þ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Nevada
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11–2238111
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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3475 Victory Boulevard, Staten Island, New York
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10314
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | þ |
PAGE
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29 | |||||
29 |
July 31,
2013
|
October 31,
2012
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|||||||
- ASSETS -
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash
|
$ | 3,483,229 | $ | 7,568,583 | ||||
Accounts receivable, net of allowances of $213,674 for 2013 and 2012
|
12,255,619 | 12,633,128 | ||||||
Inventories
|
9,659,829 | 11,303,581 | ||||||
Prepaid green coffee
|
428,231 | 150,000 | ||||||
Prepaid expenses and other current assets
|
404,495 | 704,013 | ||||||
Prepaid and refundable income taxes
|
1,923,560 | 62,763 | ||||||
Deferred income tax asset
|
513,875 | 702,655 | ||||||
TOTAL CURRENT ASSETS
|
28,668,838 | 33,124,723 | ||||||
Machinery and equipment, at cost, net of accumulated depreciation of $2,981,415 and $2,631,468 for 2013 and 2012, respectively
|
2,030,688 | 1,791,754 | ||||||
Customer list and relationships, net of accumulated amortization of $24,375 and $18,750 for 2013 and 2012, respectively
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125,625 | 131,250 | ||||||
Trademarks
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180,000 | 180,000 | ||||||
Goodwill
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440,000 | 440,000 | ||||||
Equity method investments
|
98,755 | 1,931,931 | ||||||
Deposits and other assets
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623,271 | 648,094 | ||||||
TOTAL ASSETS
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$ | 32,167,177 | $ | 38,247,752 | ||||
- LIABILITIES AND STOCKHOLDERS’ EQUITY -
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Accounts payable and accrued expenses
|
$ | 5,055,539 | $ | 11,769,107 | ||||
Line of credit
|
3,300,000 | 562,500 | ||||||
Due to broker
|
1,050,197 | 1,367,389 | ||||||
Income taxes payable
|
- | 21,122 | ||||||
TOTAL CURRENT LIABILITIES
|
9,405,736 | 13,720,118 | ||||||
Deferred income tax liabilities
|
72,875 | 32,655 | ||||||
Deferred rent payable
|
178,703 | 166,668 | ||||||
Deferred compensation payable
|
515,485 | 528,687 | ||||||
TOTAL LIABILITIES
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10,172,799 | 14,448,128 | ||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Coffee Holding Co., Inc. stockholders’ equity:
|
||||||||
Preferred stock, par value $.001 per share; 10,000,000 shares authorized; no shares issued and outstanding
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- | - | ||||||
Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,456,316 shares issued; 6,372,309 shares outstanding for 2013 and 2012
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6,456 | 6,456 | ||||||
Additional paid-in capital
|
15,904,109 | 15,904,109 | ||||||
Retained earnings
|
6,024,982 | 7,979,247 | ||||||
Less: Treasury stock, 84,007 common shares, at cost for 2013 and 2012
|
(272,133 | ) | (272,133 | ) | ||||
Total Coffee Holding Co., Inc. Stockholders’ Equity
|
21,663,414 | 23,617,679 | ||||||
Non-controlling interest
|
330,964 | 181,945 | ||||||
TOTAL EQUITY
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21,994,378 | 23,799,624 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 32,167,177 | $ | 38,247,752 |
Nine Months Ended
July 31,
|
Three Months Ended
July 31,
|
|||||||||||||||
2013
|
2012
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2013
|
2012
|
|||||||||||||
NET SALES
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$ | 100,375,542 | $ | 138,171,695 | $ | 32,370,692 | $ | 44,484,453 | ||||||||
COST OF SALES (including $24.7 and $23.4 million of related party costs for the nine months ended July 31, 2013 and 2012, respectively. Including $6.3 and $5.9 million for the three months ended July 31, 2013 and 2012, respectively.)
