Cover
Cover - USD ($) | 12 Months Ended | ||
Oct. 31, 2021 | Jan. 20, 2022 | Apr. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Oct. 31, 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --10-31 | ||
Entity File Number | 001-32491 | ||
Entity Registrant Name | COFFEE HOLDING CO., INC. | ||
Entity Central Index Key | 0001007019 | ||
Entity Tax Identification Number | 11-2238111 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Address, Address Line One | 3475 Victory Boulevard | ||
Entity Address, City or Town | Staten Island | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10314 | ||
City Area Code | (718) | ||
Local Phone Number | 832-0800 | ||
Title of 12(b) Security | Common Stock, Par Value $0.001 Per Share | ||
Trading Symbol | JVA | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 23,124,267 | ||
Entity Common Stock, Shares Outstanding | 5,708,599 | ||
Documents Incorporated by Reference | Portions of the registrant’s proxy statement for the 2022 annual meeting of stockholders to be filed pursuant to Regulation 14A within 120 days after the registrant’s fiscal year ended October 31, 2021, are incorporated by reference in Part III of this Form 10-K. | ||
ICFR Auditor Attestation Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Oct. 31, 2021 | Oct. 31, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 3,696,275 | $ 2,875,120 |
Accounts receivable, net of allowances of $144,000 for 2021 and 2020 | 9,299,978 | 7,408,905 |
Inventories | 15,961,866 | 17,102,993 |
Due from broker | 725,000 | 657,325 |
Prepaid expenses and other current assets | 542,224 | 490,246 |
Prepaid and refundable income taxes | 75,952 | 145,305 |
TOTAL CURRENT ASSETS | 30,301,295 | 28,679,894 |
Building machinery and equipment, net | 2,662,628 | 2,197,319 |
Customer list and relationships, net of accumulated amortization of $237,131 and $194,379 for 2021 and 2020, respectively | 447,869 | 490,621 |
Trademarks and tradenames | 408,000 | 1,488,000 |
Non-compete, net of accumulated amortization of $69,300 and $49,500 for 2021 and 2020, respectively | 29,700 | 49,500 |
Goodwill | 2,488,785 | 2,488,785 |
Equity method investments | 402,245 | 561,405 |
Investment - other | 2,500,000 | |
Right of use asset | 3,545,786 | 2,114,228 |
Deferred income tax assets - net | 77,394 | |
Deposits and other assets | 449,225 | 285,548 |
TOTAL ASSETS | 43,312,927 | 38,355,300 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 5,047,640 | 3,036,097 |
Line of credit – current portion | 3,800,850 | |
Due to broker | 708,321 | 1,109,650 |
Note payable – current portion | 4,200 | 5,075 |
Lease liability – current portion | 340,400 | 484,163 |
Income taxes payable | 416,449 | 5,371 |
TOTAL CURRENT LIABILITIES | 10,317,860 | 4,640,356 |
Deferred income tax liabilities - net | 100,407 | |
Line of credit net of current portion | 3,796,822 | |
Lease liabilities | 3,299,784 | 1,780,306 |
Note payable – long term | 13,092 | 17,292 |
Deferred compensation payable | 311,872 | 276,548 |
TOTAL LIABILITIES | 13,942,608 | 10,611,731 |
Commitments and Contingencies (Note 8) | ||
Coffee Holding Co., Inc. stockholders’ equity: | ||
Preferred stock, par value $.001 per share; 10,000,000 shares authorized; none issued | ||
Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,633,930 shares issued for 2021 and 2020; 5,708,599 shares outstanding for 2021 and 2020 | 6,634 | 6,634 |
Additional paid-in capital | 18,688,797 | 17,929,724 |
Retained earnings | 14,471,222 | 13,215,868 |
Less: Treasury stock, 925,331 common shares, at cost for 2021 and 2020 | (4,633,560) | (4,633,560) |
Total Coffee Holding Co., Inc. stockholders’ equity | 28,533,093 | 26,518,666 |
Non-controlling interest | 837,226 | 1,224,903 |
TOTAL EQUITY | 29,370,319 | 27,743,569 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 43,312,927 | $ 38,355,300 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Oct. 31, 2021 | Oct. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 144,000 | $ 144,000 |
Customer list and relationships, accumulated amortization | 237,131 | 194,379 |
Non-compete, accumulated amortization | $ 69,300 | $ 49,500 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 6,633,930 | 6,633,930 |
Common stock, shares outstanding | 5,708,599 | 5,708,599 |
Treasury stock, shares | 925,331 | 925,331 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Income Statement [Abstract] | ||
NET SALES | $ 63,922,402 | $ 74,335,815 |
COST OF SALES (which includes purchases of approximately $3.5 million and $5.3 million in fiscal years 2021 and 2020, respectively, from a related party) | 47,901,126 | 61,256,926 |
GROSS PROFIT | 16,021,276 | 13,078,889 |
OPERATING EXPENSES: | ||
Selling and administrative | 13,963,328 | 13,223,207 |
Officers’ salaries | 612,793 | 681,000 |
TOTAL | 14,576,121 | 13,904,207 |
INCOME (LOSS) FROM OPERATIONS | 1,445,155 | (825,318) |
OTHER INCOME (EXPENSE): | ||
Interest income | 7,658 | 3,354 |
Loss from equity method investment | (159,160) | (5,016) |
Gain on forgiveness of PPP loan | 634,400 | |
Interest expense | (85,796) | (185,177) |
TOTAL | (237,298) | 447,561 |
INCOME (LOSS) BEFORE PROVISION FOR (BENEFIT FROM) FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY | 1,207,857 | (377,757) |
Provision for (benefit from) for income taxes | 340,180 | (41,713) |
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY | 867,677 | (336,044) |
Plus: Net loss attributable to the non-controlling interest in subsidiary | 387,677 | 241,743 |
NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC. | $ 1,255,354 | $ (94,301) |
Basic and diluted earnings (loss) per share | $ 0.22 | $ (0.02) |
Weighted average common shares outstanding: | ||
Basic and diluted | 5,708,599 | 5,575,453 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Income Statement [Abstract] | ||
Related party costs | $ 3.5 | $ 5.3 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholder's Equity - USD ($) | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value at Oct. 31, 2019 | $ 6,494 | $ (4,633,560) | $ 16,580,974 | $ 13,310,169 | $ 1,466,646 | $ 26,730,723 |
Beginning balance, shares at Oct. 31, 2019 | 5,569,349 | 925,331 | ||||
Stock Compensation | 868,477 | 868,477 | ||||
Stock issuance equity investment | $ 140 | 480,273 | 480,413 | |||
Stock issuance equity investment, shares | 139,250 | |||||
Non-Controlling Interest | (241,743) | (241,743) | ||||
Net income | (94,301) | (94,301) | ||||
Ending balance, value at Oct. 31, 2020 | $ 6,634 | $ (4,633,560) | 17,929,724 | 13,215,868 | 1,224,903 | 27,743,569 |
Ending balance, shares at Oct. 31, 2020 | 5,708,599 | 925,331 | ||||
Stock Compensation | 759,073 | 759,073 | ||||
Non-Controlling Interest | (387,677) | (387,677) | ||||
Net income | 1,255,354 | 1,255,354 | ||||
Ending balance, value at Oct. 31, 2021 | $ 6,634 | $ (4,633,560) | $ 18,688,797 | $ 14,471,222 | $ 837,226 | $ 29,370,319 |
Ending balance, shares at Oct. 31, 2021 | 5,708,599 | 925,331 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
OPERATING ACTIVITIES: | ||
Net income (loss) | $ 867,677 | $ (336,044) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 662,909 | 741,503 |
Impairment of trademarks and tradenames | 1,080,000 | |
Stock-based compensation | 759,073 | 868,477 |
Unrealized (gain) loss on commodities - net | (469,004) | 553,356 |
Loss on equity method investments | 159,160 | 5,016 |
Loss on disposal of machinery and equipment | 321,651 | |
Amortization of right of use asset | 350,871 | 397,794 |
Deferred income taxes | (177,801) | (291,352) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,891,073) | 2,012,522 |
Inventories | 1,141,127 | 1,738,232 |
Prepaid expenses and other current assets | (51,978) | 97,380 |
Prepaid and refundable income taxes | 69,353 | 240,629 |
Deposits and other assets | (128,353) | 101,905 |
Accounts payable and accrued expenses | 2,011,543 | (1,307,917) |
Change in lease liability | (406,714) | (441,015) |
Income taxes payable | 411,078 | 5,271 |
Net cash provided by operating activities | 4,709,519 | 4,385,757 |
INVESTING ACTIVITIES: | ||
Purchases of other investment | (2,500,000) | |
Distribution of funds from deferred compensation plan | (101,905) | |
Proceeds from sale of machinery and equipment | 113,166 | |
Purchases of building, machinery and equipment | (1,500,483) | (435,930) |
Net cash used in investing activities | (3,887,317) | (537,835) |
FINANCING ACTIVITIES: | ||
Advances under bank line of credit | 6,016,413 | 1,141,132 |
Principal payment on note payable | (5,075) | (4,440) |
Principal payments under bank line of credit | (6,012,385) | (4,512,050) |
Net cash used in financing activities | (1,047) | (3,375,358) |
NET INCREASE IN CASH | 821,155 | 472,564 |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 2,875,120 | 2,402,556 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 3,696,275 | 2,875,120 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | ||
