Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Apr. 30, 2021 | Jun. 17, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | COFFEE HOLDING CO INC | |
Entity Central Index Key | 0001007019 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 5,708,599 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Apr. 30, 2021 | Oct. 31, 2020 |
CURRENT ASSETS: | ||
Cash | $ 3,528,137 | $ 2,875,120 |
Accounts receivable, net of allowances of $144,000 for 2021 and 2020 | 6,699,429 | 7,408,905 |
Inventories | 15,166,997 | 17,102,993 |
Prepaid expenses and other current assets | 663,423 | 490,246 |
Due from broker | 107,083 | |
Prepaid and refundable income taxes | 53,621 | 145,305 |
TOTAL CURRENT ASSETS | 26,218,690 | 28,022,569 |
Machinery and equipment, at cost, net of accumulated depreciation of $7,916,941 and $7,610,864 for 2021 and 2020, respectively | 2,488,686 | 2,197,319 |
Customer list and relationships, net of accumulated amortization of $215,755 and $194,379 for 2021 and 2020, respectively | 469,245 | 490,621 |
Trademarks and tradenames | 1,488,000 | 1,488,000 |
Non-compete, net of accumulated amortization of $59,400 and $49,500 for 2021 and 2020, respectively | 39,600 | 49,500 |
Goodwill | 2,488,785 | 2,488,785 |
Equity method investments | 557,489 | 561,405 |
Deferred income tax asset | 714,076 | 782,175 |
Right of Use Asset | 1,954,072 | 2,114,228 |
Deposits and other assets | 416,476 | 285,548 |
TOTAL ASSETS | 36,835,119 | 38,480,150 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 4,006,972 | 3,036,097 |
Lease liability - current portion | 500,804 | 484,163 |
Note payable - current portion | 2,568 | 5,075 |
Due to broker | 452,325 | |
Income taxes payable | 260,982 | 5,371 |
TOTAL CURRENT LIABILITIES | 4,771,326 | 3,983,031 |
Deferred income tax liabilities | 969,032 | 882,582 |
Line of credit | 2,500 | 3,796,822 |
Lease liability | 1,580,684 | 1,780,306 |
Note payable - long term | 17,292 | 17,292 |
Deferred compensation payable | 307,476 | 276,548 |
TOTAL LIABILITIES | 7,648,310 | 10,736,581 |
Commitments and Contingencies | ||
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, 6,633,930 shares issued for 2021 and 2020; 5,708,599 shares outstanding for 2021 and 2020 | 6,634 | 6,634 |
Additional paid-in capital | 18,309,261 | 17,929,724 |
Retained earnings | 14,250,224 | 13,215,868 |
Less: Treasury stock, 925,331 common shares, at cost for 2021 and 2020 | (4,633,560) | (4,633,560) |
Total Coffee Holding Co., Inc. Stockholders' Equity | 27,932,559 | 26,518,666 |
Non-controlling interest | 1,254,250 | 1,224,903 |
TOTAL EQUITY | 29,186,809 | 27,743,569 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 36,835,119 | $ 38,480,150 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Apr. 30, 2021 | Oct. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 144,000 | $ 144,000 |
Accumulated depreciation, machinery and equipment | 7,916,941 | 7,610,864 |
Customer list and relationships, accumulated amortization | 215,755 | 194,379 |
Non-compete, accumulated amortization | $ 59,400 | $ 49,500 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 6,633,930 | 6,633,930 |
Common stock, shares outstanding | 5,708,599 | 5,708,599 |
Treasury stock, shares | 925,331 | 925,331 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | Apr. 30, 2021 | Apr. 30, 2020 | |
Income Statement [Abstract] | ||||
NET SALES | $ 14,468,558 | $ 20,095,876 | $ 32,602,395 | $ 39,381,377 |
COST OF SALES | 10,699,090 | 15,589,450 | 24,353,356 | 31,760,285 |
GROSS PROFIT | 3,769,468 | 4,506,426 | 8,249,039 | 7,621,092 |
OPERATING EXPENSES: | ||||
Selling and administrative | 3,161,686 | 3,455,723 | 6,321,651 | 6,960,438 |
Officers' salaries | 153,638 | 157,154 | 306,863 | 327,404 |
TOTAL | 3,315,324 | 3,612,877 | 6,628,514 | 7,287,842 |
INCOME FROM OPERATIONS | 454,144 | 893,549 | 1,620,525 | 333,250 |
OTHER INCOME (EXPENSE) | ||||
Interest income | 519 | 1,952 | 929 | 2,696 |
Loss from equity method investment | (1,317) | (1,680) | (3,915) | (2,991) |
Interest expense | (16,839) | (49,725) | (43,507) | (105,459) |
TOTAL | (17,637) | (49,453) | (46,493) | (105,754) |
INCOME BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY | 436,507 | 844,096 | 1,574,032 | 227,496 |
Provision for income taxes | 129,086 | 154,767 | 510,329 | 89,351 |
NET INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY | 307,421 | 689,329 | 1,063,703 | 138,145 |
Less: Net (income) loss attributable to the non-controlling interest | 49,623 | (190,811) | (29,348) | (239,475) |
NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC. | $ 357,044 | $ 498,518 | $ 1,034,355 | $ (101,330) |
Basic and diluted earnings (loss) per share | $ .06 | $ .09 | $ .18 | $ (.02) |
Weighted average common shares outstanding: | ||||
Basic and diluted | 5,708,599 | 5,569,349 | 5,708,599 | 5,569,349 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Non-Controlling Interest [Member] | Total |