|
96,463,019 | 128,472,249 | 33,526,657 | 40,606,840 | ||||||||||||
GROSS PROFIT (LOSS)
|
3,912,523 | 9,699,446 | (1,155,965 | ) | 3,877,613 | |||||||||||
OPERATING EXPENSES:
|
||||||||||||||||
Selling and administrative
|
5,233,157 | 5,149,653 | 1,713,051 | 1,717,472 | ||||||||||||
Officers’ salaries
|
440,992 | 429,458 | 169,954 | 141,200 | ||||||||||||
TOTALS
|
5,674,149 | 5,579,111 | 1,883,005 | 1,858,672 | ||||||||||||
(LOSS) INCOME FROM OPERATIONS
|
(1,761,626 | ) | 4,120,335 | (3,038,970 | ) | 2,018,941 | ||||||||||
OTHER INCOME (EXPENSE)
|
||||||||||||||||
Interest income
|
30,176 | 27,909 | 12,370 | 9,268 | ||||||||||||
(Loss) income from equity investment
|
(105,204 | ) | (27,471 | ) | (158 | ) | 3,627 | |||||||||
Interest expense
|
(71,320 | ) | (153,294 | ) | (10,542 | ) | (46,762 | ) | ||||||||
TOTALS
|
(146,348 | ) | (152,856 | ) | 1,670 | (33,867 | ) | |||||||||
(LOSS) INCOME BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARIES
|
(1,907,974 | ) | 3,967,479 | (3,037,300 | ) | 1,985,074 | ||||||||||
(Benefit) provision for income taxes
|
(490,108 | ) | 1,460,792 | (997,618 | ) | 729,979 | ||||||||||
Net (Loss) Income Before Non-Controlling Interest in Subsidiary
|
(1,417,866 | ) | 2,506,687 | (2,039,682 | ) | 1,255,095 | ||||||||||
Less: net income attributable to the non-controlling interest
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(149,020 | ) | (67,394 | ) | (69,229 | ) | (23,899 | ) | ||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC.
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$ | (1,566,886 | ) | $ | 2,439,293 | $ | (2,108,911 | ) | $ | 1,231,196 | ||||||
Basic earnings per share
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$ | (.25 | ) | $ | .38 | $ | (.33 | ) | $ | .19 | ||||||
Diluted earnings per share
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$ | (.25 | ) | $ | .37 | $ | (.33 | ) | $ | .19 | ||||||
Dividends declared per share
|
$ | .06 | $ | .09 | $ | .00 | $ | .03 | ||||||||
Weighted average common shares outstanding:
|
||||||||||||||||
Basic
|
6,372,309 | 6,372,309 | 6,372,309 | 6,372,309 | ||||||||||||
Diluted
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6,672,309 | 6,639,309 | 6,372,309 | 6,639,309 |
2013
|
2012
|
|||||||
OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
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$ | (1,417,866 | ) | $ | 2,506,687 | |||
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
||||||||
Depreciation and amortization
|
355,570 | 332,630 | ||||||
Unrealized gain on commodities
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(317,192 | ) | (1,701,257 | ) | ||||
Loss on equity method investments
|
105,204 | 27,471 | ||||||
Deferred rent
|
12,035 | 14,811 | ||||||
Deferred income taxes
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229,000 | 628,000 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
377,509 | 2,433,607 | ||||||
Inventories
|
2,147,252 | 2,277,100 | ||||||
Prepaid expenses and other current assets
|
299,518 | 86,813 | ||||||
Prepaid green coffee
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(278,231 | ) | 187,454 | |||||
Prepaid and refundable income taxes
|
(1,860,797 | ) | 175,939 | |||||
Accounts payable and accrued expenses
|
(5,721,168 | ) | (6,216,243 | ) | ||||
Deposits and other assets
|
11,621 | 14,619 | ||||||
Income taxes payable
|
(21,122 | ) | 142 | |||||
Net cash (used in) provided by operating activities
|
(6,078,667 | ) | 767,773 | |||||
INVESTING ACTIVITIES:
|
||||||||
Purchase of equity method investments
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- | (2,100,000 | ) | |||||
Proceeds from disposition of equity method investment
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232,069 | - | ||||||
Purchases of machinery and equipment
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(588,879 | ) | (517,033 | ) | ||||
Net cash used in investing activities
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(356,810 | ) | (2,617,033 | ) | ||||
FINANCING ACTIVITIES:
|
||||||||