Interest paid | 85,357 | 196,823 |
Income taxes paid | 35,120 | 3,739 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
On October 15, 2020 Coffee Holding Company acquired an equity method investment through a contribution of shares in Jordre Well, LLC | 480,413 | |
Initial recognition of operating lease right of use asset | 2,091,316 | 2,512,022 |
Initial recognition of operating lease liabilities | 2,091,316 | 2,705,484 |
Termination of operating lease right of use asset | 242,888 | |
Termination of operating lease liability | 242,888 | |
Machinery and equipment acquired through financing | $ 26,807 |
BUSINESS ACTIVITIES
BUSINESS ACTIVITIES | 12 Months Ended |
Oct. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS ACTIVITIES | NOTE 1 - BUSINESS ACTIVITIES Coffee Holding Co., Inc. (the “Company”) conducts wholesale coffee operations, including manufacturing, roasting, packaging, marketing and distributing roasted and blended coffees for private labeled accounts and its own brands, and it sells green coffee. The Company’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. COVID-19 The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020 and has negatively affected the U.S. and global economies, disrupted global supply chains, resulted in significant travel and transport restrictions, mandated closures and stay-at-home orders, and created significant disruption of the financial markets. The continuing impact on the Company’s business including the decrease in our sales, the length and impact of stay-at-home orders and/or regional quarantines, labor shortages and employment trends, disruptions to supply chains, including its ability to obtain products from global suppliers, higher operating costs, the form and impact of economic stimulus and general overall economic instability, has contributed to and may continue to have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. At this time the full impact could not be fully determined. LIQUIDITY The Company has historically financed its operations with the use of a line of credit facility further discussed in Note 6. This credit facility currently expires in March 2022. The Company expects to renew the line of credit facility or, if necessary, seek alternative financing on similar terms. There can be no assurance that the Company will be able to renew the line of credit facility in a timely manner and/or that any such renewal will contain commercially acceptable terms. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Oct. 31, 2021 | |
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 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, depreciable lives for long-lived assets, and valuation of goodwill and indefinitely lived intangible assets. These estimates may be adjusted as more current information becomes available, and any adjustment could have a significant impact on recorded amounts. CASH AND CASH EQUIVALENTS Cash and cash equivalents consists primarily of unrestricted cash on deposit and securities with an original maturity of 3 months or less at financial institutions and brokerage firms. COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): 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: SCHEDULE OF ACCOUNTS RECEIVABLE 2021 2020 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 BUILDING, MACHINERY AND EQUIPMENT Building, machinery and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Purchases of buildings, 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 which are depreciated over the shorter of the useful life of the improvement or the lease term. COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): 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 level 1 investments 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 impact earnings volatility in any particular period. We record all open contract positions on our consolidated balance sheets at fair value in the due from and due to broker line items and typically do not offset these assets and liabilities. The Company classifies its options and future contracts as trading securities and accordingly, unrealized holding gains and losses are included in the statement of operations as a component of cost of sales and not reflected as a net amount as a separate component of stockholders’ equity. The Company recorded realized and unrealized gains and losses on these contracts as follows: SCHEDULE OF REALIZED AND UNREALIZED GAINS AND LOSSES ON CONTRACTS 2021 2020 Year Ended October 31, 2021 2020 Gross realized gains $ 1,392,949 $ 1,678,995 Gross realized (losses) (63,516 ) (1,451,761 ) Unrealized gains (losses) 469,004 (553,356 ) Total $ 1,798,437 $ (326,122 ) The notional amount of open future and option contracts was approximately $ 1,712,000 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, Sonofresco and Steep & Brew which are being amortized on the straight-line method over their estimated useful life of twenty years. Amortization expense for the years ended October 31, 2021 and 2020 was $ 62,552 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): 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. Goodwill and trademarks are not amortized but are tested for impairment at least annually or upon the occurrence of an event or when circumstances indicate that the carrying amount of goodwill and trademarks is greater than its fair value. For purposes of evaluating goodwill for impairment, the Company has determined it operates as one single reporting unit based on the Company’s internal reporting structure, the level at which discrete financial information is available and for which operating results are reviewed. The Company performs its annual impairment test on October 31 of each year by first performing a qualitative assessment to determine if it is more likely than not that the carrying amounts exceed the fair values. Depending on the outcome of our qualitative assessment, we may perform a quantitative assessment to determine if the carrying amounts exceed the fair values on the assessment date. The most significant assumptions used in these impairment tests were the royalty rates, the projections used to determine the future cashflows, and the discount rate applied to those future cashflows. For the years ending October 31, 2021 and 2020, no impairment charges were recorded to the carrying value of goodwill and the reporting unit has a fair value in excess of its carrying value by approximately 4 % as of October 31, 2021. For the year ended October 31, 2021, we recorded impairment on two of our trademarks as the carrying amount of these trademarks exceeded the respective fair values on the test date which were determined using a relief from royalty method. These impairments were due to a change in the estimated future revenues relating to these trademarks. The impairment expense totaled $ 1,080,000 SCHEDULE OF CONSOLIDATED STATEMENT OF INCOME Trademarks and tradenames Total Balance at November 1, 2019 $ 1,488,000 Impairment - Balance at October 31, 2020 $ 1,488,000 Impairment (1,080,000 ) Balance at October 31, 2021 $ 408,000 IMPAIRMENT OF LONG-LIVED ASSETS The Company assesses the impairment of long-lived assets used in operations, primarily buildings, machinery and equipment as well as purchased intangible assets subject to amortization, when events and circumstances indicate that the carrying value of these assets might not be recoverable. For purposes of evaluating the recoverability of buildings, machinery and equipment and amortizing intangible assets, the undiscounted cash flows estimated to be generated by those assets are compared to the carrying amount of those assets. If and when the carrying values of the assets exceed the undiscounted cashflows, then the related assets will be written down to fair value. During the year ended October 31, 2021 and 2020, no ADVERTISING The Company expenses the cost of advertising and promotion as incurred. Advertising costs charged to operations totaled $ 67,643 149,505 INCOME TAXES The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed for temporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision or benefit is the tax incurred for the period plus or minus the change during the period in deferred tax assets and liabilities. 