Beginning balance at Oct. 31, 2019 | $ 6,494 | $ (4,633,560) | $ 16,580,974 | $ 13,310,169 | $ 1,466,646 | $ 26,730,723 |
Beginning balance, shares at Oct. 31, 2019 | 5,569,349 | 925,331 | ||||
Stock Compensation | 248,031 | 248,031 | ||||
Net income/loss | (599,848) | (599,848) | ||||
Non-Controlling Interest | 48,664 | 48,664 | ||||
Ending balance at Jan. 31, 2020 | $ 6,494 | $ (4,633,560) | 16,829,005 | 12,710,321 | 1,515,310 | 26,427,570 |
Ending balance, shares at Jan. 31, 2020 | 5,569,349 | 925,331 | ||||
Beginning balance at Oct. 31, 2019 | $ 6,494 | $ (4,633,560) | 16,580,974 | 13,310,169 | 1,466,646 | 26,730,723 |
Beginning balance, shares at Oct. 31, 2019 | 5,569,349 | 925,331 | ||||
Net income/loss | (101,330) | |||||
Non-Controlling Interest | 239,475 | |||||
Ending balance at Apr. 30, 2020 | $ 6,494 | $ (4,633,560) | 17,069,914 | 13,208,839 | 1,706,121 | 27,357,808 |
Ending balance, shares at Apr. 30, 2020 | 5,569,349 | 925,331 | ||||
Beginning balance at Jan. 31, 2020 | $ 6,494 | $ (4,633,560) | 16,829,005 | 12,710,321 | 1,515,310 | 26,427,570 |
Beginning balance, shares at Jan. 31, 2020 | 5,569,349 | 925,331 | ||||
Stock Compensation | 240,909 | 240,909 | ||||
Net income/loss | 498,518 | 498,518 | ||||
Non-Controlling Interest | 190,811 | 190,811 | ||||
Ending balance at Apr. 30, 2020 | $ 6,494 | $ (4,633,560) | 17,069,914 | 13,208,839 | 1,706,121 | 27,357,808 |
Ending balance, shares at Apr. 30, 2020 | 5,569,349 | 925,331 | ||||
Beginning balance at Oct. 31, 2020 | $ 6,634 | $ (4,633,560) | 17,929,724 | 13,215,868 | 1,224,903 | 27,743,569 |
Beginning balance, shares at Oct. 31, 2020 | 5,708,599 | 925,331 | ||||
Stock Compensation | 189,768 | 189,768 | ||||
Net income/loss | 677,312 | 677,312 | ||||
Non-Controlling Interest | 78,970 | 78,970 | ||||
Ending balance at Jan. 31, 2021 | $ 6,634 | $ (4,633,560) | 18,119,492 | 13,893,180 | 1,303,873 | 28,689,619 |
Ending balance, shares at Jan. 31, 2021 | 5,708,599 | 925,331 | ||||
Beginning balance at Oct. 31, 2020 | $ 6,634 | $ (4,633,560) | 17,929,724 | 13,215,868 | 1,224,903 | 27,743,569 |
Beginning balance, shares at Oct. 31, 2020 | 5,708,599 | 925,331 | ||||
Net income/loss | 1,034,355 | |||||
Non-Controlling Interest | 29,348 | |||||
Ending balance at Apr. 30, 2021 | $ 6,634 | $ (4,633,560) | 18,309,261 | 14,250,224 | 1,254,250 | 29,186,809 |
Ending balance, shares at Apr. 30, 2021 | 5,708,599 | 925,331 | ||||
Beginning balance at Jan. 31, 2021 | $ 6,634 | $ (4,633,560) | 18,119,492 | 13,893,180 | 1,303,873 | 28,689,619 |
Beginning balance, shares at Jan. 31, 2021 | 5,708,599 | 925,331 | ||||
Stock Compensation | 189,769 | 189,769 | ||||
Net income/loss | 357,044 | 357,044 | ||||
Non-Controlling Interest | (49,623) | (49,623) | ||||
Ending balance at Apr. 30, 2021 | $ 6,634 | $ (4,633,560) | $ 18,309,261 | $ 14,250,224 | $ 1,254,250 | $ 29,186,809 |
Ending balance, shares at Apr. 30, 2021 | 5,708,599 | 925,331 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
OPERATING ACTIVITIES: | ||
Net income | $ 1,063,703 | $ 138,145 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 337,353 | 378,934 |
Stock-based compensation | 379,537 | 488,940 |
Unrealized (gain) loss on commodities | (559,408) | 318,936 |
Loss on equity method investments | 3,915 | 2,991 |
Amortization of right of use asset | 226,155 | 215,335 |
Deferred income taxes | 154,550 | (91,802) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 709,476 | 171,461 |
Inventories | 1,935,996 | 474,443 |
Prepaid expenses and other current assets | (173,177) | 71,148 |
Prepaid and refundable income taxes | 91,684 | 163,258 |
Accounts payable and accrued expenses | 970,875 | 343,330 |
Deposits and other assets | (100,000) | |
Change in lease liability | (248,980) | (236,607) |
Income taxes payable | 255,611 | 217 |
Net cash provided by operating activities | 5,047,290 | 2,438,729 |
INVESTING ACTIVITIES: | ||
Purchases of machinery and equipment | (597,444) | (132,967) |
Net cash used in investing activities | (597,444) | (132,967) |
FINANCING ACTIVITIES: | ||
Advances under bank line of credit | 15,563 | 641,132 |
Principal payments on note payable | (2,507) | (1,994) |
Principal payments under bank line of credit | (3,809,885) | (2,700,000) |
Net cash used in financing activities | (3,796,829) | (2,060,862) |
NET INCREASE IN CASH | 653,017 | 244,900 |
CASH, BEGINNING OF PERIOD | 2,875,120 | 2,402,556 |
CASH, END OF PERIOD | 3,528,137 | 2,647,456 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | ||
Interest paid | 54,943 | 113,647 |
Income taxes paid | 8,485 | 17,678 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Initial recognition of operating lease right of use asset | 65,999 | 2,512,022 |
Initial recognition of operating lease liabilities | 65,999 | 2,705,484 |
Machinery and equipment acquired through financing | $ 26,807 |
Business Activities
Business Activities | 6 Months Ended |
