Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 31, 2017 | Jan. 20, 2018 | Apr. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | COFFEE HOLDING CO INC | ||
Entity Central Index Key | 1,007,019 | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 28,554,281 | ||
Entity Common Stock, Shares Outstanding | 5,742,894 | ||
Entity Trading Symbol | JVA | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 2,325,650 | $ 3,227,981 |
Accounts receivable, net of allowances of $144,000 for 2017 and 2016 | 13,441,802 | 13,517,892 |
Inventories | 16,310,572 | 14,276,290 |
Prepaid green coffee | 171,350 | 435,577 |
Prepaid expenses and other current assets | 593,825 | 535,456 |
Prepaid and refundable income taxes | 472,814 | 481,977 |
Due from broker | 134,722 | |
Deferred income tax asset | 339,748 | 81,545 |
TOTAL CURRENT ASSETS | 33,655,761 | 32,691,440 |
Machinery and equipment, at cost, net of accumulated depreciation of $5,557,899 and $4,819,828 for 2017 and 2016, respectively | 2,439,338 | 2,269,863 |
Customer list and relationships, net of accumulated amortization of $72,250 and $50,250 for 2017 and 2016, respectively | 367,750 | 219,750 |
Trademarks and trade names | 820,000 | 180,000 |
Other intangible assets | 331,124 | |
Goodwill | 1,794,265 | 1,017,905 |
Equity method investments | 94,643 | 95,598 |
Deposits and other assets | 497,529 | 549,337 |
TOTAL ASSETS | 40,000,410 | 37,023,893 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 4,430,626 | 4,062,573 |
Line of credit | 8,407,527 | 6,958,375 |
Due to broker | 210,862 | |
Income taxes payable | 1,346 | 1,050 |
TOTAL CURRENT LIABILITIES | 13,050,361 | 11,021,998 |
Deferred income tax liabilities | 629,680 | 167,470 |
Deferred rent payable | 240,379 | 231,216 |
Deferred compensation payable | 488,529 | 489,668 |
TOTAL LIABILITIES | 14,408,949 | 11,910,352 |
Common stock subject to possible redemption, at $200,004; 0 and 38,364 shares issued and outstanding at redemption value as of October 31, 2017 and 2016, respectively | 200,004 | |
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, 6,494,680 shares issued; 5,805,935 and 5,824,938 shares outstanding for 2017 and 2016 | 6,494 | 6,456 |
Additional paid-in capital | 16,104,075 | 15,904,109 |
Retained earnings | 12,345,490 | 11,878,228 |
Less: Treasury stock, 688,745 and 631,378 common shares, at cost for 2017 and 2016 | (3,504,510) | (3,249,590) |
Total Coffee Holding Co., Inc. Stockholders’ Equity | 24,951,549 | 24,539,203 |
Noncontrolling interest | 639,912 | 374,334 |
TOTAL EQUITY | 25,591,461 | 24,913,537 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 40,000,410 | $ 37,023,893 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Allowances for doubtful accounts | $ 144,000 | $ 144,000 |
Accumulated Depreciation | 5,557,899 | 4,819,828 |
Customer list and relationships, accumulated amortization | 72,250 | 50,250 |
Common stock, redemption amount | $ 200,004 | |
Common stock, redemption shares issued | 0 | 38,364 |
Common stock, redemption shares outstanding | 0 | 38,364 |
Preferred stock, par value | $ .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 | 6,494,680 | 6,494,680 |
Common stock shares outstanding | 5,805,935 | 5,824,938 |
Treasury Stock, Shares | 688,745 | 631,378 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Income Statement [Abstract] | ||
NET SALES | $ 77,127,595 | $ 78,948,228 |
COST OF SALES (which include purchases of approximately $6.7 million and $8.5 million in fiscal years 2017 and 2016, respectively, from a related party) | 64,977,632 | 67,066,050 |
GROSS PROFIT | 12,149,963 | 11,882,178 |
OPERATING EXPENSES: | ||
Selling and administrative | 10,228,506 | 7,363,710 |
Officers’ salaries | 698,740 | 655,400 |
TOTAL | 10,927,246 | 8,019,110 |
INCOME FROM OPERATIONS | 1,222,717 | 3,863,068 |
OTHER INCOME (EXPENSE): | ||
Interest income | 19,436 | 41,176 |
Loss from equity method investments | (956) | (972) |
Interest expense | (264,261) | (187,310) |
TOTAL | (245,781) | (147,106) |
INCOME BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY | 976,936 | 3,715,962 |
Provision for income taxes | 244,096 | 1,365,920 |
NET INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY | 732,840 | 2,350,042 |
Less: Net income attributable to the non-controlling interest in subsidiary | (265,578) | (137,754) |
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. | $ 467,262 | $ 2,212,288 |
Basic and diluted earnings per share | $ 0.08 | $ 0.36 |
Weighted average common shares outstanding: Basic and diluted | 5,858,376 | 6,082,777 |
Consolidated Statements of Inc5
Consolidated Statements of Income (Parenthetical) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Income Statement [Abstract] | ||
Related party costs | $ 6,700,000 | $ 8,500,000 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders’ Equity - USD ($) | Redeemable Common Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Balance at Oct. 31, 2015 | $ 6,456 | $ (1,494,712) | $ 15,904,109 | $ 9,665,940 | $ 336,580 | $ 24,418,373 | |
Balance, shares at Oct. 31, 2015 | 6,162,207 | 294,109 | |||||
Treasury stock | $ (1,754,878) | (1,754,878) | |||||
Treasury stock, shares | (337,269) | 337,269 | |||||
Dividend | (100,000) | (100,000) | |||||
Net income | 2,212,228 | 2,212,288 | |||||
Stock issued in connection with acquisition | $ 200,004 | ||||||
Stock issued in connection with acquisition, shares | 38,364 | ||||||
Non- controlling interest | 137,754 | 137,754 | |||||
Balance at Oct. 31, 2016 | $ 200,004 | $ 6,456 | $ (3,249,590) | 15,904,109 | 11,878,228 | 374,334 | 24,913,537 |
Balance, shares at Oct. 31, 2016 | 38,364 | 5,824,938 | 631,378 | ||||
Treasury stock | $ (254,920) | (254,920) | |||||
Treasury stock, shares | (57,367) | 57,367 | |||||
Net income | 467,262 | 467,262 | |||||
Stock issued in connection with acquisition | $ (200,004) | $ 38 | 199,966 | 200,004 | |||
Stock issued in connection with acquisition, shares | (38,364) | 38,364 | |||||
Non- controlling interest | 265,578 | 265,578 | |||||
Balance at Oct. 31, 2017 | $ 6,494 | $ (3,504,510) | $ 16,107,075 | $ 12,345,490 | $ 639,912 | $ 25,591,461 | |
Balance, shares at Oct. 31, 2017 | 5,805,935 | 688,745 |
Consolidated Statement of Chan7
Consolidated Statement of Changes in Stockholders’ Equity (Parenthetical) - $ / shares | Oct. 31, 2017 | Oct. 31, 2016 |
Statement of Stockholders' Equity [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | Feb. 23, 2017 | Jun. 29, 2016 | Oct. 31, 2017 | Oct. 31, 2016 |
OPERATING ACTIVITIES: | ||||
Net income | $ 732,840 | $ 2,350,042 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 762,043 | 587,572 | ||
Unrealized loss (gain) on commodities | 345,584 | (618,557) | ||
Loss on equity method investments | 955 | 973 | ||
Deferred rent | 9,163 | 9,161 | ||
Deferred income taxes | (183,975) | 991,275 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 661,008 | (2,465,513) | ||
Inventories | (917,376) | (143,907) | ||
Prepaid expenses and other current assets | (25,688) | (279,254) | ||
Prepaid green coffee | 264,227 | 184,875 | ||
Prepaid and refundable income taxes | 9,163 | 952,600 | ||
Accounts payable and accrued expenses | (258,827) | (30,860) | ||
Deposits and other assets | 77,220 | 68,331 | ||
Income taxes payable | 296 | 1,050 | ||
Net cash provided by operating activities | 1,476,633 | 1,607,788 | ||
INVESTING ACTIVITIES: | ||||
Purchase of business net of cash acquired | (2,893,275) | (819,564) | ||
Purchases of machinery and equipment | (679,921) | (963,435) | ||
Net cash used in investing activities | (3,573,196) | (1,782,999) | ||
FINANCING ACTIVITIES: | ||||
Line of credit | 1,449,152 | 1,404,254 | ||
Purchase of treasury stock | (254,920) | (1,754,878) | ||
Payment of dividend | $ (200,004) | (100,000) | ||
Net cash provided by (used in) financing activities | 1,194,232 | (450,624) | ||
NET DECREASE IN CASH | (902,331) | (625,835) | ||
CASH, BEGINNING OF PERIOD | 3,227,981 | 3,853,816 | ||
CASH, END OF PERIOD | 2,325,650 | 3,227,981 | ||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | ||||
Interest paid | 261,485 | 181,007 | ||
Income taxes paid | $ 391,933 | $ 34,183 | ||
Coffee Kinetics, LLC [Member] | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||
Fair value of assets acquired | 1,091,612 | |||
Less: liabilities assumed | (72,044) | |||
Net assets acquired: | 1,019,568 | |||
Common stock, par value $.001 per share, 38,364 shares | 39 | |||
Additional paid-in capital | 199,965 | |||
Non-cash payment | 200,004 | |||
Net cash paid | $ 819,564 | |||
Comfort Foods, Inc [Member] | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||
Accounts receivable | $ 584,918 | |||
Inventory | 1,116,906 | |||
Equipment | 229,597 | |||
Prepaid expenses | 32,681 | |||
Customer lists | 170,000 | |||
Other intangible assets | 971,124 | |||
Goodwill | 388,378 | |||
Other asset | 26,551 | |||
Less: liabilities | 626,880 | |||
Net cash paid | $ 2,893,275 |
Consolidated Statements of Cas9
Consolidated Statements of Cash Flows (Parenthetical) | Jun. 29, 2016$ / sharesshares |
Coffee Kinetics, LLC [Member] | |
Common stock, par value | $ / shares | $ 0.001 |
Common stock shares issued | shares | 38,364 |
Business Activities
Business Activities | 12 Months Ended |
Oct. 31, 2017 | |