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 Company has issued 1,000,000 The weighted average common shares outstanding used in the computation of basic and diluted earnings per share were 5,708,599 5,575,453 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash, accounts receivable, notes due to/(from) broker , 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 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. The Company measures fair value as required by Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: A) Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. B) Level 2 – inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. C) Level 3 – unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. The hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. REVENUE RECOGNITION The Company recognizes revenue in accordance with the five-step model as prescribed by the Financial Accounting Standards Board (“FASB”) Accounting Codification (“ASC”) Topic 606 (“ASC 606”) in which the Company evaluates the transfer of promised goods or services and recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): The following table presents revenues by product line for the years ended October 31, 2021 and 2020. SCHEDULE OF REVENUE 2021 2020 Green $ 26,118,492 $ 23,912,022 Packaged 37,803,910 50,423,793 Totals $ 63,922,402 $ 74,335,815 Revenue for these product lines is recognized upon shipment to the customer. 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 $ 3,165,000 2,780,000 PAYCHECK PROTECTION PROGRAM On July 22, 2020, the Company received loan proceeds of $ 634,400 The PPP, which was established under the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times certain average monthly payroll expenses of the qualifying business. The loan and accrued interest, or a portion thereof, may be forgiven after 24 weeks so long as the borrower uses the loan proceeds for eligible purposes including payroll, benefits, rent, mortgage interest and utilities, and maintains its payroll levels, as defined by the PPP. At least 60% of the amount forgiven must be attributable to payroll costs, as defined by the PPP The PPP loan was set to mature in five years from the date of the first disbursement of proceeds to the Company and accrued interest at a fixed rate of 1 U.S. GAAP does not contain authoritative accounting standards for forgivable loans provided by governmental entities to a for-profit entity. Absent authoritative accounting standards, interpretative guidance issued and commonly applied by financial statement preparers allows for the selection of accounting policies amongst acceptable alternatives. Based on facts and circumstances outlined below, the Company determined it most appropriate to account for the PPP loan proceeds as an in-substance government grant by analogy to International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance. Under the provisions of IAS 20, “a forgivable loan from the government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan.” IAS 20 does not define “reasonable assurance”, however, based on certain interpretations, it is analogous to “probable” as defined in Financial Accounting Standards Board (“FASB”) ASC 450-20-20 under U.S. GAAP, which is the definition the Company has applied to its expectations of PPP loan forgiveness. Under IAS 20, government grants are recognized in earnings on a systematic basis over the periods in which the Company recognizes costs for which the grant is intended to compensate (i.e. qualified expenses). Further, IAS 20 permits for the recognition in earnings either separately under a general heading such as other income, or as a reduction of COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): the related expenses. The Company has elected to recognize government grant income separately within other income to present a more clear distinction in its financial statements between its operating income and the amount of net income resulting from the PPP loan and subsequent expected forgiveness. The Company believes this presentation method promotes greater comparability amongst all period presented. The following table provided the balance and activity related to the PPP Loan as of October 31, 2020: SCHEDULE OF PAYCHECK PROTECTION PROGRAM PPP Loan $ 634,400 Qualified expenses incurred to date 634,400 Unrecognized government grant income $ - The PPP loan was formally forgiven during fiscal year ended October 31, 2021. STOCK- BASED COMPENSATION Stock-based awards are accounted for as required by ASC Topic 718 “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718 stock-based awards are valued at fair value on the date of grant, and that fair value is recognized over requisite service period. The Company accounts for forfeitures when they occur. 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, 2021 and 2020, the Company had approximately $ 2,224,000 816,000 The accounts at the brokerage firm contain cash and securities. Balances are insured up to $ 500,000 100,000 523,000 1,421,000 RECLASSIFICATION Certain amounts in the prior year financial statements have been reclassified to conform to the current year’s presentation. These reclassification adjustments had no effect on the Company’s previously reported net income. 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 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): EQUITY METHOD OF ACCOUNTING (cont’d): Statements of Operations. 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 equity method investments consist of the following: (1) 20 100,000 9,213 5,016 71,779 80,992 (2) On October 15, 2020 the Company acquired a 49 139,250 3.45 480,413 139,250 500,000 149,947 330,466 480,413 INVESTMENTS - OTHER Investment – other represent investments made by the Company that do not qualify as equity method investments as the Company cannot exercise significant influence over the target. The Company accounts for these investments in accordance with ASC Topic 321 “Investments – Equity Securities” (“ASC 321”). In August 2021, the Company made an investment of $ 2,500,000 2,500,000 LEASES Effective November 1, 2019, the Company adopted ASC Topic 842, Leases (“ASC 842”). The recognition, measurement and presentation of expenses and cash flows arising from a lease, have not significantly changed from previous US GAAP requirements. On November 1, 2019, the effective date of ASC 842, existing leases of the Company were required to be recognized and measured. Additionally any leases entered into during the year were also required to recognized and measured. In applying ASC 842, the Company made an accounting policy election not to recognize the right of use assets and lease liabilities relating to short-term leases. Implementation of ASC 842 included an analysis of contracts, including real estate leases and service contracts to identify embedded leases, to determine the initial recognition of the right to use assets and lease liabilities, which required subjective assessment over the determination of the associated discount rates to apply in determining the lease liabilities. The standard provides a number of transition practical expedients, which the Company has elected, including: COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): LEASES (cont’d): ● A “package of three” expedients that must be taken together and allow entities to (1) not reassess whether existing contracts contain leases, (2) carryforward the existing lease classification, and (3) not reassess initial direct costs associated with existing leases, and ● An implementation expedient which allows the requirements of the standard in the period of adoption with no restatement of prior periods. The adoption of ASC 842 resulted in the recording of operating lease right of use assets of $ 2,512,022 2,705,484 The Company implemented ASC 842 using the modified retrospective approach. In addition, at November 1, 2019, there was no impact to stockholder’s equity upon adoption. The Company determines if an arrangement is or contains a lease at inception. The Company’s operating lease arrangement are comprised of real estate and facility leases. Right of use assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right of use assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As the Company’s leases do not provide an implicit rate and the implicit rate is not readily determinable, the Company estimates its incremental borrowing rate based on the information available at the measurement date in determining the present value of the lease payments. The present value of the lease payments was determined using a 4.75 5.00 The Company presents the amortization of its right to use assets and payments of related lease liabilities originating in connection with operating leases as an adjustment to reconcile net income or loss to net cash generated or used in operating activities and an operating cash outflow, respectively within the operating section of the statement of cash flows. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Oct. 31, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 3 - INVENTORIES Inventories at October 31, 2021 and 2020 consisted of the following: SCHEDULE OF INVENTORIES 2021 2020 Packed coffee $ 2,705,356 $ 3,590,709 Green coffee 10,890,091 11,390,668 Roaster parts 422,858 381,617 Packaging supplies 1,943,561 1,739,999 Totals $ 15,961,866 $ 17,102,993 |