Apr. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Activities | NOTE 1 - BUSINESS ACTIVITIES: Coffee Holding Co., Inc. (the “Company”) conducts wholesale coffee operations, including manufacturing, roasting, packaging, marketing and distributing roasted and blended coffees for private labeled accounts and its own brands, and it sells green coffee. The Company also manufactures and sells coffee roasters. The Company’s core product, coffee, can be summarized and divided into three product categories (“product lines”) as follows: Wholesale Green Coffee: Private Label Coffee: Branded Coffee: The Company’s wholesale green coffee sales are included in the “green” revenue stream, and the Company’s private label and branded coffee sales are included in the “packaged revenue stream” and are primarily to customers that are located throughout the United States with limited sales in Canada and certain countries in Asia. Such customers include supermarkets, wholesalers, and individually-owned and multi-unit retailers. The Company’s unprocessed green coffee, which includes over 90 specialty coffee offerings, is sold primarily to specialty gourmet roasters and to coffee shop operators in the United States with limited sales in Australia, Canada, England and China. The Company’s wholesale green, private label, and branded coffee product categories generate revenues and cost of sales individually but incur selling, general and administrative expenses in the aggregate. There are no individual product managers and discrete financial information is not available for any of the product lines. The Company’s product portfolio is used in one business and it operates and competes in one business activity and economic environment. In addition, the three product lines share customers, manufacturing resources, sales channels, and marketing support. Thus, the Company considers the three product lines to be one single reporting segment. COVID-19 The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020 and has negatively affected the U.S. and global economies, disrupted global supply chains, resulted in significant travel and transport restrictions, mandated closures and stay-at-home orders, and created significant disruption of the financial markets. The continuing impact on the Company’s business, including the decrease in our sales, the length and impact of stay-at-home orders and/or regional quarantines, labor shortages and employment trends, disruptions to supply chains, including its ability to obtain products from global suppliers, higher operating costs, the form and impact of economic stimulus and general overall economic instability, has contributed to and may continue to have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. At this time the full impact could not be determined. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 6 Months Ended |
Apr. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES: The following (a) condensed consolidated balance sheet as of April 30, 2021, which has been derived from audited financial statements, and (b) the unaudited interim condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s latest shareholders’ annual report on Form 10-K filed with the SEC on February 16, 2021 for the fiscal year ended October 31, 2020 (“Form 10-K”). In the opinion of management, all adjustments (which include normal and recurring nature adjustments) necessary to present a fair statement of the Company’s financial position as of April 30, 2021 and 2020, and results of operations for the three and six months ended April 30, 2021 and 2020 and the cash flows for the six months ended April 30, 2021 and 2020 as applicable, have been made. The results of operations for the three and six months ended April 30, 2021 and 2020 are not necessarily indicative of the operating results for the full fiscal year or any future periods. The condensed consolidated financial statements include the accounts of the Company, the Company’s subsidiaries, Organic Products Trading Company, LLC (“OPTCO”), Sonofresco, LLC (“SONO”), Comfort Foods, Inc. (“CFI”) and Generations Coffee Company, LLC (“GCC”), the entity formed as a result of the Company’s joint venture with Caruso’s Coffee, Inc. The Company owns a 60% equity interest in GCC. All inter-company transactions and balances have been eliminated in consolidation. Significant Accounting Policies The significant accounting policies used in the preparation of these condensed consolidated financial statements are disclosed in our 2020 10-K, and there have been no changes to the Company’s significant accounting policies during the three and six months ended April 30, 2021. Revenue Recognition The Company recognizes revenue in accordance with the five-step model as prescribed by the Financial Accounting Standards Board (“FASB”) Accounting Codification (“ASC”) Topic 606 (“ASC 606”) in which the Company evaluates the transfer of promised goods or services and recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The following table presents revenues by stream for the six and three months ended April 30, 2021 and 2020. Six Months Ended April 30, 2021 Three Months Ended April 30, 2021 Six Months Ended April 30, 2020 Three Months Ended April 30, 2020 Green $ 12,050,777 $ 5,446,902 $ 12,688,131 $ 5,902,555 Packaged $ 20,551,618 $ 9,021,656 $ 26,693,246 $ 14,193,321 Totals $ 32,602,395 $ 14,468,558 $ 39,381,377 $ 20,095,876 |