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’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 private label and branded coffee sales 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Oct. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: BASIS OF PRESENTATION: The consolidated financial statements include the accounts of the Company, Organic Products Trading Company, LLC (“OPTCO”), Sonofresco LLC (“SONO”), Comfort Foods, Inc. (“CFI”) and Generations Coffee Company, LLC (“GCC”). All significant inter-company balances and transactions have been eliminated in consolidation. USE OF ESTIMATES: The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates include allowance for uncollectible accounts receivable and reserves, inventory obsolescence, depreciation, intangible asset valuations and useful lives, taxes, contingencies, and valuation of financial instruments. These estimates may be adjusted as more current information becomes available, and any adjustment could have a significant impact on recorded amounts. CASH: Cash consists primarily of unrestricted cash on deposit at financial institutions and brokerage firms. PREPAID GREEN COFFEE: Prepaid coffee is an item that emanates from OPTCO. The balance represents advance payments made by OPTCO to several coffee growing cooperatives for the purchase of green coffee. Interest is charged to the cooperatives for these advances. Interest earned was $19,430 and $41,176 as of October 31, 2017 and 2016, respectively. The prepaid coffee balance was $171,350 and $435,577 as of October 31, 2017 and 2016, respectively. ACCOUNTS RECEIVABLE: Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Past due balances over 60 days and other higher risk amounts are reviewed individually for collectability. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. 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 the Company from its customers. The allowances are summarized as follows: 2017 2016 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 INVENTORIES: Inventories are stated at the lower of cost (First in, first out basis) or net realizable value, including provisions for obsolescence commensurate with known or estimated exposures. There are no reserves for obsolescence as of October 31, 2017 and 2016. MACHINERY AND EQUIPMENT: Machinery and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Purchases of machinery and equipment and additions and betterments which substantially extend the useful life of an asset are capitalized at cost. Expenditures which do not materially prolong the normal useful life of an asset are charged to operations as incurred. The Company also provides for amortization of leasehold improvements. COMMODITIES HELD BY BROKER: The commodities held at broker represent the market value of the Company’s trading account, which consists of option 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 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: 2017 2016 Option contracts $ 166,945 $ (83,753 ) Future contracts (377,807 ) 218,475 Commodities due (to) from broker $ (210,862 ) $ 134,722 The Company classifies its options and future contracts as trading securities and accordingly, unrealized holding gains and losses are included in earnings. At October 31, 2017, the Company held 145 futures contracts (generally with terms of three to four months) for the purchase of 5,437,500 pounds of green coffee at a weighted average price of $1.31 per pound. The fair market value of coffee applicable to such contracts was $1.25 per pound at that date. At October 31, 2017, the Company did not have any options. At October 31, 2016, the Company held 22 futures contracts (generally with terms of three to four months) for the purchase of 825,000 pounds of green coffee at a weighted average price of $1.45 per pound. The fair market value of coffee applicable to such contracts was $1.64 per pound at that date. At October 31, 2016, the Company did not have any options. Included in cost of sales for the years ended October 31, 2017 and 2016, the Company recorded realized and unrealized gains and losses respectively, on these contracts as follows: Year Ended October 31, 2017 2016 Gross realized gains $ 1,655,269 $ 1,443,046 Gross realized (losses) (1,636,487 ) (1,000,976 ) Unrealized gains (losses) (345,584 ) 618,558 Total $ (326,802 ) $ 1,060,628 GOODWILL AND TRADEMARKS: The Company has determined that its goodwill and trademarks, which consist of product lines, trade names and packaging designs have an indefinite useful life. The value of the goodwill and trademarks was allocated based on an independent valuation. Goodwill and trademarks are not amortized but are assigned to a specific reporting unit or asset class and tested for impairment at least annually or upon the occurrence of an event or when circumstances indicate that the reporting unit’s carrying amount of goodwill and trademarks is greater than its fair value. As of October 31, 2017 and 2016, the Company has determined by using a qualitative assessment that an impairment did not exist. In 2011, the Company adopted Financial Accounting Standard ASB ASU 2011-08 Intangibles – Goodwill and Other – Testing Goodwill for Impairment, which allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendment includes a number of events and circumstances for an entity to consider in conducting the qualitative assessment. CUSTOMER LIST AND RELATIONSHIPS: Customer list and relationships consist of a specific customer lists and customer contracts obtained by the Company in the acquisition of OPTCO, Comfort Foods and Sonofresco which are being amortized on the straight-line method over their estimated useful life of twenty years. ADVERTISING: The Company expenses the cost of advertising and promotion as incurred. Advertising costs charged to operations totaled $243,658 and $170,774 for the years ended October 31, 2017 and 2016, respectively. 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. Deferred tax assets and liabilities are individually classified as current or non-current based on their characteristics. 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. EARNINGS PER SHARE: 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 5,858,376 and 6,082,777 for the years ended October 31, 2017 and 2016, respectively. FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amounts of cash, accounts receivable, notes receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The carrying amount of the bank line of credit borrowings approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar remaining maturities. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instruments when available. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. REVENUE RECOGNITION: The Company recognizes revenue in accordance with the authoritative guidance. Revenue is recognized at the point title and risk of ownership transfers to its customers upon the Company’s shippers taking possession of the goods at the time of shipment because i) title passes in accordance with the terms of the Company’s purchase orders and with its agreements with its customers, ii) any risk of loss is covered by the Company’s 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 to its customers. Returns: The Company does not accept returns for damaged goods on packaged coffee and usable green coffee, as the customer takes possession of our product at the point of shipment. In the event a customer claims receipt of damaged goods, the Company, acting as an agent on behalf of the customer, may file a claim for reimbursement with the shipper. The Company is not obligated or required to act as an agent on behalf of its customers, but may make the business decision to do so as a convenience to its customers. The shipper keeps the damaged product. The Company will then ship a completely new order to the customer once a claim has been filed and the Company receives reimbursement or credit from the shipper for the initial shipment. The Company does evaluate the need, if any, of an accrual for returns for damaged goods. To date, returns for damaged goods have been immaterial. The Company estimates that, based on historical trends, that future returns for damaged goods should also be immaterial. In the event that the Company ships an incorrect order or has returns for short dated product, the Company will accept those two types of items back as returns. The amount for these two types of returns are estimated, accrued and recognized at the date of sale. These amounts are included in the determination of net sales. Slotting fees: Certain retailers require the payment of slotting fees in order to obtain space for the Company’s products on the retailer’s store shelves. The cost of these fees are estimated, accrued and recognized at the earlier of the date cash is paid or a liability to the retailer is created. The amounts are included in the determination of net sales. Sales discounts: The amount of sales discounts are estimated, accrued and recognized at the date of the sale. These amounts are included in the determination of net sales. Volume-based incentives: These incentives typically involve rebates or refunds of a specific amount of cash consideration that are redeemable only if the reseller completes a specified cumulative level of sales transactions. Under incentive programs of this nature, the Company estimates and accrues the cost of the rebate when it is taken by the reseller. These amounts are included in the determination of net sales. Cooperative advertising: Under these arrangements, the Company will agree to reimburse the reseller for a portion of the costs incurred by the reseller to advertise and promote certain of the Company’s products. The Company estimates, accrues and recognizes the cost of cooperative advertising programs in the period in which the advertising and promotional activity first takes place. The costs of these incentives are included in advertising expense. SHIPPING AND HANDLING FEES AND COSTS: Revenue earned from shipping and handling fees is reflected in net sales. Costs associated with shipping product to customers aggregating approximately $2,412,000 and $1,506,000 for the years ended October 31, 2017 and 2016, respectively, is included in selling and administrative expenses. CONCENTRATION OF RISK: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions and brokerage firms. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At October 31, 2017 and 2016, the Company had approximately $176,000 and $1,539,429 in excess of FDIC insured limits, respectively. The accounts at the brokerage firm contain cash and securities. Balances are insured up to $500,000, with a limit of $100,000 for cash, by the Securities Investor Protection Corporation (SIPC). At October 31, 2017 and 2016, the Company had approximately $1,122,000 and $348,041 in excess of SIPC insured limits, respectively. See Note 10 for concentration of risks with respect to trade receivables and purchases from accounts payable vendors. OPERATING LEASES: The Company has operating lease agreements for its corporate office and warehouses, some of which contain provisions for future rent increases or periods in which rent payments are abated. Operating leases which provide for lease payments that vary materially from the straight-line basis are adjusted for financial accounting purposes to reflect rental income or expense on the straight-line basis in accordance with the authoritative guidance issued by the FASB. The excess of straight-line rent over actual payments by the Company of $240,379 and $231,216 is included as deferred rent payable as of October 31, 2017 and 2016, respectively. EQUITY METHOD OF ACCOUNTING: Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an Investee depends on an evaluation of several factors including, among others, representation on the Investee company’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the Investee company. Under the equity method of accounting, an Investee company’s accounts are not reflected within the Company’s Consolidated Balance Sheets and Consolidated Statements of Income; however, the Company’s share of the earnings or losses of the Investee company is reflected in the caption “Loss from equity method investments” in the Consolidated Statements of Income. The Company’s carrying value in an equity method Investee company is reflected in the caption “Equity method investments” in the Company’s Consolidated Balance Sheets. The Company’s investment in a company that is accounted for on the equity method of accounting consist of the following: (1) 20% interest in Healthwise Gourmet Coffees, LLC, a distributor of low acidity coffees. The investments in this company amounted to $100,000. The loss recognized amounted to $955 and $972 for the years ended October 31, 2017 and 2016, respectively. The net value of this investment as presented on our consolidated balance sheet at October 31, 2017 and 2016 was $94,643 and $95,598, respectively. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements Affecting the Company | 12 Months Ended |
Oct. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Pronouncements Affecting the Company | NOTE 3 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY: The FASB has issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory,” which applies to inventory that is measured using first-in, first-out (“FIFO”) or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out (“LIFO”). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting this guidance. The FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Nonpublic business entities should apply the amendments for fiscal years beginning after December 15, 2019 (i.e., January 1, 2020, for a calendar year entity), and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted for all public business entities and all nonpublic business entities upon issuance. The Company is currently evaluating the impact of adopting this guidance. In May 2014 the FASB issued ASU 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers - Deferral of the Effective Date Principal versus Agent Considerations Identifying Performance Obligations and Licensing Narrow-Scope Improvements and Practical Expedients, In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features, II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” which addresses narrow issues identified as a result of the complexity associated with applying generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity. Part I of this Update addresses the complexity of accounting for certain financial instruments with down round features. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this Update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. These amendments in Part I of this update are effective for annual and interim periods beginning after December 15, 2018, early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part I of this Update should be applied in either of the following ways: (1) Retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the statement of financial position as of the beginning of the first fiscal year and interim period(s) in which the pending content that links to this paragraph is effective. (2) Retrospectively to outstanding financial instruments with a down round feature for each prior reporting period presented in accordance with the guidance on accounting changes in paragraphs 250-10-45-5 through 45-10. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. |
Inventories
Inventories | 12 Months Ended |
Oct. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 4 - INVENTORIES: Inventories at October 31, 2017 and 2016 consisted of the following: 2017 2016 Packed coffee $ 2,242,714 $ 1,804,633 Green coffee 12,317,394 11,434,024 Roaster parts 286,515 210,007 Packaging supplies 1,463,949 827,626 Totals $ 16,310,572 $ 14,276,290 |
Formation of Subsidiary
Formation of Subsidiary | 12 Months Ended |
Oct. 31, 2017 | |
Formation Of Subsidiary | |
Formation of Subsidiary | NOTE 5 - FORMATION OF SUBSIDIARY: On June 23, 2016, the Company formed a wholly-owned subsidiary named Sonofresco, LLC a Delaware limited liability company. Pursuant to the terms of an Agreement for Purchase and Sale of Assets dated June 23, 2016 (the “SONO Agreement”), by and among the Company, Coffee Kinetics LLC, a Washington limited liability company (the “Seller”), the members of the Seller and SONO (the “Buyer”), the Company, through its wholly-owned subsidiary SONO, purchased substantially all the assets, including equipment, inventory, customer list and relationships (the “Assets”) of the Seller. The acquisition was accounted for using the purchase method in accordance with ASC 805, “Business Combinations.” The Buyer purchased the Assets for a purchase price consisting of $819,564 in cash and 38,364 shares of the Company’s redeemable common stock (the “Sono Shares”) with a value of $200,004 (the “Common Stock Payment Amount”) issued on June 29, 2016. As part of the transaction, all of the employees of the Seller became employees of the Buyer. In addition, on June 29, 2016, the Company entered into a one-year advisory agreement (the “Advisory Agreement”), with one of the Seller’s executives (the “Executive”), on an independent contractor basis, to ensure continuity of the business and to continue to operate the business located in Washington. The Advisory Agreement will automatically renew for an additional one year term upon the expiration of the first year term unless terminated by the Company. After completion of the first year term, the Advisory Agreement is subject to renewal by mutual agreement of the parties. Pursuant to the terms of the Advisory Agreement, the Executive is entitled to cash compensation of $50,000 per annum. If the Advisory Agreement is terminated prior to the end of the first year term, the Executive is entitled to receive an additional $50,000 termination fee. If the term of the Advisory Agreement is extended past the first year term, subject to certain exceptions, the Executive will be entitled to the $50,000 termination fee upon termination of the Advisory Agreement. The following table summarizes the estimated fair value of the assets and liabilities assumed at acquisition: Assets acquired: Accounts receivable $ 84,142 Inventory 269,565 Equipment 40,000 Customer list 120,000 Goodwill 577,905 Less: liabilities assumed (72,044 ) Net assets acquired: $ 1,019,568 Purchase of assets funded by: Cash paid $ 819,564 Redeemable Common Stock 200,004 $ 1,019,568 Pursuant to the terms of the Sono Agreement, the value of the Sono Shares was based on the three day average of the closing price of the Company’s common stock for the three trading days immediately prior to June 23, 2016. In addition, pursuant to the terms of the Sono Agreement, during the twelve month period commencing on June 29, 2016 (the “Closing Date”), if Seller informs Buyer of its desire to sell all, but not less than all of the Sono Shares to the Company, Buyer agrees to repurchase all but not less than all of the Sono Shares at the Common Stock Payment amount. |
Purchase of Business
Purchase of Business | 12 Months Ended |
Oct. 31, 2017 | |
Business Combinations [Abstract] | |