BUILDING, MACHINERY AND EQUIPME
BUILDING, MACHINERY AND EQUIPMENT | 12 Months Ended |
Oct. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
BUILDING, MACHINERY AND EQUIPMENT | NOTE 4 – BUILDING, MACHINERY AND EQUIPMENT Building machinery and equipment at October 31, 2021 and 2020 consisted of the following: SCHEDULE OF MACHINERY AND EQUIPMENT Estimated 2021 2020 Improvements 15 30 $ 233,766 $ 233,766 Building 31 900,321 - Machinery and equipment 7 8,441,382 8,492,395 Furniture and fixtures 7 1,082,022 1,082,022 10,657,491 9,808,183 Less, accumulated depreciation 7,994,863 7,610,864 $ 2,662,628 $ 2,197,319 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 4 – BUILDING, MACHINERY AND EQUIPMENT (cont’d): Depreciation expense totaled $ 600,357 and $ 678,951 for the years ended October 31, 2021 and 2020, respectively. In October 2021 the Company sold $ 651,175 of machinery and equipment with a carrying value of $ 434,817 at disposal for $ 113,166 321,651 recorded as a component of operating expenses for the year ended October 31, 2021. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Oct. 31, 2021 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses at October 31, 2021 and 2020 consisted of the following: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES 2021 2020 Accounts payable $ 4,144,700 $ 2,672,777 Purchase accruals 875,201 336,480 Other accruals 27,739 26,840 Totals $ 5,047,640 $ 3,036,097 |
LINE OF CREDIT
LINE OF CREDIT | 12 Months Ended |
Oct. 31, 2021 | |
Debt Disclosure [Abstract] | |
LINE OF CREDIT | NOTE 6 - LINE OF CREDIT On April 25, 2017 the Company and OPTCO (together with the Company, collectively referred to herein as the “Borrowers”) entered into an Amended and Restated Loan and Security Agreement (the “A&R Loan Agreement”) and Amended and Restated Loan Facility (the “A&R Loan Facility”) with Sterling National Bank (“Sterling”), which consolidated (i) the financing agreement between the Company and Sterling, dated February 17, 2009, as modified, (the “Company Financing Agreement”) and (ii) the financing agreement between Company, as guarantor, OPTCO and Sterling, dated March 10, 2015 (the “OPTCO Financing Agreement”), amongst other things. On March 13, 2020, the Company reached an agreement for a new loan modification agreement and credit facility with Sterling. The terms of the new agreement, among other things: (i) provides for a new maturity date of March 31, 2022 1.75 3.50 Each of the A&R Loan Facility and A&R Loan Agreement contains covenants, subject to certain exceptions, that place annual restrictions on the Borrowers’ operations, including covenants relating to debt restrictions, capital expenditures, indebtedness, minimum deposit restrictions, tangible net worth, net profit, leverage, employee loan restrictions, dividend and repurchase restrictions (common stock and preferred stock), and restrictions on intercompany transactions. The Company was in compliance with all covenants as of October 31, 2021 and October 31, 2020. The outstanding balance on the Company’s lines of credit were $ 3,800,850 3,796,822 85,359 184,045 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Oct. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 7 - INCOME TAXES The Company’s provision/(benefit) for income taxes in 2021 and 2020 consisted of the following: SCHEDULE OF PROVISION FOR INCOME TAX 2021 2020 Current Federal $ 427,210 $ 187,140 State and local 90,771 62,499 Total 517,981 249,639 Deferred Federal (50,451 ) (229,355 ) State and local (127,350 ) (61,997 ) Total (177,801 ) (291,352 ) Income tax expense/(benefit) $ 340,180 $ (41,713 ) 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: SCHEDULE OF EFFECTIVE INCOME TAX RATE 2021 2020 Provision for (Benefit) from tax at the federal statutory rate $ 253,650 $ (79,329 ) Other permanent differences 19,736 52,537 State and local tax, net of federal 66,794 (14,921 ) Provision for (benefit from) income taxes $ 340,180 $ (41,713 ) Effective income tax rate 28 % 11 % COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 7 - INCOME TAXES (cont’d): The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities as of October 31, 2021 and 2020 are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2021 2020 Deferred tax assets: Accounts receivable $ 34,203 $ 36,468 Unrealized loss - 140,136 Deferred rent 20,652 36,810 Deferred compensation 74,075 70,035 Net operating loss 57,576 70,275 Stock-based compensation 499,841 340,715 Inventory 77,579 87,736 Total deferred tax asset $ 763,926 $ 782,175 Deferred tax liabilities: Intangible assets acquired 346,892 484,932 Unrealized gain 111,068 Buildings, machinery and equipment 228,572 $ 397,650 Total deferred tax liabilities $ 686,532 $ 882,582 Net deferred tax assets (liabilities) $ 77,394 $ (100,407 ) A valuation allowance was not provided at October 31, 2021 or 2020. 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, 2021 and 2020, the Company did no no 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 2018. The Company’s California, Colorado and New Jersey and Texas income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2018. The Company’s Oregon, New York, Kansas, South Carolina, Rhode Island, Connecticut and Michigan income tax returns are no longer subject to examination by their respective taxing authorities for the years before fiscal 2018. As of October 31, 2021, and 2020, the Company had cumulative net operating loss carryforwards of approximately $ 274,173 334,642 60,469 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Oct. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 - COMMITMENTS AND CONTINGENCIES CLASS ACTION COMPLAINT The Company was named as a defendant in a putative class action lawsuit filed in the United States District Court for the Northern District of Illinois on or about December 21, 2020. The plaintiffs, Eileen Brodsky and Rhonda Diamond, purporting to represent a class of individuals who purchased coffee products at Aldi, Inc. (“Aldi”), a supermarket chain, generally allege that Aldi sold private label coffee products manufactured by us and by Pan American Coffee Co., LLC (“Pan American”), which falsely described the number of cups of coffee that could be made from the amount of product purchased. Aldi and Pan American are also named as defendants in the action. The complaint asserts a variety of claims under New York and California consumer protection laws, and seeks unspecified monetary damages, including disgorgement and restitution, as well as other forms of relief including class certification, declaratory and injunctive relief, attorneys’ fees, and interest. The Company believes the allegations in the complaint are wholly without merit and that the claims asserted are legally deficient, and the Company intends to vigorously defend the action. As of the filing of this Form 10-K, the Company has not been served with the complaint. Therefore, the Company is unable to predict the ultimate outcome of this lawsuit as the suit was dismissed and we are awaiting a ruling on the plantiff’s appeal. A significant customer of the Company was named as a defendant in a putative class action lawsuit filed in the United States District Court for the District of Massachusetts on or about February 2, 2021, concerning the labeling on private label coffee productions we sold to the customer. The plaintiff, David Cohen, purporting to represent a class of individuals who purchased coffee products from our customer, generally allege that the customer sold private label coffee products manufactured by the Company which falsely described the number of cups of coffee that could be made from the amount of product purchased. The Company is not named as a defendant in the action, but has agreed to indemnify the customer for the costs and expenses incurred in defending the lawsuit and for any liability the customer may suffer as a result. The complaint asserts a variety of claims under Massachusetts consumer protection laws, and seeks unspecified monetary damages as well as other forms of relief including class certification, declaratory and injunctive relief, attorneys’ fees, and interest. The Company believes the allegations in the complaint are wholly without merit and that the claims asserted are legally deficient, and intends to vigorously support the customer in defending the action. As of the filing of this Form 10-K, the Company is unable to predict the ultimate outcome of this lawsuit. 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 . Contributions to the plan aggregated $ 72,558 81,384 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 |
LEASES