Inventories
Inventories | 6 Months Ended |
Apr. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 3 - INVENTORIES: Inventories at April 30, 2021 and October 31, 2020 consisted of the following: April 30, 2021 October 31, 2020 Packed coffee $ 3,357,198 $ 3,590,709 Green coffee 9,493,183 11,390,668 Roasters and parts 431,153 381,617 Packaging supplies 1,885,463 1,739,999 Totals $ 15,166,997 $ 17,102,993 |
Commodities Held by Broker
Commodities Held by Broker | 6 Months Ended |
Apr. 30, 2021 | |
Brokers and Dealers [Abstract] | |
Commodities Held by Broker | NOTE 4 - COMMODITIES HELD BY BROKER: The Company has used, and intends to continue to use in a limited capacity, short term coffee futures and options contracts primarily for the purpose of partially hedging and minimizing the effects of changing green coffee prices and to reduce our cost of sales. The commodities held at broker represent the market value of the Company’s trading account, which consists of options and future contracts for coffee held with a brokerage firm. The Company uses 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 condensed consolidated financial statements with current recognition of gains and losses on such positions. The Company’s accounting for options and futures contracts may increase earnings volatility in any particular period. The Company has open position contracts held by the broker, which are summarized as follows: April October Option Contracts $ 53,158 $ (164,475 ) Future Contracts 53,925 (287,850 ) Total Commodities $ 107,083 $ (452,325 ) The Company classifies its options and future contracts as trading securities and accordingly, unrealized holding gains and losses are included in the statement of operations as a component of cost of sales and not reflected as a net amount as a separate component of stockholders’ equity. The Company recorded realized and unrealized gains and losses respectively, on these contracts as follows: Three Months Ended April 30, 2021 2020 Gross realized gains $ 241,125 $ 485,344 Gross realized losses - (668,114 ) Unrealized gain 144,333 666,901 Total $ 385,458 $ 484,131 Six Months Ended April 30, 2021 2020 Gross realized gains $ 503,112 $ 841,903 Gross realized losses (76 ) (794,925 ) Unrealized gain (loss) 559,408 (318,936 ) Total $ 1,062,444 $ (271,958 ) |
Line of Credit
Line of Credit | 6 Months Ended |
Apr. 30, 2021 | |
Debt Disclosure [Abstract] | |
Line of Credit | NOTE 5 - LINE OF CREDIT: On April 25, 2017 the Company and OPTCO (together with the Company, collectively referred to herein as the “Borrowers”) entered into an Amended and Restated Loan and Security Agreement (the “A&R Loan Agreement”) and Amended and Restated Loan Facility (the “A&R Loan Facility”) with Sterling National Bank (“Sterling”), which consolidated (i) the financing agreement between the Company and Sterling, dated February 17, 2009, as modified, (the “Company Financing Agreement”) and (ii) the financing agreement between Company, as guarantor, OPTCO and Sterling, dated March 10, 2015 (the “OPTCO Financing Agreement”), amongst other things. On March 13, 2020, the Company reached an agreement for a new loan modification agreement and credit facility with Sterling. The terms of the new agreement, among other things: (i) provides for a new maturity date of March 31, 2022 and (ii) decreases the interest rate per annum to LIBOR plus 1.75% (with such interest rate not to be lower than 3.50%). All other terms of the A&R Loan Agreement and A&R Loan Facility remain the same. Each of the A&R Loan Facility and A&R Loan Agreement contains covenants, subject to certain exceptions, that place annual restrictions on the Borrowers’ operations, including covenants relating to debt restrictions, capital expenditures, indebtedness, minimum deposit restrictions, tangible net worth, net profit, leverage, employee loan restrictions, dividend and repurchase restrictions (common stock and preferred stock), and restrictions on intercompany transactions. The Company was in compliance with all covenants as of April 30, 2021 and October 31, 2020. The outstanding balance on the Company’s lines of credit were $2,500 and $3,796,822 as of April 30, 2021 and October 31, 2020, respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Apr. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 6 - INCOME TAXES: The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be 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 laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision or benefit is the tax incurred for the period plus or minus the change during the period in deferred tax assets and liabilities. As of April 30, 2021 and October 31, 2020, the Company did not have any unrecognized tax benefits or open tax positions. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of April 30, 2021 and October 31, 2020, the Company had no accrued interest or penalties related to income taxes. The Company currently has no federal or state tax examinations in progress. The Company files a U.S. federal income tax return and California, Colorado, Connecticut, Idaho, Kansas, Louisiana, Montana, Massachusetts, Michigan, New Jersey, New York, New York City, Oregon, Rhode Island, South Carolina, Tennessee, Virginia, and Texas state tax returns. The Company’s federal income tax return is no longer subject to examination by the federal taxing authority for the years before fiscal 2017. The Company’s California, Colorado and New Jersey income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2016. The Company’s Oregon and New York income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2017. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Apr. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE 7 - EARNINGS PER SHARE: The Company presents “basic” and “diluted” earnings per common share pursuant to the provisions included in the authoritative guidance issued by FASB, “Earnings per Share,” and certain other financial accounting pronouncements. Basic earnings per common share were computed by dividing net income by the sum of the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing the net income by the weighted-average number of common shares outstanding plus the dilutive effect of common shares issuable upon exercise of potential sources of dilution. The weighted average common shares outstanding used in the computation of basic and diluted earnings per share were 5,708,599 and 5,569,349 for the three and six months ended April 30, 2021 and 2020, respectively. The Company has granted 1,000,000 options which have not been included in the calculation of diluted earnings per share due to their anti-dilutive nature. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Apr. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 8 – COMMITMENTS AND CONTINGENCIES: CLASS ACTION COMPLAINTS The Company was named as a defendant in a putative class action lawsuit filed in the United States District Court for the Northern District of Illinois on or about December 21, 2020. The plaintiffs, Eileen Brodsky and Rhonda Diamond, purporting to represent a class of individuals who purchased coffee products at Aldi, Inc. (“Aldi”), a supermarket chain, generally allege that Aldi sold private label coffee products manufactured by the Company and another coffee roasting company, which falsely described the number of cups of coffee that could be made from the amount of product purchased. Aldi and Pan American are also named as defendants in the action. The complaint asserts a variety of claims under New York and California consumer protection laws, and seeks unspecified monetary damages, including disgorgement and restitution, as well as other forms of relief including class certification, declaratory and injunctive relief, attorneys’ fees, and interest. The Company believes the allegations in the complaint are wholly without merit and that the claims asserted are legally deficient, and the company intends to vigorously defend the action. The Company has filed a motion to dismiss, and the plaintiff has sought leave to file an amended complaint. At this time, the Company is unable to predict the ultimate outcome of this lawsuit. A significant customer of the Company was named as a defendant in a putative class action lawsuit filed in the United States District Court for the District of Massachusetts on or about February 2, 2021, concerning the labeling on private label coffee productions we sold to the customer. The plaintiff, David Cohen, purporting to represent a class of individuals who purchased coffee products from our customer, generally allege that the customer sold private label coffee products manufactured by the Company which falsely described the number of cups of coffee that could be made from the amount of product purchased. The Company is not named as a defendant in the action, but has agreed to indemnify the customer for the costs and expenses incurred in defending the lawsuit and for any liability the customer may suffer as a result. The complaint asserts a variety of claims under Massachusetts consumer protection laws, and seeks unspecified monetary damages as well as other forms of relief including class certification, declaratory and injunctive relief, attorneys’ fees, and interest. The Company believes the allegations in the complaint are wholly without merit and that the claims asserted are legally deficient, and intends to vigorously support the customer in