Advances under bank line of credit
|
6,788,920 | 129,236,460 | ||||||
Principal payments under bank line of credit
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(4,051,420 | ) | (129,677,124 | ) | ||||
Payment of dividend
|
(387,377 | ) | (581,067 | ) | ||||
Net cash provided by (used in) financing activities
|
2,350,123 | (1,021,731 | ) | |||||
NET DECREASE IN CASH
|
(4,085,354 | ) | (2,870,991 | ) | ||||
CASH, BEGINNING OF PERIOD
|
7,568,583 | 4,244,335 | ||||||
CASH, END OF PERIOD
|
$ | 3,483,229 | $ | 1,373,344 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
|
||||||||
Interest paid
|
$ | 73,261 | $ | 168,428 | ||||
Income taxes paid
|
$ | 803,490 | $ | 570,160 |
2013
|
2012
|
|||||||
Inventory received
|
$ | 503,500 | $ | - | ||||
Settlement of accounts payable
|
992,402 | - | ||||||
Total noncash proceeds
|
$ | 1,495,902 | $ | - |
July 31,
2013
|
October 31,
2012
|
|||||||
Allowance for doubtful accounts
|
$ | 126,674 | $ | 126,674 | ||||
Reserve for other allowances
|
47,000 | 47,000 | ||||||
Reserve for sales discounts
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40,000 | 40,000 | ||||||
Totals
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$ | 213,674 | $ | 213,674 |
July 31,
2013
|
October 31,
2012
|
|||||||
Packed coffee
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$ | 1,810,032 | $ | 1,753,314 | ||||
Green coffee
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7,136,839 | 8,989,763 | ||||||
Packaging supplies
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712,958 | 560,504 | ||||||
Totals
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$ | 9,659,829 | $ | 11,303,581 |
July 31,
2013
|
October 31,
2012
|
|||||||
Option Contracts
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(27,456 | ) | 253,369 | |||||
Future Contracts
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(1,022,741 | ) | (1,620,758 | ) | ||||
Total Commodities
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(1,050,197 | ) | (1,367,389 | ) |
Three Months Ended July 31,
|
||||||||
2013
|
2012
|
|||||||
Gross realized gains
|
$ | 630,564 | $ | 2,698,809 | ||||
Gross realized losses
|
(4,482,121 | ) | (2,576,080 | ) | ||||
Unrealized gains
|
286,637 | 404,643 | ||||||
Total
|
$ | (3,564,920 | ) | $ | 527,372 |
Nine Months Ended July 31,
|
||||||||
2013
|
2012
|
|||||||
Gross realized gains
|
$ | 1,782,571 | $ | 3,187,914 | ||||
Gross realized losses
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(6,987,735 | ) | (4,774,068 | ) | ||||
Unrealized gains
|
317,192 | 1,701,257 | ||||||
Total
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$ | (4,887,972 | ) | $ | 115,103 |
NOTE 9 -
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INCOME TAXES (cont’d):
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NOTE 10 -
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EARNINGS PER SHARE:
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NOTE 11 -
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ECONOMIC DEPENDENCY:
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NOTE 11 -
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ECONOMIC DEPENDENCY (cont’d):
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NOTE 12 -
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RELATED PARTY TRANSACTIONS:
|
|
a.
|
Treasury Stock. The Company utilizes the cost method of accounting for treasury stock. The cost of reissued shares is determined under the last-in, first-out method. The Company did not purchase any shares during the three and six months ended April 30, 2013 and 2012.
|
|
b.
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Dividends: On December 27, 2012, the Company paid a cash dividend of $387,379 ($0.06 per share) to all stockholders of record as of December 15, 2012. On January 20, 2012 and April 30, 2012, the Company paid a cash dividend of $193,689 ($0.03 per share) to all stockholders of record as of January 16, 2012 and April 16, 2012. On June 13, 2013, the Company announced that the Board elected to terminate the dividend program.