LEASES | 12 Months Ended |
Oct. 31, 2021 | |
Leases | |
LEASES | NOTE 9 - LEASES The following summarizes the Company’s operating leases: SCHEDULE OF OPERATING LEASE LIABILITY 2021 2020 Right-of-use operating lease assets $ 3,545,786 $ 2,114,228 Current lease liability 340,400 484,163 Non-current lease liability 3,299,784 1,780,306 Total lease liability $ 3,640,184 $ 2,264,469 The amortization of the right-of-use asset for the years ended October 31, 2021 and 2020 was $ 350,871 397,794 Weighted average remaining lease term 11.4 Weighted average discount rate 4.9 % Maturities of lease liabilities by year for our operating leases are as follows: SCHEDULE OF MATURITY LEASE LIABILITY 2022 $ 514,053 2023 494,899 2024 356,304 2025 354,528 2026 360,104 Thereafter 2,701,089 Total lease payments $ 4,780,977 Less: imputed interest (1,140,793 ) Present value of operating lease liabilities $ 3,640,184 The aggregate cash payments under these leasing agreements was $ 442,118 In June 2021, the Company purchased a facility in Colorado for $ 900,321 242,888 In September 2021, the Company extended its headquarters lease in Staten Island, New York through September 2036. As a result, on the date of the modification the Company increased its right-of-use asset and lease liability by $ 2,025,316 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Oct. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 10 - RELATED PARTY TRANSACTIONS The Company has engaged its 40 349,760 380,838 An employee of one of the top two vendors is a director of the Company. Purchases from that vendor totaled approximately $ 3,500,000 5,300,000 1,014,000 0 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. The deferred compensation payable represents the liability due to this employee of the Company upon his retirement. The deferred compensation liability at October 31, 2021 and 2020 was $ 311,872 and $ 276,548 , respectively. Deferred compensation expenses included in officers’ salaries were $ 0 during the years ended October 31, 2021 and 2020, respectively as no amounts were contributed to this plan during the years ended October 31, 2021 and 2020. COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 12 Months Ended |
Oct. 31, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 11 - STOCKHOLDERS’ EQUITY a. Treasury Stock b. Stock Options 1,000,000 stock options to employees, officers and non-employee directors from the 2013 Plan each with an exercise price of $ 5.43 . Options granted under the 2013 Plan may be Incentive Stock Options or Nonqualified Stock Options, as determined by the Administrator at the time of grant. No options were granted, forfeited or expired during the years ended October 31, 2021 and 2020. As of October 31, 2021, 666,383 The Company recorded $ 759,073 868,477 0.5 The unrecognized stock compensation expense as of October 31, 2021 was approximately $ 405,821 c. Common Stock 30,000,000 0.001 6,633,930 5,708,599 d. Preferred Stock. 10,000,000 0.001 no |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Oct. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS In January 2022, the Board of Directors approved a special dividend $ 0.073 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Oct. 31, 2021 | |
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 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, depreciable lives for long-lived assets, and valuation of goodwill and indefinitely lived intangible assets. These estimates may be adjusted as more current information becomes available, and any adjustment could have a significant impact on recorded amounts. |
CASH AND CASH EQUIVALENTS: | CASH AND CASH EQUIVALENTS Cash and cash equivalents consists primarily of unrestricted cash on deposit and securities with an original maturity of 3 months or less at financial institutions and brokerage firms. COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): |
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: SCHEDULE OF ACCOUNTS RECEIVABLE 2021 2020 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 |
BUILDING, MACHINERY AND EQUIPMENT | BUILDING, MACHINERY AND EQUIPMENT Building, machinery and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Purchases of buildings, 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 which are depreciated over the shorter of the useful life of the improvement or the lease term. COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): |
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 level 1 investments 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 impact earnings volatility in any particular period. We record all open contract positions on our consolidated balance sheets at fair value in the due from and due to broker line items and typically do not offset these assets and liabilities. The Company classifies its options and future contracts as trading securities and accordingly, unrealized holding gains and losses are included in the statement of operations as a component of cost of sales and not reflected as a net amount as a separate component of stockholders’ equity. The Company recorded realized and unrealized gains and losses on these contracts as follows: SCHEDULE OF REALIZED AND UNREALIZED GAINS AND LOSSES ON CONTRACTS 2021 2020 Year Ended October 31, 2021 2020 Gross realized gains $ 1,392,949 $ 1,678,995 Gross realized (losses) (63,516 ) (1,451,761 ) Unrealized gains (losses) 469,004 (553,356 ) Total $ 1,798,437 $ (326,122 ) The notional amount of open future and option contracts was approximately $ 1,712,000 |
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, Sonofresco and Steep & Brew which are being amortized on the straight-line method over their estimated useful life of twenty years. Amortization expense for the years ended October 31, 2021 and 2020 was $ 62,552 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): |
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. Goodwill and trademarks are not amortized but are tested for impairment at least annually or upon the occurrence of an event or when circumstances indicate that the carrying amount of goodwill and trademarks is greater than its fair value. For purposes of evaluating goodwill for impairment, the Company has determined it operates as one single reporting unit based on the Company’s internal reporting structure, the level at which discrete financial information is available and for which operating results are reviewed. The Company performs its annual impairment test on October 31 of each year by first performing a qualitative assessment to determine if it is more likely than not that the carrying amounts exceed the fair values. Depending on the outcome of our qualitative assessment, we may perform a quantitative assessment to determine if the carrying amounts exceed the fair values on the assessment date. The most significant assumptions used in these impairment tests were the royalty rates, the projections used to determine the future cashflows, and the discount rate applied to those future cashflows. For the years ending October 31, 2021 and 2020, no impairment charges were recorded to the carrying value of goodwill and the reporting unit has a fair value in excess of its carrying value by approximately 4 % as of October 31, 2021. For the year ended October 31, 2021, we recorded impairment on two of our trademarks as the carrying amount of these trademarks exceeded the respective fair values on the test date which were determined using a relief from royalty method. These impairments were due to a change in the estimated future revenues relating to these trademarks. The impairment expense totaled $ 1,080,000 SCHEDULE OF CONSOLIDATED STATEMENT OF INCOME Trademarks and tradenames Total Balance at November 1, 2019 $ 1,488,000 Impairment - Balance at October 31, 2020 $ 1,488,000 Impairment (1,080,000 ) Balance at October 31, 2021 $ 408,000 |
IMPAIRMENT OF LONG-LIVED ASSETS | IMPAIRMENT OF LONG-LIVED ASSETS The Company assesses the impairment of long-lived assets used in operations, primarily buildings, machinery and equipment as well as purchased intangible assets subject to amortization, when events and circumstances indicate that the carrying value of these assets might not be recoverable. For purposes of evaluating the recoverability of buildings, machinery and equipment and amortizing intangible assets, the undiscounted cash flows estimated to be generated by those assets are compared to the carrying amount of those assets. If and when the carrying values of the assets exceed the undiscounted cashflows, then the related assets will be written down to fair value. During the year ended October 31, 2021 and 2020, no |
ADVERTISING | ADVERTISING The Company expenses the cost of advertising and promotion as incurred. Advertising costs charged to operations totaled $ 67,643 149,505 |