Purchase of Business | NOTE 6 - PURCHASE OF BUSINESS: Pursuant to the terms of a Stock Purchase Agreement dated February 23, 2017, by and among the Company, Comfort Foods, Inc., a Massachusetts corporation (“CFI”), Stephen J. Beattie (the “Trustee”), as trustee of the Stephen J. Beattie Revocable Trust of 2013 (the “Trust”) and Victor Janovich (together, with the Trustee on behalf of the Trust, the “Sellers”), the Company, acquired all of the outstanding capital stock of CFI. The transaction was accounted for as a business combination and was not a significant acquisition for the Company. The purpose of the transaction was to expand the Company’s presence in the northeast. The Company purchased the shares of capital stock for a purchase price of $2,300,000 in cash, subject to the holdback of $25,000 for a six month period following the consummation of the transaction to secure the Sellers’ indemnification obligations. In addition, immediately following consummation of the transaction, the Company also paid all of the existing bank debt of CFI, totaling approximately $605,173. As part of the transaction, the employees of CFI remained employees of CFI, with the exception of Stephen Beattie, CFI’s then Chief Executive Officer. Mr. Beattie entered into an advisory agreement (the “Advisory Agreement”) with CFI, dated as of February 23, 2017, pursuant to which Mr. Beattie agreed to provide services to CFI on an independent contractor basis, to ensure continuity of the business and its operations in Massachusetts. The initial term of the Advisory Agreement commenced on April 1, 2017 and was set to expire on December 31, 2017, unless terminated earlier in accordance with the terms and conditions of the Advisory Agreement. On September 6, 2017, the Company terminated the Advisory Agreement. Pursuant to the terms of the Advisory Agreement, Mr. Beattie was paid $5,000 per month. The following table summarizes the assets purchased and liabilities assumed: Assets acquired: Accounts receivable $ 584,918 Inventory 1,116,906 Prepaid expenses 32,681 Equipment 229,597 Customer List 170,000 Tradename 640,000 Other intangible assets 331,124 Goodwill 388,378 Security deposit 26,551 Less: liabilities assumed (626,880 ) Net assets acquired: $ 2,893,275 Purchase of assets funded by: Cash paid $ 2,893,275 The operations of CFI have been included in the Company’s consolidated statement of operations since the date of the acquisition on February 23, 2017. Goodwill generated from the acquisition is not deductible for tax purposes. Proforma information is not required due to immateriality of the amounts. |
Machinery and Equipment
Machinery and Equipment | 12 Months Ended |
Oct. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Machinery and Equipment | NOTE 7 - MACHINERY AND EQUIPMENT: Machinery and equipment at October 31, 2017 and 2016 consisted of the following: Estimated Useful Life 2017 2016 Improvements 15-30 years $ 202,285 $ 202,285 Machinery and equipment 7 years 6,809,944 6,004,156 Furniture and fixtures 7 years 985,008 883,250 7,997,237 7,089,691 Less, accumulated depreciation 5,557,899 4,819,828 $ 2,439,338 $ 2,269,863 Depreciation expense totaled $740,043 and $578,572 for the years ended October 31, 2017 and 2016, respectively. |
Line of Credit
Line of Credit | 12 Months Ended |
Oct. 31, 2017 | |
Debt Disclosure [Abstract] | |
Line of Credit | NOTE 8 - 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”) with Sterling, which consolidated the Company Financing Agreement and the OPTCO Financing Agreement. Pursuant to the A&R Loan Agreement, the terms of each of the Company Financing Agreement and the OPTCO Financing Agreement were amended and restated to, among other things: (i) provide for a new Maturity Date of February 28, 2018; (ii) consolidate the principal amounts of the Company Financing Agreement and the OPTCO Financing Agreement to provide for a maximum principal amount limit of $12,000,000 for the Borrowers, collectively, provided that Also on April 25, 2017, SONO and CFI (collectively referred to herein as the “Guarantors”), entered into a Guaranty Agreement (the “Guaranty Agreement”) in connection with the Loan Agreement. The Guaranty Agreement was provided as an inducement to Sterling to extend credit to Borrowers in exchange for the Guarantors’ unconditional guarantee of the payment and performance obligations of the Borrowers under the Loan Agreement, as further defined in the Guaranty Agreement. Each of the Company 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 Loan Facility also requires that we maintain a minimum working capital at all times, and the A&R Loan Agreement requires that the Borrowers, on a consolidated basis, maintain a minimum working capital at all times and achieve a minimum net profit amount as of fiscal year end during the term of the A&R Loan Agreement. The Company and OPTCO, as applicable were in compliance with all required financial covenants at October 31, 2017 and 2016. Each of the Company Loan Facility and the A&R Loan Agreement is secured by all tangible and intangible assets of the Company. Other than as amended and restated by the A&R Loan Agreement, the Company Financing Agreement and the OPTCO Financing Agreement remains in full force and effect. As of October 31, 2017 and 2016, the outstanding balance under the bank line of credit was $8,407,626 and $6,958,375, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 9 - INCOME TAXES: The Company’s provision for income taxes in 2017 and 2016 consisted of the following: 2017 2016 Current Federal $ 392,354 $ 219,562 State and local 35,717 155,083 428,071 374,645 Deferred Federal (199,550 ) 941,150 State and local 15,575 50,125 (183,975 ) 991,275 Income tax (benefit) expense $ 244,096 $ 1,365,920 A reconciliation of the difference between the expected income tax rate using the statutory U.S. federal tax rate and the Company’s effective tax rate is as follows: 2017 2016 Tax at the federal statutory rate of 34% $ 241,862 $ 1,263,427 Other permanent differences (21,289 ) (32,944 ) State and local tax, net of federal 23,523 135,437 Provision for income taxes $ 244,096 $ 1,365,920 Effective income tax rate 34 % 37 % The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities as of October 31, 2017 and 2016 are as follows: 2017 2016 Current deferred tax assets: Accounts receivable $ 57,904 $ 67,034 Unrealized loss 138,963 Inventory 142,881 64,384 Total current deferred tax asset $ 339,748 $ 131,418 Non-current deferred tax assets: Deferred rent 96,659 107,635 Deferred compensation 196,443 227,947 Total non-current deferred tax asset $ 293,102 $ 335,582 Total deferred tax asset $ 632,850 $ 467,000 Current deferred tax liability: Unrealized gain $ $ 49,873 Non-current deferred tax liability: Intangible assets acquired 387,982 Fixed assets 534,800 $ 503,052 Total deferred tax liabilities $ 922,782 $ 552,925 A valuation allowance was not provided at October 31, 2017 or 2016. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are expected to be deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced. As of October 31, 2017 and 2016, 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 October 31, 2017 and 2016, 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, Michigan, New Jersey, New York, New York City, Virginia, Texas, Rhode Island, South Carolina, and Oregon state tax returns. The Company’s federal income tax return is no longer subject to examination by the federal taxing authority for years before fiscal 2014. 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 2011. The Company’s Oregon, New York, Kansas, South Carolina, Rhode Island, Connecticut and Michigan and Texas income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2012. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Oct. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 10 - COMMITMENTS AND CONTINGENCIES: OPERATING LEASES: In February 2004, the Company entered into a lease for office and warehouse space in La Junta City, Colorado. This lease, which is at a monthly rental of $8,341 beginning January 2005, expires on January 31, 2024. Rent charged to operations amounted to $95,504 for the years ended October 31, 2017 and 2016. In October 2008, the Company entered into a lease for office and warehouse space in Staten Island, NY. This lease, which is at a monthly rental beginning November 2008, expires on October 31, 2023 and includes annual rent increases. Rent charged to operations amounted to $143,171 for the years ended October 31, 2017 and 2016. The Company also uses a variety of independent, bonded commercial warehouses to store its green coffee beans. In March 2015, the Company entered into a lease for office space in Vancouver, WA. This lease, which is at a monthly rental beginning April 1, 2015, expired on March 31, 2017. The lease was extended, effective as of April 1, 2017 and expiring on March 31, 2019. Rent charged to operations amounted to $37,130 and $37,745 for the years ended October 31, 2017 and 2016, respectively. In December 2016, the Company entered into a lease for office and warehouse space in Burlington, WA. This lease, which is at a monthly rental beginning December 1, 2016, expired on December 31, 2017. The lease was extended, effective January 1, 2018 and expiring on December 31, 2018. Rent charged to operations amounted to $43,988 for the year ended October 31, 2017. In April 2017, the Company entered into a lease for office and warehouse space in North Andover, MA. This lease, which is at a monthly rental beginning April 1, 2017, expires on March 31, 2027 and includes charges for common areas and utilities. Rent charged to operations amounted to $172,627 for the year ended October 31, 2017. The aggregate minimum future lease payments as of October 31, 2017 for each of the next five years and thereafter are as follows: October 31, 2018 $ 492,474 2019 450,454 2020 438,820 2021 447,342 2022 456,290 Thereafter 1,065,701 $ 3,351,081 401 (K) RETIREMENT PLAN: The Company has a 401(k) Retirement Plan, which covers all the full time employees who have completed one year of service and have reached their 21 st |