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Fair Value Measurements as of July 31, 2013
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Money market
|
$ | 515,485 | $ | 515,485 | – | – | ||||||||||
Commodities Options
|
– | – | – | – | ||||||||||||
Total Assets
|
$ | 515,485 | $ | 515,458 | – | – | ||||||||||
Liabilities:
|
||||||||||||||||
Commodities Options
|
$ | (27,456 | ) | $ | (27,456 | ) | ||||||||||
Commodities Futures
|
(1,022,741 | ) | – | (1,022,741 | ) | – | ||||||||||
Total Liabilities
|
$ | (1,050,197 | ) | – | $ | (1,050,197 | ) | – |
Fair Value Measurements as of October 31, 2012
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Money market
|
$ | 334,221 | $ | 334,221 | – | – | ||||||||||
Equities
|
194,466 | 194,466 | – | – | ||||||||||||
Commodities Options
|
253,369 | – | 253,369 | – | ||||||||||||
Total Assets
|
$ | 782,056 | $ | 528,687 | 253,369 | – | ||||||||||
Liabilities:
|
||||||||||||||||
Commodities Futures
|
(1,620,758 | ) | – | (1,620,758 | ) | – | ||||||||||
Total Liabilities
|
$ | (1,620,758 | ) | – | $ | (1,620,758 | ) | – |
●
|
our dependency on a single commodity could affect our revenues and profitability;
|
●
|
our success in expanding our market presence in new geographic regions;
|
●
|
the effectiveness of our hedging policy may impact our profitability;
|
●
|
the success of our joint ventures;
|
●
|
our success in implementing our business strategy or introducing new products;
|
●
|
our ability to attract and retain customers;
|
●
|
our ability to retain key personnel;
|
●
|
our ability to obtain additional financing;
|
●
|
our ability to comply with the restrictive covenants we are subject to under our current financing;
|
●
|
the effects of competition from other coffee manufacturers and other beverage alternatives;
|
●
|
the impact to the operations of our Colorado facility;
|
●
|
general economic conditions and conditions which affect the market for coffee;
|
●
|
the macro global economic environment;
|
●
|
our ability to maintain and develop our brand recognition;
|
●
|
the impact of rapid or persistent fluctuations in the price of coffee beans;
|
●
|
fluctuations in the supply of coffee beans;
|
●
|
the volatility of our common stock; and
|
●
|
other risks which we identify in future filings with the SEC.
|
●
|
the sale of wholesale specialty green coffee;
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●
|
the roasting, blending, packaging and sale of private label coffee; and
|
●
|
the roasting, blending, packaging and sale of our seven brands of coffee.
|
●
|
the level of marketing and pricing competition from existing or new competitors in the coffee industry;
|
●
|
our ability to retain existing customers and attract new customers;
|
●
|
our hedging policy;
|
●
|
fluctuations in purchase prices, the supply of green coffee and the selling prices of our products; and
|
●
|
our ability to manage inventory and operations and maintain gross margins.
|
●
|
We recognize revenue in accordance with the relevant authoritative guidance. Revenue is recognized at the point title and risk of ownership transfers to its customers which is upon the shippers taking possession of the goods because i) title passes in accordance with the terms of the purchase orders and with our agreements with our customers, ii) any risk of loss is covered by the customers’ insurance, iii) there is persuasive evidence of a sales arrangement, iv) the sales price is determinable and v) collection of the resulting receivable is reasonably assured. Thus, revenue is recognized at the point of shipment.
|
●
|
Our allowance for doubtful accounts is maintained to provide for losses arising from customers’ inability to make required payments. If there is deterioration of our customers’ credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required. For example, every additional one percent of our accounts receivable that becomes uncollectible, would decrease our operating income by approximately $122,500 for the quarter ended July 31, 2013. 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.
|
●
|
Inventories are stated at lower of cost (determined on a first-in, first-out basis) or market. Based on our assumptions about future demand and market conditions, inventories are subject to be written-down to market value. If our assumptions about future demand change and/or actual market conditions are less favorable than those projected, additional write-downs of inventories may be required. Each additional one percent of potential inventory writedown would have decreased operating income by approximately $96,600 for the quarter ended July 31, 2013.
|
●
|
We account for income taxes in accordance with the relevant authoritative guidance. Deferred tax assets and liabilities are computed for temporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized. Accordingly, our net deferred tax asset as of July 31, 2013 of $441,000 may require a valuation allowance if we do not generate taxable income.