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. 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 Company has issued 1,000,000 The weighted average common shares outstanding used in the computation of basic and diluted earnings per share were 5,708,599 5,575,453 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash, accounts receivable, notes due to/(from) broker , 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 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. The Company measures fair value as required by Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: A) Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. B) Level 2 – inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. C) Level 3 – unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. The hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company recognizes revenue in accordance with the five-step model as prescribed by the Financial Accounting Standards Board (“FASB”) Accounting Codification (“ASC”) Topic 606 (“ASC 606”) in which the Company evaluates the transfer of promised goods or services and recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): The following table presents revenues by product line for the years ended October 31, 2021 and 2020. SCHEDULE OF REVENUE 2021 2020 Green $ 26,118,492 $ 23,912,022 Packaged 37,803,910 50,423,793 Totals $ 63,922,402 $ 74,335,815 Revenue for these product lines is recognized upon shipment to the customer. |
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 $ 3,165,000 2,780,000 |
PAYCHECK PROTECTION PROGRAM | PAYCHECK PROTECTION PROGRAM On July 22, 2020, the Company received loan proceeds of $ 634,400 The PPP, which was established under the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times certain average monthly payroll expenses of the qualifying business. The loan and accrued interest, or a portion thereof, may be forgiven after 24 weeks so long as the borrower uses the loan proceeds for eligible purposes including payroll, benefits, rent, mortgage interest and utilities, and maintains its payroll levels, as defined by the PPP. At least 60% of the amount forgiven must be attributable to payroll costs, as defined by the PPP The PPP loan was set to mature in five years from the date of the first disbursement of proceeds to the Company and accrued interest at a fixed rate of 1 U.S. GAAP does not contain authoritative accounting standards for forgivable loans provided by governmental entities to a for-profit entity. Absent authoritative accounting standards, interpretative guidance issued and commonly applied by financial statement preparers allows for the selection of accounting policies amongst acceptable alternatives. Based on facts and circumstances outlined below, the Company determined it most appropriate to account for the PPP loan proceeds as an in-substance government grant by analogy to International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance. Under the provisions of IAS 20, “a forgivable loan from the government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan.” IAS 20 does not define “reasonable assurance”, however, based on certain interpretations, it is analogous to “probable” as defined in Financial Accounting Standards Board (“FASB”) ASC 450-20-20 under U.S. GAAP, which is the definition the Company has applied to its expectations of PPP loan forgiveness. Under IAS 20, government grants are recognized in earnings on a systematic basis over the periods in which the Company recognizes costs for which the grant is intended to compensate (i.e. qualified expenses). Further, IAS 20 permits for the recognition in earnings either separately under a general heading such as other income, or as a reduction of COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): the related expenses. The Company has elected to recognize government grant income separately within other income to present a more clear distinction in its financial statements between its operating income and the amount of net income resulting from the PPP loan and subsequent expected forgiveness. The Company believes this presentation method promotes greater comparability amongst all period presented. The following table provided the balance and activity related to the PPP Loan as of October 31, 2020: SCHEDULE OF PAYCHECK PROTECTION PROGRAM PPP Loan $ 634,400 Qualified expenses incurred to date 634,400 Unrecognized government grant income $ - The PPP loan was formally forgiven during fiscal year ended October 31, 2021. |
STOCK- BASED COMPENSATION | STOCK- BASED COMPENSATION Stock-based awards are accounted for as required by ASC Topic 718 “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718 stock-based awards are valued at fair value on the date of grant, and that fair value is recognized over requisite service period. The Company accounts for forfeitures when they occur. |
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, 2021 and 2020, the Company had approximately $ 2,224,000 816,000 The accounts at the brokerage firm contain cash and securities. Balances are insured up to $ 500,000 100,000 523,000 1,421,000 |
RECLASSIFICATION | RECLASSIFICATION Certain amounts in the prior year financial statements have been reclassified to conform to the current year’s presentation. These reclassification adjustments had no effect on the Company’s previously reported net income. |
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 COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): EQUITY METHOD OF ACCOUNTING (cont’d): Statements of Operations. 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 equity method investments consist of the following: (1) 20 100,000 9,213 5,016 71,779 80,992 (2) On October 15, 2020 the Company acquired a 49 139,250 3.45 480,413 139,250 500,000 149,947 330,466 480,413 |
INVESTMENTS - OTHER | INVESTMENTS - OTHER Investment – other represent investments made by the Company that do not qualify as equity method investments as the Company cannot exercise significant influence over the target. The Company accounts for these investments in accordance with ASC Topic 321 “Investments – Equity Securities” (“ASC 321”). In August 2021, the Company made an investment of $ 2,500,000 2,500,000 |
LEASES | LEASES Effective November 1, 2019, the Company adopted ASC Topic 842, Leases (“ASC 842”). The recognition, measurement and presentation of expenses and cash flows arising from a lease, have not significantly changed from previous US GAAP requirements. On November 1, 2019, the effective date of ASC 842, existing leases of the Company were required to be recognized and measured. Additionally any leases entered into during the year were also required to recognized and measured. In applying ASC 842, the Company made an accounting policy election not to recognize the right of use assets and lease liabilities relating to short-term leases. Implementation of ASC 842 included an analysis of contracts, including real estate leases and service contracts to identify embedded leases, to determine the initial recognition of the right to use assets and lease liabilities, which required subjective assessment over the determination of the associated discount rates to apply in determining the lease liabilities. The standard provides a number of transition practical expedients, which the Company has elected, including: COFFEE HOLDING CO., INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2021 AND 2020 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d): LEASES (cont’d): ● A “package of three” expedients that must be taken together and allow entities to (1) not reassess whether existing contracts contain leases, (2) carryforward the existing lease classification, and (3) not reassess initial direct costs associated with existing leases, and ● An implementation expedient which allows the requirements of the standard in the period of adoption with no restatement of prior periods. The adoption of ASC 842 resulted in the recording of operating lease right of use assets of $ 2,512,022 2,705,484 The Company implemented ASC 842 using the modified retrospective approach. In addition, at November 1, 2019, there was no impact to stockholder’s equity upon adoption. The Company determines if an arrangement is or contains a lease at inception. The Company’s operating lease arrangement are comprised of real estate and facility leases. Right of use assets represent the Company’s right to use the underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right of use assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As the Company’s leases do not provide an implicit rate and the implicit rate is not readily determinable, the Company estimates its incremental borrowing rate based on the information available at the measurement date in determining the present value of the lease payments. The present value of the lease payments was determined using a 4.75 5.00 The Company presents the amortization of its right to use assets and payments of related lease liabilities originating in connection with operating leases as an adjustment to reconcile net income or loss to net cash generated or used in operating activities and an operating cash outflow, respectively within the operating section of the statement of cash flows. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