Economic Dependency
Economic Dependency | 12 Months Ended |
Oct. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Economic Dependency | NOTE 11 - ECONOMIC DEPENDENCY: Approximately 25% of the Company’s sales were derived from four customers during the year ended October 31, 2017. These customers also accounted for approximately $6,175,000 or 46% of the Company’s accounts receivable balance at October 31, 2017. Approximately 29% of the Company’s sales were derived from one customer during the year ended October 31, 2016. This customer also accounted for approximately $3,661,000 or 27% of the Company’s accounts receivable balance at October 31, 2016. 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 and other allowances that management believes will adequately provide for credit losses. For the year ended October 31, 2017, approximately 28% of the Company’s purchases were from five vendors. These vendors accounted for approximately $145,000 of the Company’s accounts payable at October 31, 2017. For the year ended October 31, 2016, approximately 43% of the Company’s purchases were from four vendors. These vendors accounted for approximately $609,000 of the Company’s accounts payable at October 31, 2016. 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 | 12 Months Ended |
Oct. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12 - RELATED PARTY TRANSACTIONS: The Company has engaged its 40% partner in Generation Coffee Company, LLC as an outside contractor (the “Partner”). Included in contract labor expense, which is a component of cost of sales, are expenses incurred from the Partner during the years ended October 31, 2017 and 2016 of $427,931 and $459,345, respectively. An employee of one of the top two vendors is a director of the Company. Purchases from that vendor totaled approximately $6,700,000 and $8,475,000 for the years ended October 31, 2017 and 2016, respectively. The corresponding accounts payable balance to this vendor was approximately $72,000 and $237,000 at October 31, 2017 and 2016, respectively. 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: Andrew Gordon, the CEO. Within the plan guidelines, this employee is deferring a portion of his current salary and bonus. The deferred compensation payable represents the liability due to an officer of the Company. The deferred compensation liability at October 31, 2017 and 2016 was $488,529 and $489,668, respectively. Deferred compensation expenses included in officers’ salaries were $0 during the years ended October 31, 2017 and 2016, respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Oct. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 13 - STOCKHOLDERS’ EQUITY a. Treasury Stock b. Share Repurchase Program. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Oct. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 14 - FAIR VALUE MEASUREMENTS: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not adjusted for transaction costs. The guidance also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels giving the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3) as described below: Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible by the Company; Level 2 Inputs – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; Level 3 Inputs – Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants. The Company determines fair values for its investment assets as follows: Investments at fair value consist of commodity securities and deferred compensation plan assets. The Company maintains a deferred compensation plan. The fair value of the plan assets are classified within Level 1 as the assets are valued using quoted prices in active markets. The assets are included with Deposits and other assets in the accompanying balance sheets. Additional information related to the Company’s deferred compensation plan is disclosed in Note 11. The Company’s commodity securities are classified within Level 2 and include coffee futures and options contracts. To determine fair value, the Company utilizes the market approach valuation technique for the coffee futures and options contracts. The Company uses Level 2 inputs that are based on market data of similar instruments that are in observable markets. All commodities on the balance sheet are recorded at fair value with changes in fair value included in earnings. The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Fair Value Measurements as of October 31, 2017 Total Level 1 Level 2 Level 3 Assets: Money market 488,529 488,529 – – Commodities – Options 166,945 166,945 Total Assets $ 655,474 $ 488,529 $ 166,945 – Liabilities: Commodities – Futures (377,807 ) – (377,807 ) – Total Liabilities $ (377,807 ) – $ (377,807 ) – Fair Value Measurements as of October 31, 2016 Total Level 1 Level 2 Level 3 Assets: Money market 489,826 489,826 – – Commodities – Futures 218,475 218,475 Total Assets $ 708,301 $ 489,826 $ 218,475 – Liabilities: Commodities – Options (83,753 ) – (83,753 ) – Total Liabilities $ (83,753 ) – $ (83,753 ) – |
Subsequent Events
Subsequent Events | 12 Months Ended |
Oct. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 15 - 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. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION: The consolidated financial statements include the accounts of the Company, Organic Products Trading Company, LLC (“OPTCO”), Sonofresco LLC (“SONO”), Comfort Foods, Inc. (“CFI”) and Generations Coffee Company, LLC (“GCC”). All significant inter-company balances and transactions have been eliminated in consolidation. |
Use of Estimates | USE OF ESTIMATES: The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Significant estimates include allowance for uncollectible accounts receivable and reserves, inventory obsolescence, depreciation, intangible asset valuations and useful lives, taxes, contingencies, and valuation of financial instruments. These estimates may be adjusted as more current information becomes available, and any adjustment could have a significant impact on recorded amounts. |
Cash | CASH: Cash consists primarily of unrestricted cash on deposit at financial institutions and brokerage firms. |
Prepaid Green Coffee | PREPAID GREEN COFFEE: Prepaid coffee is an item that emanates from OPTCO. The balance represents advance payments made by OPTCO to several coffee growing cooperatives for the purchase of green coffee. Interest is charged to the cooperatives for these advances. Interest earned was $19,430 and $41,176 as of October 31, 2017 and 2016, respectively. The prepaid coffee balance was $171,350 and $435,577 as of October 31, 2017 and 2016, respectively. |
Accounts Receivable | ACCOUNTS RECEIVABLE: Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Past due balances over 60 days and other higher risk amounts are reviewed individually for collectability. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. 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 the Company from its customers. The allowances are summarized as follows: 2017 2016 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 |
Inventories | INVENTORIES: Inventories are stated at the lower of cost (First in, first out basis) or net realizable value, including provisions for obsolescence commensurate with known or estimated exposures. There are no reserves for obsolescence as of October 31, 2017 and 2016. |
Machinery and Equipment | MACHINERY AND EQUIPMENT: Machinery and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Purchases of machinery and equipment and additions and betterments which substantially extend the useful life of an asset are capitalized at cost. Expenditures which do not materially prolong the normal useful life of an asset are charged to operations as incurred. The Company also provides for amortization of leasehold improvements. |
Commodities Held by Broker | COMMODITIES HELD BY BROKER: The commodities held at broker represent the market value of the Company’s trading account, which consists of option 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 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: 2017 2016 Option contracts $ 166,945 $ (83,753 ) Future contracts (377,807 ) 218,475 Commodities due (to) from broker $ (210,862 ) $ 134,722 The Company classifies its options and future contracts as trading securities and accordingly, unrealized holding gains and losses are included in earnings. At October 31, 2017, the Company held 145 futures contracts (generally with terms of three to four months) for the purchase of 5,437,500 pounds of green coffee at a weighted average price of $1.31 per pound. The fair market value of coffee applicable to such contracts was $1.25 per pound at that date. At October 31, 2017, the Company did not have any options. At October 31, 2016, the Company held 22 futures contracts (generally with terms of three to four months) for the purchase of 825,000 pounds of green coffee at a weighted average price of $1.45 per pound. The fair market value of coffee applicable to such contracts was $1.64 per pound at that date. At October 31, 2016, the Company did not have any options. Included in cost of sales for the years ended October 31, 2017 and 2016, the Company recorded realized and unrealized gains and losses respectively, on these contracts as follows: Year Ended October 31, 2017 2016 Gross realized gains $ 1,655,269 $ 1,443,046 Gross realized (losses) (1,636,487 ) (1,000,976 ) Unrealized gains (losses) (345,584 ) 618,558 Total $ (326,802 ) $ 1,060,628 |