|
●
|
Our goodwill consists of the cost in excess of the fair market value of the acquired net assets of OPTCO. This company has been integrated into a structure which does not provide the basis for separate reporting units. Consequently, the Company is a single reporting unit for goodwill impairment testing purposes. We also have intangible assets consisting of customer list and relationships and trademarks acquired from OPTCO. At July 31, 2013 our balance sheet reflected goodwill and intangible assets as set forth below:
|
Customer list and relationships, net
|
$ | 125,625 | ||
Trademarks
|
180,000 | |||
Goodwill
|
440,000 | |||
$ | 745,625 |
Principal Executive Officer and Principal Financial Officer’s Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
Principal Executive Officer and Principal Financial Officer’s Certification furnished Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
Coffee Holding Co., Inc.
|
|||
Date: September 11, 2013
|
By:
|
/s/ Andrew Gordon
|
|
Andrew Gordon President
|
|||
Chief Executive Officer and Chief Financial Officer |
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended July 31, 2013 of Coffee Holding Co., Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the quarterly report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: September 11, 2013
|
By:
|
/s/ Andrew Gordon | |
Andrew Gordon | |||
President, Chief Executive Officer and | |||
Chief Financial Officer |
(A)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
|
(B)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.
|
Date: September 11, 2013
|
By:
|
/s/ Andrew Gordon | |
Andrew Gordon
|
|||
President, Chief Executive Officer | |||
and Chief Financial Officer |
11. ECONOMIC DEPENDENCY
|
9 Months Ended |
---|---|
Jul. 31, 2013
|
|
Risks and Uncertainties [Abstract] | |
ECONOMIC DEPENDENCY | Approximately 59% of the Companys sales were derived from one customer during the nine months ended July 31, 2013. This customer also accounted for approximately $7,086,000 of the Companys accounts receivable balance at July 31, 2013. Approximately 63% of the Companys sales were derived from one customer during the nine months ended July 31, 2012. This customer also accounted for approximately $6,886,000 of the Companys accounts receivable balance at July 31, 2012. Concentration of credit risk with respect to other trade receivables is limited due to the short payment terms generally extended by the Company, by ongoing credit evaluations of customers, and by maintaining an allowance for doubtful accounts that management believes will adequately provide for credit losses.
For the nine months ended July 31, 2013, approximately 67% of the Companys purchases were from four vendors. These vendors accounted for approximately $2,773,000 of the Companys accounts payable at July 31, 2013. For the nine months ended July 31, 2012, approximately 62% of the Companys purchases were from four vendors. These vendors accounted for approximately $3,057,000 of the Companys accounts payable at July 31, 2012. Management does not believe the loss of any one vendor would have a material adverse effect of the Companys operations due to the availability of many alternate suppliers.
Approximately 62% of the Companys sales were derived from one customer during the three months ended July 31, 2013. Approximately 63% of the Companys sales were derived from one customer during the three months ended July 31, 2012.
For the three months ended July 31, 2013, approximately 72% of the Companys purchases were from four vendors. For the three months ended July 31, 2012, approximately 65% of the Companys purchases were from three vendors. Management does not believe the loss of any one vendor would have a material adverse effect on the Companys operations due to the availability of many alternate suppliers. |
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2013
|
Jul. 31, 2012
|
Jul. 31, 2013
|
Jul. 31, 2012
|
|
Consolidated Statements Of Income | ||||
NET SALES | $ 32,370,692 | $ 44,484,453 | $ 100,375,542 | $ 138,171,695 |
COST OF SALES (including $24.7 and $23.4 million of related party costs for the nine months ended July 31, 2013 and 2012, respectively. Including $6.3 and $5.9 million for the three months ended July 31, 2013 and 2012, respectively.) | 33,526,657 | 40,606,840 | 96,463,019 | 128,472,249 |
GROSS PROFIT (LOSS) | (1,155,965) | 3,877,613 | 3,912,523 | 9,699,446 |
OPERATING EXPENSES: | ||||
Selling and administrative | 1,713,051 | 1,717,472 | 5,233,157 | 5,149,653 |
Officers’ salaries | 169,954 | 141,200 | 440,992 | 429,458 |
TOTALS | 1,883,005 | 1,858,672 | 5,674,149 | 5,579,111 |