Accounting Policies [Abstract] | |
SCHEDULE OF ACCOUNTS RECEIVABLE | SCHEDULE OF ACCOUNTS RECEIVABLE 2021 2020 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 REALIZED AND UNREALIZED GAINS AND LOSSES ON CONTRACTS | The Company recorded realized and unrealized gains and losses on these contracts as follows: SCHEDULE OF REALIZED AND UNREALIZED GAINS AND LOSSES ON CONTRACTS 2021 2020 Year Ended October 31, 2021 2020 Gross realized gains $ 1,392,949 $ 1,678,995 Gross realized (losses) (63,516 ) (1,451,761 ) Unrealized gains (losses) 469,004 (553,356 ) Total $ 1,798,437 $ (326,122 ) |
SCHEDULE OF CONSOLIDATED STATEMENT OF INCOME | SCHEDULE OF CONSOLIDATED STATEMENT OF INCOME Trademarks and tradenames Total Balance at November 1, 2019 $ 1,488,000 Impairment - Balance at October 31, 2020 $ 1,488,000 Impairment (1,080,000 ) Balance at October 31, 2021 $ 408,000 |
SCHEDULE OF REVENUE | The following table presents revenues by product line for the years ended October 31, 2021 and 2020. SCHEDULE OF REVENUE 2021 2020 Green $ 26,118,492 $ 23,912,022 Packaged 37,803,910 50,423,793 Totals $ 63,922,402 $ 74,335,815 |
SCHEDULE OF PAYCHECK PROTECTION PROGRAM | The following table provided the balance and activity related to the PPP Loan as of October 31, 2020: SCHEDULE OF PAYCHECK PROTECTION PROGRAM PPP Loan $ 634,400 Qualified expenses incurred to date 634,400 Unrecognized government grant income $ - |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
Inventory Disclosure [Abstract] | |
SCHEDULE OF INVENTORIES | Inventories at October 31, 2021 and 2020 consisted of the following: SCHEDULE OF INVENTORIES 2021 2020 Packed coffee $ 2,705,356 $ 3,590,709 Green coffee 10,890,091 11,390,668 Roaster parts 422,858 381,617 Packaging supplies 1,943,561 1,739,999 Totals $ 15,961,866 $ 17,102,993 |
BUILDING, MACHINERY AND EQUIP_2
BUILDING, MACHINERY AND EQUIPMENT (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF MACHINERY AND EQUIPMENT | Building machinery and equipment at October 31, 2021 and 2020 consisted of the following: SCHEDULE OF MACHINERY AND EQUIPMENT Estimated 2021 2020 Improvements 15 30 $ 233,766 $ 233,766 Building 31 900,321 - Machinery and equipment 7 8,441,382 8,492,395 Furniture and fixtures 7 1,082,022 1,082,022 10,657,491 9,808,183 Less, accumulated depreciation 7,994,863 7,610,864 $ 2,662,628 $ 2,197,319 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
Payables and Accruals [Abstract] | |
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES | Accounts payable and accrued expenses at October 31, 2021 and 2020 consisted of the following: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES 2021 2020 Accounts payable $ 4,144,700 $ 2,672,777 Purchase accruals 875,201 336,480 Other accruals 27,739 26,840 Totals $ 5,047,640 $ 3,036,097 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF PROVISION FOR INCOME TAX | The Company’s provision/(benefit) for income taxes in 2021 and 2020 consisted of the following: SCHEDULE OF PROVISION FOR INCOME TAX 2021 2020 Current Federal $ 427,210 $ 187,140 State and local 90,771 62,499 Total 517,981 249,639 Deferred Federal (50,451 ) (229,355 ) State and local (127,350 ) (61,997 ) Total (177,801 ) (291,352 ) Income tax expense/(benefit) $ 340,180 $ (41,713 ) |
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: SCHEDULE OF EFFECTIVE INCOME TAX RATE 2021 2020 Provision for (Benefit) from tax at the federal statutory rate $ 253,650 $ (79,329 ) Other permanent differences 19,736 52,537 State and local tax, net of federal 66,794 (14,921 ) Provision for (benefit from) income taxes $ 340,180 $ (41,713 ) Effective income tax rate 28 % 11 % |
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, 2021 and 2020 are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2021 2020 Deferred tax assets: Accounts receivable $ 34,203 $ 36,468 Unrealized loss - 140,136 Deferred rent 20,652 36,810 Deferred compensation 74,075 70,035 Net operating loss 57,576 70,275 Stock-based compensation 499,841 340,715 Inventory 77,579 87,736 Total deferred tax asset $ 763,926 $ 782,175 Deferred tax liabilities: Intangible assets acquired 346,892 484,932 Unrealized gain 111,068 Buildings, machinery and equipment 228,572 $ 397,650 Total deferred tax liabilities $ 686,532 $ 882,582 Net deferred tax assets (liabilities) $ 77,394 $ (100,407 ) |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Oct. 31, 2021 | |
Leases | |
SCHEDULE OF OPERATING LEASE LIABILITY | The following summarizes the Company’s operating leases: SCHEDULE OF OPERATING LEASE LIABILITY 2021 2020 Right-of-use operating lease assets $ 3,545,786 $ 2,114,228 Current lease liability 340,400 484,163 Non-current lease liability 3,299,784 1,780,306 Total lease liability $ 3,640,184 $ 2,264,469 Weighted average remaining lease term 11.4 Weighted average discount rate 4.9 % |
SCHEDULE OF MATURITY LEASE LIABILITY | Maturities of lease liabilities by year for our operating leases are as follows: SCHEDULE OF MATURITY LEASE LIABILITY 2022 $ 514,053 2023 494,899 2024 356,304 2025 354,528 2026 360,104 Thereafter 2,701,089 Total lease payments $ 4,780,977 Less: imputed interest (1,140,793 ) Present value of operating lease liabilities $ 3,640,184 |
SCHEDULE OF ACCOUNTS RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($) | Oct. 31, 2021 | Oct. 31, 2020 |
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 |
SCHEDULE OF REALIZED AND UNREAL
SCHEDULE OF REALIZED AND UNREALIZED GAINS AND LOSSES ON CONTRACTS (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Accounting Policies [Abstract] | ||
Gross realized gains | $ 1,392,949 | $ 1,678,995 |
Gross realized (losses) | (63,516) | (1,451,761) |
Unrealized gains (losses) | 469,004 | (553,356) |
Total | $ 1,798,437 | $ (326,122) |
SCHEDULE OF CONSOLIDATED STATEM
SCHEDULE OF CONSOLIDATED STATEMENT OF INCOME (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 1,488,000 | $ 1,488,000 |
Impairment | (1,080,000) | |
Ending balance | $ 408,000 | $ 1,488,000 |
SCHEDULE OF REVENUE (Details)
SCHEDULE OF REVENUE (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Totals | $ 63,922,402 | $ 74,335,815 |
Green Coffee [Member] | ||
Totals | 26,118,492 | 23,912,022 |
Packaged Coffee [Member] | ||
Totals | $ 37,803,910 | $ 50,423,793 |
SCHEDULE OF PAYCHECK PROTECTION
SCHEDULE OF PAYCHECK PROTECTION PROGRAM (Details) | Oct. 31, 2020USD ($) |
Short-term Debt [Line Items] | |
Unrecognized government grant income | |
PPP Loan [Member] | |
Short-term Debt [Line Items] | |
Unrecognized government grant income | 634,400 |
Qualified Expenses Incurred to Date [Member] | |
Short-term Debt [Line Items] | |
Unrecognized government grant income | $ 634,400 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Oct. 15, 2020 | Jul. 22, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Sep. 30, 2021 | Aug. 31, 2021 | Jun. 30, 2021 | Nov. 01, 2019 |
Product Information [Line Items] | ||||||||
Reserves for inventory obsolescence | $ 0 | $ 0 | ||||||
Future and option contracts | 1,712,000 | |||||||
Amortization expense | $ 62,552 | 62,552 | ||||||
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount | 4.00% | |||||||
Impairment expenses | $ 1,080,000 | |||||||
Impairment of long-lived assets | 0 | 0 | ||||||
Advertising costs | $ 67,643 | $ 149,505 | ||||||
Anti-dilutive diluted earnings per share | 1,000,000 | |||||||
Weighted average common shares outstanding: basic and diluted | 5,708,599 | 5,575,453 | ||||||
Selling and administrative expense | $ 13,963,328 | $ 13,223,207 | ||||||
Cash excess of FDIC insured limits | 2,224,000 | 816,000 | ||||||
Cash, SIPC insured amount | 100,000 | |||||||
Cash excess of SIPC insured limits | $ 523,000 | 1,421,000 | ||||||
Equity method description | 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 | |||||||
Investments | $ 2,500,000 | |||||||
Loss on equity method investments | $ (159,160) | (5,016) | ||||||
Equity method investments | 402,245 | 561,405 | ||||||
Other investments | 2,500,000 | |||||||
Operating lease right of use assets | 3,545,786 | 2,114,228 | $ 2,025,316 | $ 242,888 | $ 2,512,022 | |||
Operating lease liabilities | $ 3,299,784 | $ 1,780,306 | $ 2,705,484 | |||||
Lease payment, percent | 5.00% | 4.75% | ||||||
Healthwise Gourmet Coffees LLC [Member] | ||||||||