Goodwill and Trademarks | GOODWILL AND TRADEMARKS: The Company has determined that its goodwill and trademarks, which consist of product lines, trade names and packaging designs have an indefinite useful life. The value of the goodwill and trademarks was allocated based on an independent valuation. Goodwill and trademarks are not amortized but are assigned to a specific reporting unit or asset class and tested for impairment at least annually or upon the occurrence of an event or when circumstances indicate that the reporting unit’s carrying amount of goodwill and trademarks is greater than its fair value. As of October 31, 2017 and 2016, the Company has determined by using a qualitative assessment that an impairment did not exist. In 2011, the Company adopted Financial Accounting Standard ASB ASU 2011-08 Intangibles – Goodwill and Other – Testing Goodwill for Impairment, which allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under this amendment, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendment includes a number of events and circumstances for an entity to consider in conducting the qualitative assessment. |
Customer List and Relationships | CUSTOMER LIST AND RELATIONSHIPS: Customer list and relationships consist of a specific customer lists and customer contracts obtained by the Company in the acquisition of OPTCO, Comfort Foods and Sonofresco which are being amortized on the straight-line method over their estimated useful life of twenty years. |
Advertising | ADVERTISING: The Company expenses the cost of advertising and promotion as incurred. Advertising costs charged to operations totaled $243,658 and $170,774 for the years ended October 31, 2017 and 2016, respectively. |
Income Taxes | 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. Deferred tax assets and liabilities are individually classified as current or non-current based on their characteristics. 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. |
Earnings Per Share | EARNINGS PER SHARE: 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 5,858,376 and 6,082,777 for the years ended October 31, 2017 and 2016, respectively. |
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amounts of cash, accounts receivable, notes receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The carrying amount of the bank line of credit borrowings approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar remaining maturities. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instruments when available. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Revenue Recognition | REVENUE RECOGNITION: The Company recognizes revenue in accordance with the authoritative guidance. Revenue is recognized at the point title and risk of ownership transfers to its customers upon the Company’s shippers taking possession of the goods at the time of shipment because i) title passes in accordance with the terms of the Company’s purchase orders and with its agreements with its customers, ii) any risk of loss is covered by the Company’s 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 to its customers. Returns: The Company does not accept returns for damaged goods on packaged coffee and usable green coffee, as the customer takes possession of our product at the point of shipment. In the event a customer claims receipt of damaged goods, the Company, acting as an agent on behalf of the customer, may file a claim for reimbursement with the shipper. The Company is not obligated or required to act as an agent on behalf of its customers, but may make the business decision to do so as a convenience to its customers. The shipper keeps the damaged product. The Company will then ship a completely new order to the customer once a claim has been filed and the Company receives reimbursement or credit from the shipper for the initial shipment. The Company does evaluate the need, if any, of an accrual for returns for damaged goods. To date, returns for damaged goods have been immaterial. The Company estimates that, based on historical trends, that future returns for damaged goods should also be immaterial. In the event that the Company ships an incorrect order or has returns for short dated product, the Company will accept those two types of items back as returns. The amount for these two types of returns are estimated, accrued and recognized at the date of sale. These amounts are included in the determination of net sales. Slotting fees: Certain retailers require the payment of slotting fees in order to obtain space for the Company’s products on the retailer’s store shelves. The cost of these fees are estimated, accrued and recognized at the earlier of the date cash is paid or a liability to the retailer is created. The amounts are included in the determination of net sales. Sales discounts: The amount of sales discounts are estimated, accrued and recognized at the date of the sale. These amounts are included in the determination of net sales. Volume-based incentives: These incentives typically involve rebates or refunds of a specific amount of cash consideration that are redeemable only if the reseller completes a specified cumulative level of sales transactions. Under incentive programs of this nature, the Company estimates and accrues the cost of the rebate when it is taken by the reseller. These amounts are included in the determination of net sales. Cooperative advertising: Under these arrangements, the Company will agree to reimburse the reseller for a portion of the costs incurred by the reseller to advertise and promote certain of the Company’s products. The Company estimates, accrues and recognizes the cost of cooperative advertising programs in the period in which the advertising and promotional activity first takes place. The costs of these incentives are included in advertising expense. |
Shipping and Handling Fees and Costs | SHIPPING AND HANDLING FEES AND COSTS: Revenue earned from shipping and handling fees is reflected in net sales. Costs associated with shipping product to customers aggregating approximately $2,412,000 and $1,506,000 for the years ended October 31, 2017 and 2016, respectively, is included in selling and administrative expenses. |
Concentration of Risk | CONCENTRATION OF RISK: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions and brokerage firms. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At October 31, 2017 and 2016, the Company had approximately $176,000 and $1,539,429 in excess of FDIC insured limits, respectively. The accounts at the brokerage firm contain cash and securities. Balances are insured up to $500,000, with a limit of $100,000 for cash, by the Securities Investor Protection Corporation (SIPC). At October 31, 2017 and 2016, the Company had approximately $1,122,000 and $348,041 in excess of SIPC insured limits, respectively. See Note 10 for concentration of risks with respect to trade receivables and purchases from accounts payable vendors. |
Operating Leases | OPERATING LEASES: The Company has operating lease agreements for its corporate office and warehouses, some of which contain provisions for future rent increases or periods in which rent payments are abated. Operating leases which provide for lease payments that vary materially from the straight-line basis are adjusted for financial accounting purposes to reflect rental income or expense on the straight-line basis in accordance with the authoritative guidance issued by the FASB. The excess of straight-line rent over actual payments by the Company of $240,379 and $231,216 is included as deferred rent payable as of October 31, 2017 and 2016, respectively. |
Equity Method of Accounting | EQUITY METHOD OF ACCOUNTING: Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an Investee depends on an evaluation of several factors including, among others, representation on the Investee company’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the Investee company. Under the equity method of accounting, an Investee company’s accounts are not reflected within the Company’s Consolidated Balance Sheets and Consolidated Statements of Income; however, the Company’s share of the earnings or losses of the Investee company is reflected in the caption “Loss from equity method investments” in the Consolidated Statements of Income. The Company’s carrying value in an equity method Investee company is reflected in the caption “Equity method investments” in the Company’s Consolidated Balance Sheets. The Company’s investment in a company that is accounted for on the equity method of accounting consist of the following: (1) 20% interest in Healthwise Gourmet Coffees, LLC, a distributor of low acidity coffees. The investments in this company amounted to $100,000. The loss recognized amounted to $955 and $972 for the years ended October 31, 2017 and 2016, respectively. The net value of this investment as presented on our consolidated balance sheet at October 31, 2017 and 2016 was $94,643 and $95,598, respectively. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Accounts Receivable | The allowances are summarized as follows: 2017 2016 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 |
Schedule of Commodities Held by Broker | The Company has open position contracts held by the broker, which are summarized as follows: 2017 2016 Option contracts $ 166,945 $ (83,753 ) Future contracts (377,807 ) 218,475 Commodities due (to) from broker $ (210,862 ) $ 134,722 |