defending the action. As of the filing of this Form 10-Q, the Company is unable to predict the ultimate outcome of this lawsuit. A number of lawsuits similar to those above have been filed in recent years against coffee sellers in the industry in which the Company competes. Many of these lawsuits have yet to be finally adjudicated. The Company believes the lawsuits filed against it are without merit. LEASES The following summarizes the Company’s operating leases: April 30, 2021 Right-of-use operating lease assets $ 1,954,072 Current lease liability $ 500,804 Non-current lease liability $ 1,580,684 Total lease liability 2,081,488 The amortization of the right-of-use asset for the six and three months ended April 30, 2021 was $226,155 and $112,587, respectively. April 30, 2021 Average remaining lease term 3.2 Discount rate 4.75 % Maturities of lease liabilities by year for our operating leases are as follows: 2021 (remaining six months) $ 303,370 2022 570,854 2023 546,542 2024 316,477 2025 168,288 Thereafter 434,744 Total lease payments $ 2,340,275 Less: imputed interest (258,787 ) Present value of operating lease liabilities $ 2,081,488 The aggregate cash payments under these leasing agreements was $300,306 for the six months ended April 30, 2021. |
Economic Dependency
Economic Dependency | 6 Months Ended |
Apr. 30, 2021 | |
Risks and Uncertainties [Abstract] | |
Economic Dependency | NOTE 9 - ECONOMIC DEPENDENCY: Approximately 23% and 24% of the Company’s sales were derived from six customers during the three and six months ended April 30, 2021, respectively. These customers also accounted for approximately $2,094,000 of the Company’s accounts receivable balance at April 30, 2021. Approximately 24% of the Company’s sales were derived from six customers during the three and six months ended April 30, 2020. These customers also accounted for approximately $3,557,000 of the Company’s accounts receivable balance at April 30, 2020. Concentration of credit risk with respect to other trade receivables is limited due to the short payment terms generally extended by the Company, by ongoing credit evaluations of customers, and by maintaining an allowance for doubtful accounts that management believes will adequately provide for credit losses. Approximately 27% and 28% of the Company’s purchases were from six vendors for the three and six months ended April 30, 2021, respectively. These vendors accounted for approximately $386,000 of the Company’s accounts payable at April 30, 2021. Approximately 26% and 27% of the Company’s purchases were from six vendors for the three and six months ended April 30, 2020, respectively. These vendors accounted for approximately $971,000 of the Company’s accounts payable at April 30, 2020. Management does not believe the loss of any one vendor would have a material adverse effect of the Company’s operations due to the availability of many alternate suppliers. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Apr. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 10 - RELATED PARTY TRANSACTIONS: The Company has engaged its 40% partner in GCC as an outside contractor (the “Partner”). Included in contract labor expense are expenses incurred from the Partner during the three and six months ended April 30, 2021 of $88,032 and $162,725, respectively and $94,429 and $197,200, respectively for the three and six months ended April 30, 2020, for the processing of finished goods. These amounts are reflected in cost of sales in the statement of operations. An employee of one of the top five vendors is a director of the Company. Purchases from that vendor totaled approximately $0 and $734,000 for the three and six months ended April 30, 2021 and 2020, respectively and $1,672,000 and $3,005,000 for the three and six months ended April 30, 2020, respectively. These amounts are reflected in cost of sales in the statement of operations. The corresponding accounts payable balance to this vendor was $0 at April 30, 2021 and October 31, 2020. In January 2005, the Company established the “Coffee Holding Co., Inc. Non-Qualified Deferred Compensation Plan.” Currently, there is only one participant in the plan: the Company’s Chief Executive Officer. Within the plan guidelines, this employee is deferring a portion of his current salary and bonus. The assets are held in a separate trust. The deferred compensation payable represents the liability due to an officer of the Company. The assets are included in the Deposits and other assets in the accompanying balance sheets. The deferred compensation asset and liability at April 30, 2021 and October 31, 2020 were $307,476 and $276,548, respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Apr. 30, 2021 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 11 - STOCKHOLDERS’ EQUITY: a. Treasury Stock b. Stock Options. The Company has an incentive stock plan, the 2013 Equity Compensation Plan (the “2013 Plan”), and on April 19, 2019, has granted stock options to employees, officers and non-employee directors from the 2013 Plan. Options granted under the 2013 Plan may be Incentive Stock Options or Nonqualified Stock Options, as determined by the Administrator at the time of grant. As of January 31, 2021, the Board of Directors approved 1,000,000 options. The Company recorded $189,769 and $379,537 of stock-based compensation for the three and six months ended April 30, 2021 and $240,909 and $488,940 for the three and six months ended April 30, 2020, respectively. The remaining unamortized stock compensation expense as of April 30, 2021 was approximately $785,357, which will be expensed over a weighted average period of one year. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Apr. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 12 - SUBSEQUENT EVENTS: The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required further adjustment or disclosure in the condensed consolidated financial statements. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 6 Months Ended |
Apr. 30, 2021 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with the five-step model as prescribed by the Financial Accounting Standards Board (“FASB”) Accounting Codification (“ASC”) Topic 606 (“ASC 606”) in which the Company evaluates the transfer of promised goods or services and recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The following table presents revenues by stream for the six and three months ended April 30, 2021 and 2020. Six Months Ended April 30, 2021 Three Months Ended April 30, 2021 Six Months Ended April 30, 2020 Three Months Ended April 30, 2020 Green $ 12,050,777 $ 5,446,902 $ 12,688,131 $ 5,902,555 Packaged $ 20,551,618 $ 9,021,656 $ 26,693,246 $ 14,193,321 Totals $ 32,602,395 $ 14,468,558 $ 39,381,377 $ 20,095,876 |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 6 Months Ended |
Apr. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Revenue | The following table presents revenues by stream for the six and three months ended April 30, 2021 and 2020. Six Months Ended April 30, 2021 Three Months Ended April 30, 2021 Six Months Ended April 30, 2020 Three Months Ended April 30, 2020 Green $ 12,050,777 $ 5,446,902 $ 12,688,131 $ 5,902,555 Packaged $ 20,551,618 $ 9,021,656 $ 26,693,246 $ 14,193,321 Totals $ 32,602,395 $ 14,468,558 $ 39,381,377 $ 20,095,876 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Apr. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories at April 30, 2021 and October 31, 2020 consisted of the following: April 30, 2021 October 31, 2020 Packed coffee $ 3,357,198 $ 3,590,709 Green coffee 9,493,183 11,390,668 Roasters and parts 431,153 381,617 Packaging supplies 1,885,463 1,739,999 Totals $ 15,166,997 $ 17,102,993 |
Commodities Held by Broker (Tab
Commodities Held by Broker (Tables) | 6 Months Ended |
Apr. 30, 2021 | |
Brokers and Dealers [Abstract] | |
Schedule of Contracts Held by Broker | The Company has open position contracts held by the broker, which are summarized as follows: April October Option Contracts $ 53,158 $ (164,475 ) Future Contracts 53,925 (287,850 ) Total Commodities $ 107,083 $ (452,325 ) |
Schedule of Realized and Unrealized Gains and Losses on Contracts | The Company recorded realized and unrealized gains and losses respectively, on these contracts as follows: Three Months Ended April 30, 2021 2020 Gross realized gains $ 241,125 $ 485,344 Gross realized losses - (668,114 ) Unrealized gain 144,333 666,901 Total $ 385,458 $ 484,131 Six Months Ended April 30, 2021 2020 Gross realized gains $ 503,112 $ 841,903 Gross realized losses (76 ) (794,925 ) Unrealized gain (loss) 559,408 (318,936 ) Total $ 1,062,444 $ (271,958 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Apr. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Leases | The following summarizes the Company’s operating leases: April 30, 2021 Right-of-use operating lease assets $ 1,954,072 Current lease liability $ 500,804 Non-current lease liability $ 1,580,684 Total lease liability 2,081,488 April 30, 2021 Average remaining lease term 3.2 Discount rate 4.75 % |
Schedule of Minimum Future Lease Payments | Maturities of lease liabilities by year for our operating leases are as follows: 2021 (remaining six months) $ 303,370 2022 570,854 2023 546,542 2024 316,477 2025 168,288 Thereafter 434,744 Total lease payments $ 2,340,275 Less: imputed interest (258,787 ) Present value of operating lease liabilities $ 2,081,488 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies (Details Narrative) | Apr. 30, 2021 |
Generation Coffee Company, LLC [Member] | |
Equity method investment, ownership percentage | 60.00% |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies - Schedule of Revenue (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | Apr. 30, 2021 | Apr. 30, 2020 | |
Totals | $ 14,468,558 | $ 20,095,876 | $ 32,602,395 | $ 39,381,377 |
Green Coffee [Member] | ||||