Product Information [Line Items] | ||||||||
Equity method investment, ownership percentage | 20.00% | |||||||
Investments | $ 100,000 | |||||||
Loss on equity method investments | 9,213 | $ 5,016 | ||||||
Equity method investments | 71,779 | 80,992 | ||||||
Jordre well LLC [Member]. | ||||||||
Product Information [Line Items] | ||||||||
Equity method investment, ownership percentage | 49.00% | |||||||
Investments | $ 480,413 | 330,466 | 480,413 | |||||
Loss on equity method investments | 149,947 | |||||||
Number of common stock shares issued, shares | 139,250 | |||||||
Share price | $ 3.45 | |||||||
Revenue | $ 500,000 | |||||||
Maximum [Member] | ||||||||
Product Information [Line Items] | ||||||||
Cash, SIPC insured amount | 500,000 | |||||||
Paycheck protection program [Member]. | ||||||||
Product Information [Line Items] | ||||||||
Proceeds from loan | $ 634,400 | |||||||
Debt description | The PPP, which was established under the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times certain average monthly payroll expenses of the qualifying business. The loan and accrued interest, or a portion thereof, may be forgiven after 24 weeks so long as the borrower uses the loan proceeds for eligible purposes including payroll, benefits, rent, mortgage interest and utilities, and maintains its payroll levels, as defined by the PPP. At least 60% of the amount forgiven must be attributable to payroll costs, as defined by the PPP | |||||||
Debt interest fixed rate | 1.00% | |||||||
Shipping and Handling [Member] | ||||||||
Product Information [Line Items] | ||||||||
Selling and administrative expense | $ 3,165,000 | $ 2,780,000 |
SCHEDULE OF INVENTORIES (Detail
SCHEDULE OF INVENTORIES (Details) - USD ($) | Oct. 31, 2021 | Oct. 31, 2020 |
Totals | $ 15,961,866 | $ 17,102,993 |
Packed Coffee [Member] | ||
Totals | 2,705,356 | 3,590,709 |
Green Coffee [Member] | ||
Totals | 10,890,091 | 11,390,668 |
Roaster Parts [Member] | ||
Totals | 422,858 | 381,617 |
Packaging Supplies [Member] | ||
Totals | $ 1,943,561 | $ 1,739,999 |
SCHEDULE OF MACHINERY AND EQUIP
SCHEDULE OF MACHINERY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Improvements | $ 233,766 | $ 233,766 |
Machinery and equipment | 900,321 | |
Building | 8,441,382 | 8,492,395 |
Furniture and fixtures | 1,082,022 | 1,082,022 |
Property plant and equipment gross | 10,657,491 | 9,808,183 |
Less, accumulated depreciation | 7,994,863 | 7,610,864 |
Property plant and equipment net | $ 2,662,628 | $ 2,197,319 |
Improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 15 years | |
Improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 30 years | |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 31 years | |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 7 years | |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 7 years |
BUILDING, MACHINERY AND EQUIP_3
BUILDING, MACHINERY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation | $ 600,357 | $ 678,951 |
Proceeds from sale of machinery and equipment | 113,166 | |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment | 651,175 | |
Property, Plant and Equipment, Disposals | 434,817 | |
Gain (Loss) on Disposition of Property Plant Equipment | $ 321,651 |
SCHEDULE OF ACCOUNTS PAYABLE AN
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Oct. 31, 2021 | Oct. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 4,144,700 | $ 2,672,777 |
Purchase accruals | 875,201 | 336,480 |
Other accruals | 27,739 | 26,840 |
Totals | $ 5,047,640 | $ 3,036,097 |
LINE OF CREDIT (Details Narrati
LINE OF CREDIT (Details Narrative) - USD ($) | Mar. 13, 2020 | Oct. 31, 2021 | Oct. 31, 2020 |
Debt Instrument [Line Items] | |||
Outstanding line of credit | $ 3,800,850 | $ 3,796,822 | |
Line of credit interest expense | $ 85,359 | $ 184,045 | |
New Loan Modification Agreement and Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Line of credit expire date | Mar. 31, 2022 | ||
New Loan Modification Agreement and Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Line of credit interest rate | 1.75% | ||
New Loan Modification Agreement and Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Line of credit interest rate | 3.50% |
SCHEDULE OF PROVISION FOR INCOM
SCHEDULE OF PROVISION FOR INCOME TAX (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Federal | $ 427,210 | $ 187,140 |
State and local | 90,771 | 62,499 |
Total | 517,981 | 249,639 |
Federal | (50,451) | (229,355) |
State and local | (127,350) | (61,997) |
Total | (177,801) | (291,352) |
Income tax expense/(benefit) | $ 340,180 | $ (41,713) |
SCHEDULE OF EFFECTIVE INCOME TA
SCHEDULE OF EFFECTIVE INCOME TAX RATE (Details) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Provision for (Benefit) from tax at the federal statutory rate | $ 253,650 | $ (79,329) |
Other permanent differences | 19,736 | 52,537 |
State and local tax, net of federal | 66,794 | (14,921) |
Income tax expense/(benefit) | $ 340,180 | $ (41,713) |
Effective income tax rate | 28.00% | 11.00% |
SCHEDULE OF DEFERRED TAX ASSETS
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($) | Oct. 31, 2021 | Oct. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Accounts receivable | $ 34,203 | $ 36,468 |
Unrealized loss | 140,136 | |
Deferred rent | 20,652 | 36,810 |
Deferred compensation | 74,075 | 70,035 |
Net operating loss | 57,576 | 70,275 |
Stock-based compensation | 499,841 | 340,715 |
Inventory | 77,579 | 87,736 |
Total deferred tax asset | 763,926 | 782,175 |
Intangible assets acquired | 346,892 | 484,932 |
Unrealized gain | 111,068 | |
Buildings, machinery and equipment | 228,572 | 397,650 |
Total deferred tax liabilities | 686,532 | 882,582 |
Net deferred tax assets (liabilities) | $ 77,394 | $ (100,407) |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Accrued interest or penalties | 0 | 0 |
Net operating loss carryforwards | 274,173 | $ 334,642 |
Internal Revenue Service (IRS) [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards annual limitation | $ 60,469 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Retirement Benefits, 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 | $ 72,558 | $ 81,384 |
SCHEDULE OF OPERATING LEASE LIA
SCHEDULE OF OPERATING LEASE LIABILITY (Details) - USD ($) | Oct. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Oct. 31, 2020 | Nov. 01, 2019 |
Leases | |||||
Right-of-use operating lease assets | $ 3,545,786 | $ 2,025,316 | $ 242,888 | $ 2,114,228 | $ 2,512,022 |
Current lease liability | 340,400 | 484,163 | |||
Non-current lease liability | 3,299,784 | 1,780,306 | $ 2,705,484 | ||
Total lease liability | $ 3,640,184 | $ 2,264,469 | |||
Operating Lease, Weighted Average Remaining Lease Term | 11 years 4 months 24 days | ||||
Operating Lease, Weighted Average Discount Rate, Percent | 4.90% |
SCHEDULE OF MATURITY LEASE LIAB
SCHEDULE OF MATURITY LEASE LIABILITY (Details) - USD ($) | Oct. 31, 2021 | Oct. 31, 2020 |
Leases | ||
2022 | $ 514,053 | |
2023 | 494,899 | |
2024 | 356,304 | |
2025 | 354,528 | |
2026 | 360,104 | |
Thereafter | 2,701,089 | |
Total lease payments | 4,780,977 | |
Less: imputed interest | (1,140,793) | |
Present value of operating lease liabilities | $ 3,640,184 | $ 2,264,469 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Oct. 31, 2021 | Oct. 31, 2020 | Sep. 30, 2021 | Nov. 01, 2019 | |
Leases | |||||
Amortization of right-of-use asset | $ 350,871 | $ 397,794 | |||
Cash payments for lease | 442,118 | ||||
Payments to acquired assets | $ 900,321 | ||||
Right of use asset | $ 242,888 | $ 3,545,786 | $ 2,114,228 | $ 2,025,316 | $ 2,512,022 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Contract labor expense | $ 349,760 | $ 380,838 |
Purchases from related party vendor | 3,500,000 | 5,300,000 |
Accounts payable to related party vendor | 1,014,000 | 0 |
Deferred Compensation Liability, Classified, Noncurrent | $ 311,872 | 276,548 |
Deferred Compensation Arrangement with Individual, Compensation Expense | $ 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, 2021 | Oct. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of option are exercisable | 666,383 | |
Stock-based compensation | $ 759,073 | $ 868,477 |
Weighted average remaining contractual life | 6 months | |
Unrecognized stock compensation expense | $ 405,821 | |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares issued | 6,633,930 | 6,633,930 |
Common stock, shares outstanding | 5,708,599 | 5,708,599 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
2013 Equity Compensation Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,000,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 5.43 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | 1 Months Ended |
Jan. 31, 2022$ / shares | |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Special dividend for outstanding common stock | $ 0.073 |