Schedule of Realized and Unrealized Gains and Losses on Contracts | Included in cost of sales for the years ended October 31, 2017 and 2016, the Company recorded realized and unrealized gains and losses respectively, on these contracts as follows: Year Ended October 31, 2017 2016 Gross realized gains $ 1,655,269 $ 1,443,046 Gross realized (losses) (1,636,487 ) (1,000,976 ) Unrealized gains (losses) (345,584 ) 618,558 Total $ (326,802 ) $ 1,060,628 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories at October 31, 2017 and 2016 consisted of the following: 2017 2016 Packed coffee $ 2,242,714 $ 1,804,633 Green coffee 12,317,394 11,434,024 Roaster parts 286,515 210,007 Packaging supplies 1,463,949 827,626 Totals $ 16,310,572 $ 14,276,290 |
Formation of Subsidiary (Tables
Formation of Subsidiary (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Formation Of Subsidiary | |
Schedule of Fair value of Assets and Liabilities Assumed at Acquisition | The following table summarizes the estimated fair value of the assets and liabilities assumed at acquisition: Assets acquired: Accounts receivable $ 84,142 Inventory 269,565 Equipment 40,000 Customer list 120,000 Goodwill 577,905 Less: liabilities assumed (72,044 ) Net assets acquired: $ 1,019,568 Purchase of assets funded by: Cash paid $ 819,564 Redeemable Common Stock 200,004 $ 1,019,568 |
Purchase of Business (Tables)
Purchase of Business (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Business Combinations [Abstract] | |
Summary of Assets Purchased and Liabilities Assumed | The following table summarizes the assets purchased and liabilities assumed: Assets acquired: Accounts receivable $ 584,918 Inventory 1,116,906 Prepaid expenses 32,681 Equipment 229,597 Customer List 170,000 Tradename 640,000 Other intangible assets 331,124 Goodwill 388,378 Security deposit 26,551 Less: liabilities assumed (626,880 ) Net assets acquired: $ 2,893,275 Purchase of assets funded by: Cash paid $ 2,893,275 |
Machinery and Equipment (Tables
Machinery and Equipment (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Machinery and Equipment | Machinery and equipment at October 31, 2017 and 2016 consisted of the following: Estimated Useful Life 2017 2016 Improvements 15-30 years $ 202,285 $ 202,285 Machinery and equipment 7 years 6,809,944 6,004,156 Furniture and fixtures 7 years 985,008 883,250 7,997,237 7,089,691 Less, accumulated depreciation 5,557,899 4,819,828 $ 2,439,338 $ 2,269,863 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Tax | The Company’s provision for income taxes in 2017 and 2016 consisted of the following: 2017 2016 Current Federal $ 392,354 $ 219,562 State and local 35,717 155,083 428,071 374,645 Deferred Federal (199,550 ) 941,150 State and local 15,575 50,125 (183,975 ) 991,275 Income tax (benefit) expense $ 244,096 $ 1,365,920 |
Schedule of Effective Income Tax Rate | A reconciliation of the difference between the expected income tax rate using the statutory U.S. federal tax rate and the Company’s effective tax rate is as follows: 2017 2016 Tax at the federal statutory rate of 34% $ 241,862 $ 1,263,427 Other permanent differences (21,289 ) (32,944 ) State and local tax, net of federal 23,523 135,437 Provision for income taxes $ 244,096 $ 1,365,920 Effective income tax rate 34 % 37 % |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities as of October 31, 2017 and 2016 are as follows: 2017 2016 Current deferred tax assets: Accounts receivable $ 57,904 $ 67,034 Unrealized loss 138,963 Inventory 142,881 64,384 Total current deferred tax asset $ 339,748 $ 131,418 Non-current deferred tax assets: Deferred rent 96,659 107,635 Deferred compensation 196,443 227,947 Total non-current deferred tax asset $ 293,102 $ 335,582 Total deferred tax asset $ 632,850 $ 467,000 Current deferred tax liability: Unrealized gain $ $ 49,873 Non-current deferred tax liability: Intangible assets acquired 387,982 Fixed assets 534,800 $ 503,052 Total deferred tax liabilities $ 922,782 $ 552,925 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimum Future Lease Payments | The aggregate minimum future lease payments as of October 31, 2017 for each of the next five years and thereafter are as follows: October 31, 2018 $ 492,474 2019 450,454 2020 438,820 2021 447,342 2022 456,290 Thereafter 1,065,701 $ 3,351,081 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Oct. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Fair Value Measurements as of October 31, 2017 Total Level 1 Level 2 Level 3 Assets: Money market 488,529 488,529 – – Commodities – Options 166,945 166,945 Total Assets $ 655,474 $ 488,529 $ 166,945 – Liabilities: Commodities – Futures (377,807 ) – (377,807 ) – Total Liabilities $ (377,807 ) – $ (377,807 ) – Fair Value Measurements as of October 31, 2016 Total Level 1 Level 2 Level 3 Assets: Money market 489,826 489,826 – – Commodities – Futures 218,475 218,475 Total Assets $ 708,301 $ 489,826 $ 218,475 – Liabilities: Commodities – Options (83,753 ) – (83,753 ) – Total Liabilities $ (83,753 ) – $ (83,753 ) – |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Details Narrative) | 12 Months Ended | |||
Oct. 31, 2017USD ($)Integer$ / sharesshares | Oct. 31, 2017GBP (£)shares | Oct. 31, 2016USD ($)Integer$ / sharesshares | Oct. 31, 2016GBP (£)shares | |
Interest Income | $ 19,436 | $ 41,176 | ||
Prepaid green coffee | 171,350 | 435,577 | ||
Reserves for obsolescence | ||||
Number of futures contracts | Integer | 145 | 22 | ||
Advertising cost | $ 243,658 | $ 170,774 | ||
Weighted average common shares outstanding: Basic and diluted | shares | 5,858,376 | 5,858,376 | 6,082,777 | 6,082,777 |
Shipping and handling fees | $ 2,412,000 | $ 1,506,000 | ||
Cash excess of FDIC insured limits | 176,000 | 1,539,429 | ||
Cash excess of SIPC insured limits | 1,122,000 | 348,041 | ||
Straight line rent | 240,379 | 231,216 | ||
Investments | 100,000 | |||
Loss on equity method investments | (955) | (973) | ||
Equity method investments | $ 94,643 | $ 95,598 | ||
Healthwise Gourmet Coffees, LLC [Member] | ||||
Equity method investment, ownership percentage | 20.00% | |||
Board of Directors [Member] | ||||
Equity method interest voting securities of investee company | Investee companys board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the Investee company. | Investee companys board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the Investee company. | ||
Pounds [Member] | ||||
Purchase of futures contracts | £ | £ 5,437,500 | £ 825,000 | ||
Futures contracts weighted average price | $ / shares | $ 1.31 | $ 1.45 | ||
Fair market value of futures contract | $ / shares | $ 1.25 | $ 1.64 | ||
Minimum [Member] | ||||
Futures contracts term | 3 months | 3 months | ||
Cash, SIPC insured amount | $ 500,000 | |||
Maximum [Member] | ||||
Futures contracts term | 4 months | 4 months | ||
Cash, SIPC insured amount | $ 100,000 | |||
Improvements [Member] | Minimum [Member] | ||||
Futures contracts term | 3 months | 3 months | ||
Improvements [Member] | Maximum [Member] | ||||
Futures contracts term | 4 months | 4 months |
Summary of Significant Accoun35
Summary of Significant Accounting Policies - Schedule of Accounts Receivable (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Accounting Policies [Abstract] | ||
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 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies - Schedule of Commodities Held by Broker (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Accounting Policies [Abstract] | ||
Option Contracts | $ 166,945 | $ (83,753) |
Future Contracts | (377,807) | 218,475 |
Total Commodities | $ (210,862) | $ 134,722 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Schedule of Realized and Unrealized Gains and Losses on Contracts (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Accounting Policies [Abstract] | ||
Gross realized gains | $ 1,655,269 | $ 1,443,046 |
Gross realized (losses) | (1,636,487) | (1,000,976) |
Unrealized gains (losses) | (345,584) | 618,558 |
Total | $ (326,802) | $ 1,060,628 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Roasters and parts | $ 286,515 | $ 210,007 |
Packaging supplies | 1,463,949 | 827,626 |
Totals | 16,310,572 | 14,276,290 |
Packed Coffee [Member] | ||
Inventory - Coffee | 2,242,714 | 1,804,633 |
Green Coffee [Member] | ||
Inventory - Coffee | $ 12,317,394 | $ 11,434,024 |
Formation of Subsidiary (Detail
Formation of Subsidiary (Details Narrative) - USD ($) | Jun. 29, 2016 | Oct. 31, 2017 | Oct. 31, 2016 |
Purchase price of assets | $ 819,564 | ||
Purchase price of assets, shares | 38,364 | ||
Payments for common stock | $ 200,004 | $ 100,000 | |
Advisory Agreement [Member] | |||
Cash compensation | 50,000 | ||
Termination fee | $ 50,000 |
Formation of Subsidiary - Sched
Formation of Subsidiary - Schedule of Fair value of Assets and Liabilities Assumed at Acquisition (Details) | Oct. 31, 2017USD ($) |
Formation Of Subsidiary Details | |
Accounts receivable | $ 84,142 |
Inventory | 269,565 |
Equipment | 40,000 |
Customer list | 120,000 |
Goodwill | 577,905 |
Less: liabilities assumed | (72,044) |
Net assets acquired: | 1,019,568 |
Cash paid | 819,564 |
Redeemable Common Stock | 200,004 |
Total | $ 1,019,568 |
Purchase of Business (Details N
Purchase of Business (Details Narrative) | 12 Months Ended |
Oct. 31, 2017USD ($) | |
Payment to acquire capital stock of subsidiary | $ 2,300,000 |
Amount holdback to secure the sellers indemnification obligations | 25,000 |