Totals | 5,446,902 | 5,902,555 | 12,050,777 | 12,688,131 |
Packaged Coffee [Member] | ||||
Totals | $ 9,021,656 | $ 14,193,321 | $ 20,551,618 | $ 26,693,246 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Apr. 30, 2021 | Oct. 31, 2020 |
Totals | $ 15,166,997 | $ 17,102,993 |
Packed Coffee [Member] | ||
Totals | 3,357,198 | 3,590,709 |
Green Coffee [Member] | ||
Totals | 9,493,183 | 11,390,668 |
Roasters and Parts [Member] | ||
Totals | 431,153 | 381,617 |
Packaging Supplies [Member] | ||
Totals | $ 1,885,463 | $ 1,739,999 |
Commodities Held by Broker - Sc
Commodities Held by Broker - Schedule of Contracts Held by Broker (Details) - USD ($) | Apr. 30, 2021 | Oct. 31, 2020 |
Brokers and Dealers [Abstract] | ||
Option Contracts | $ 53,158 | $ (164,475) |
Future Contracts | 53,925 | (287,850) |
Total Commodities | $ 107,083 | $ (452,325) |
Commodities Held by Broker - _2
Commodities Held by Broker - Schedule of Realized and Unrealized Gains and Losses on Contracts (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | Apr. 30, 2021 | Apr. 30, 2020 | |
Brokers and Dealers [Abstract] | ||||
Gross realized gains | $ 241,125 | $ 485,344 | $ 503,112 | $ 841,903 |
Gross realized losses | (668,114) | (76) | (794,925) | |
Unrealized gain (loss) | 144,333 | 666,901 | 559,408 | (318,936) |
Total | $ 385,458 | $ 484,131 | $ 1,062,444 | $ (271,958) |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | Mar. 13, 2020 | Apr. 30, 2021 | Oct. 31, 2020 |
Outstanding line of credit | $ 2,500 | $ 3,796,822 | |
New Loan Modification Agreement and Credit Facility [Member] | |||
Line of credit expire date | Mar. 31, 2022 | ||
New Loan Modification Agreement and Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Line of credit interest rate | 1.75% | ||
New Loan Modification Agreement and Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | |||
Line of credit interest rate | 3.50% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Apr. 30, 2021 | Oct. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | ||
Accrued interest or penalties |
Earnings Per Share (Details Nar
Earnings Per Share (Details Narrative) - shares | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | Apr. 30, 2021 | Apr. 30, 2020 | |
Weighted average common shares outstanding: Basic and diluted | 5,708,599 | 5,569,349 | 5,708,599 | 5,569,349 |
Option [Member] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 1,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 6 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Amortization of right-of-use asset | $ 226,155 | $ 215,335 |
Cash payments for lease | $ 300,306 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Operating Leases (Details) - USD ($) | Apr. 30, 2021 | Oct. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Right-of-use operating lease assets | $ 1,954,072 | $ 2,114,228 |
Current lease liability | 500,804 | 484,163 |
Non-current lease liability | 1,580,684 | $ 1,780,306 |
Total lease liability | $ 2,081,488 | |
Average remaining lease term | 3 years 2 months 12 days | |
Discount rate | 4.75% |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Minimum Future Lease Payments (Details) | Apr. 30, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 (remaining six months) | $ 303,370 |
2022 | 570,854 |
2023 | 546,542 |
2024 | 316,477 |
2025 | 168,288 |
Thereafter | 434,744 |
Total lease payments | 2,340,275 |
Less: imputed interest | (258,787) |
Present value of operating lease liabilities | $ 2,081,488 |
Economic Dependency (Details Na
Economic Dependency (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | Apr. 30, 2021 | Apr. 30, 2020 | |
Six Vendors [Member] | ||||
Accounts receivable | $ 386,000 | $ 386,000 | ||
Accounts Payable [Member] | Six Vendors [Member] | ||||
Concentration risk percentage | 27.00% | 26.00% | 28.00% | 27.00% |
Accounts receivable | $ 971,000 | $ 971,000 | ||
Six Customers [Member] | ||||
Accounts receivable | $ 2,094,000 | $ 3,557,000 | $ 2,094,000 | $ 3,557,000 |
Six Customers [Member] | Sales Revenue [Member] | ||||
Concentration risk percentage | 23.00% | 24.00% | 24.00% | 24.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2021 | Apr. 30, 2020 | Apr. 30, 2021 | Apr. 30, 2020 | Oct. 31, 2020 | |
Contract labor expense | $ 88,032 | $ 94,429 | $ 162,725 | $ 197,200 | |
Purchases from related party vendor | 0 | $ 1,672,000 | 734,000 | $ 3,005,000 | |
Accounts payable to related party vendor | 0 | 0 | $ 0 | ||
Deferred compensation payable | $ 307,476 | $ 307,476 | $ 276,548 | ||
Generation Coffee Company, LLC [Member] | |||||
Related party transaction percentage | 40.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | Apr. 30, 2021 | Apr. 30, 2020 | |
Stock-based compensation | $ 379,537 | $ 488,940 | $ 189,769 | $ 240,909 |
Unamortized stock compensation expense | $ 785,357 | |||
Board of Directors [Member] | ||||
Share-based compensation, options, number of shares authorized | 1,000,000 | 1,000,000 |