Mr Beattie [Member] | |
Advisory agreement term obligation paid per month | 5,000 |
Comfort Foods, Inc [Member] | |
Payments for bank debt | $ 605,173 |
Purchase of Business - Summary
Purchase of Business - Summary of Assets Purchased and Liabilities Assumed (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Accounts receivable | $ 84,142 | |
Inventory | 269,565 | |
Equipment | 40,000 | |
Other intangible assets | 331,124 | |
Less: liabilities assumed | 72,044 | |
Net assets acquired: | 1,019,568 | |
Comfort Foods, Inc [Member] | ||
Accounts receivable | 584,918 | |
Inventory | 1,116,906 | |
Prepaid expenses | 32,681 | |
Equipment | 229,597 | |
Customer List | 170,000 | |
Tradenames | 640,000 | |
Other intangible assets | 331,124 | |
Goodwill | 388,378 | |
Security deposit | 26,551 | |
Less: liabilities assumed | (626,880) | |
Net assets acquired: | 2,893,275 | |
Cash paid | $ 2,893,275 |
Machinery and Equipment (Detail
Machinery and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 740,043 | $ 578,572 |
Machinery and Equipment - Sched
Machinery and Equipment - Schedule of machinery and equipment (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Improvements | $ 202,285 | $ 202,285 |
Machinery and equipment | 6,004,156 | 6,004,156 |
Furniture and fixtures | 985,008 | 883,250 |
Subtotal | 7,997,237 | 7,089,691 |
Less, accumulated depreciation | 5,557,899 | 4,819,828 |
Total | $ 2,439,338 | $ 2,269,863 |
Machinery and Equipment [Member] | ||
Estimated useful life | 7 years | |
Furniture and Fixtures [Member] | ||
Estimated useful life | 7 years | |
Minimum [Member] | Improvements [Member] | ||
Estimated useful life | 15 years | |
Maximum [Member] | Improvements [Member] | ||
Estimated useful life | 30 years |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | Apr. 25, 2017 | Oct. 31, 2017 | Oct. 31, 2016 |
Bank Line of Credit [Member] | |||
Line of credit, maximum principal amount | $ 8,407,626 | $ 6,958,375 | |
Amended and Restated Loan and Security Agreement [Member] | |||
Line of credit, maximum principal amount | $ 12,000,000 | ||
Amended and Restated Loan and Security Agreement [Member] | Borrowers [Member] | |||
Line of credit expire date | Feb. 28, 2018 | ||
Line of credit, maximum principal amount | $ 3,000,000 | ||
Line of credit interest rate | 85.00% | ||
Amended and Restated Loan and Security Agreement [Member] | Borrowers [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Line of credit interest rate | 2.40% | ||
Prepayment premium percentage | 1.00% | ||
Maximum obligation amount | $ 1,000,000 | ||
Amended and Restated Loan and Security Agreement [Member] | Borrowers [Member] | Accounts Receivable [Member] | |||
Line of credit maximum borrowing capacity | 2,000,000 | ||
Amended and Restated Loan and Security Agreement [Member] | Borrowers [Member] | Accounts Receivable [Member] | OPTCO [Member] | |||
Line of credit maximum borrowing capacity | $ 1,500,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | ||
Accrued interest or penalties |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provision for Income Tax (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Current: Federal | $ 392,354 | $ 219,562 |
Current: State and local | 35,717 | 155,083 |
Total Current | 428,071 | 374,645 |
Deferred: Federal | (199,550) | 941,150 |
Deferred: State and local | 15,575 | 50,125 |
Total Deferred | (183,975) | 991,275 |
Income tax (benefit) expense | $ 244,096 | $ 1,365,920 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Tax at the federal statutory rate of 34% | $ 241,862 | $ 1,263,427 |
Other permanent differences | (21,289) | (32,944) |
State and local tax, net of federal benefit | 23,523 | 135,437 |
Provision for income taxes | $ 244,096 | $ 1,365,920 |
Effective income tax rate | 34.00% | 37.00% |
Income Taxes - Schedule of Ef49
Income Taxes - Schedule of Effective Income Tax Rate (Details) (Parenthetical) | 12 Months Ended |
Oct. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Federal statutory rate | 34.00% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Current deferred tax assets: Accounts receivable | $ 57,904 | $ 67,034 |
Current deferred tax assets: Unrealized loss | 138,963 | |
Current deferred tax assets: Inventory | 142,881 | 64,384 |
Total current deferred tax asset | 339,748 | 81,545 |
Non-current deferred tax assets: Deferred rent | 96,659 | 107,635 |
Non-current deferred tax assets: Deferred compensation | 196,443 | 227,947 |
Total non-current deferred tax asset | 293,102 | 335,582 |
Total deferred tax asset | 632,850 | 467,000 |
Current deferred tax liability: Unrealized gain | 49,873 | |
Non-current deferred tax liability: Intangible assets acquired | 387,982 | |
Non-current deferred tax liability: Fixed assets | 534,800 | 503,052 |
Total deferred tax liabilities | $ 922,782 | $ 552,925 |
Commitment and Contingencies (D
Commitment and Contingencies (Details Narrative) - USD ($) | Apr. 30, 2017 | Dec. 31, 2016 | Mar. 31, 2015 | Oct. 30, 2008 | Feb. 29, 2004 | Oct. 31, 2017 | Oct. 31, 2016 |
Retirement plan description | The Company has a 401(k) Retirement Plan, which covers all the full time employees who have completed one year of service and have reached their 21st birthday. The Company matches 100% of the aggregate salary reduction contribution up to the first 3% of compensation and 50% of aggregate contribution of the next 2% of compensation. | ||||||
Aggregate contribution of retirement plan | $ 71,701 | $ 67,083 | |||||
Colorado [Member] | |||||||
Lease expiration date | Jan. 31, 2024 | ||||||
Monthly rent expenses | $ 8,341 | ||||||
Rent expenses | 95,504 | 95,504 | |||||
Staten Island [Member] | |||||||
Lease expiration date | Oct. 31, 2023 | ||||||
Rent expenses | 143,171 | 143,171 | |||||
Vancouver [Member] | |||||||
Lease expiration date | Mar. 31, 2019 | ||||||
Rent expenses | 37,130 | $ 37,745 | |||||
Burlington [Member] | |||||||
Lease expiration date | Dec. 31, 2018 | ||||||
Rent expenses | 43,988 | ||||||
North Andover [Member] | |||||||
Lease expiration date | Mar. 31, 2027 | ||||||
Rent expenses | $ 17,267 |
Commitment and Contingencies -
Commitment and Contingencies - Schedule of Minimum Future Lease Payments (Details) | Oct. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 492,474 |
2,019 | 450,454 |
2,020 | 438,820 |
2,021 | 447,342 |
2,022 | 456,290 |
Thereafter | 1,065,701 |
Total | $ 3,351,081 |
Economic Dependency (Details Na
Economic Dependency (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Four Customers [Member] | ||
Accounts receivable | $ 6,175,000 | |
Four Customers [Member] | Sales Revenue [Member] | ||
Concentration risk percentage | 25.00% | |
Accounts Receivable [Member] | Sales Revenue [Member] | ||
Concentration risk percentage | 46.00% | 27.00% |
One Customers [Member] | ||
Accounts receivable | $ 3,661,000 | |
One Customers [Member] | Sales Revenue [Member] | ||
Concentration risk percentage | 29.00% | |
Five Vendors [Member] | ||
Concentration risk percentage | 28.00% | |
Accounts payable | $ 145,000 | |
Four Vendors [Member] | ||
Concentration risk percentage | 43.00% | |
Accounts payable | $ 609,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Contract labor expense | $ 427,931 | $ 459,345 |
Purchases from related party vendor | 6,700,000 | 8,475,000 |
Accounts payable from related party vendor | 72,000 | 237,000 |
Deferred compensation liability | 488,529 | 489,668 |
Deferred compensation expenses | $ 0 | $ 0 |
Generations Coffee Company, LLC [Member] | ||
Related party transaction percentage | 40.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | ||||
Oct. 31, 2017 | Oct. 31, 2016 | Sep. 10, 2017 | Sep. 29, 2015 | Jan. 24, 2014 | |
Number of treasury stock shares | 55,667 | 337,269 | |||
Number of treasury stock shares, value | $ 337,269 | $ 1,754,878 | |||
2014 Share Repurchase Program [Member] | |||||
Number of common stock repurchase | 156,415 | 1,000,000 | |||
Number of common stock repurchase value | $ 995,729 | ||||
2015 Share Repurchase Program [Member] | |||||
Number of treasury stock shares | 3,384 | 337,269 | |||
Number of treasury stock shares, value | $ 15,829 | $ 1,754,878 | |||
Number of common stock repurchase | 2,000,000 | 2,000,000 | |||
2017 Share Repurchase Program [Member] | |||||
Number of treasury stock shares | 53,983 | ||||
Number of treasury stock shares, value | $ 239,091 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($) | Oct. 31, 2017 | Oct. 31, 2016 |
Assets: Money market | $ 488,529 | $ 489,826 |
Assets: Commodities- Options | 166,945 | |
Assets: Commodities-Futures | 218,475 | |
Total Assets | 655,474 | 708,301 |
Liabilities: Commodities Options | (83,753) | |
Liabilities: Commodities-Futures | (377,807) | |
Total Liabilities | (377,807) | (83,753) |
Fair Value Inputs Level1 [Member] | ||
Assets: Money market | 482,499 | 489,826 |
Assets: Commodities- Options | ||
Assets: Commodities-Futures | ||
Total Assets | 482,499 | 489,826 |
Liabilities: Commodities Options | ||
Liabilities: Commodities-Futures | ||
Total Liabilities | ||
Fair Value Inputs Level2 [Member] | ||
Assets: Money market | ||
Assets: Commodities- Options | 166,945 | |
Assets: Commodities-Futures | 218,475 | |
Total Assets | 166,945 | 218,475 |
Liabilities: Commodities Options | (83,753) | |
Liabilities: Commodities-Futures | (377,807) | |
Total Liabilities | (377,807) | (83,753) |
Fair Value Inputs Level3 [Member] | ||
Assets: Money market | ||
Assets: Commodities- Options | ||
Assets: Commodities-Futures | ||
Total Assets | ||
Liabilities: Commodities Options | ||
Liabilities: Commodities-Futures | ||
Total Liabilities |