(LOSS) INCOME FROM OPERATIONS | (3,038,970) | 2,018,941 | (1,761,626) | 4,120,335 |
OTHER INCOME (EXPENSE): | ||||
Interest income | 12,370 | 9,268 | 30,176 | 27,909 |
(Loss) income from equity investment | (158) | 3,627 | (105,204) | (27,471) |
Interest expense | (10,542) | (46,762) | (71,320) | (153,294) |
TOTAL | 1,670 | (33,867) | (146,348) | (152,856) |
(LOSS) INCOME BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARIES | (3,037,300) | 1,985,074 | (1,907,974) | 3,967,479 |
(Benefit) provision for income taxes | (997,618) | 729,979 | (490,108) | 1,460,792 |
Net (Loss) Income Before Non-Controlling Interest in Subsidiary | (2,039,682) | 1,255,095 | (1,417,866) | 2,506,687 |
Less: net income attributable to the non-controlling interest | (69,229) | (23,899) | (149,020) | (67,394) |
NET (LOSS) INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. | $ (2,108,911) | $ 1,231,196 | $ (1,566,886) | $ 2,439,293 |
Basic earnings per share | $ (0.33) | $ 0.19 | $ (0.25) | $ 0.38 |
Diluted earnings per share | $ (0.33) | $ 0.19 | $ (0.25) | $ 0.37 |
Dividends declared per share | $ 0 | $ 0.03 | $ 0.06 | $ 0.09 |
Weighted average common shares outstanding: | ||||
Basic | 6,372,309 | 6,372,309 | 6,372,309 | 6,372,309 |
Diluted | 6,372,309 | 6,639,309 | 6,672,309 | 6,639,309 |
4. PREPAID GREEN COFFEE
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9 Months Ended |
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Jul. 31, 2013
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Notes to Financial Statements | |
4. PREPAID GREEN COFFEE | The balance represents advance payments made by OPTCO to several coffee growing cooperatives for the purchase of green coffee. Interest is charged to the cooperatives for these advances. Interest earned was $12,370 and $6,238 for the three months ended July 2013 and July 2012, respectively. Interest earned was $22,596 and $19,423 for the nine months ended July 2013 and 2012, respectively. The prepaid coffee balance was $428,231 at July 31, 2013 and $150,000 at October 31, 2012. |
7. COMMODITIES HELD BY BROKER (Tables)
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Jul. 31, 2013
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Commodities Held By Broker Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Commodities held by Broker |
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Schedule of realized and unrealized gains and losses |
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12. RELATED PARTY TRANSACTIONS
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9 Months Ended |
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Jul. 31, 2013
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Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | The Company has engaged its 40% partner in GCC as an outside contractor (the Partner). Included in contract labor expense are expenses incurred from the Partner during the three and nine months ended July 31, 2013 of $133,970 and $365,364, respectively, for the processing of finished goods.
An employee of one of the top four vendors is a director of the Company. Purchases from that vendor totaled approximately $24,700,000 and $6,300,000 for the nine and three months ended July 31, 2013 and $23,400,000 and $5,900,000 for the nine and three months ended July 31, 2012. The corresponding accounts payable balance to this vendor was approximately $1,173,000 and $1,540,000 at July 31, 2013 and 2012, respectively.
In January 2005, the Company established the Coffee Holding Co., Inc. Non-Qualified Deferred Compensation Plan. Currently, there is only one participant in the plan: Andrew Gordon, the Companys Chief Executive Officer. Within the plan guidelines, this employee is deferring a portion of his current salary and bonus. The assets are held in a separate trust. The deferred compensation payable represents the liability due to an officer of the Company. The assets are included in the Deposits and other assets in the accompanying balance sheets. The deferred compensation asset and liability at July 31, 2013 and October 31, 2012 were $515,485 and $528,687, respectively. |
6. INVENTORIES (Details) (USD $)
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Jul. 31, 2013
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Oct. 31, 2012
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Inventories Details | ||
Packed coffee | $ 1,810,032 | $ 1,753,314 |
Green coffee | 7,136,839 | 8,989,763 |
Packaging supplies | 712,958 | 560,504 |
Totals | $ 9,659,829 | $ 11,303,581 |
5. ACCOUNTS RECEIVABLE (Details) (USD $)
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Jul. 31, 2013
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Oct. 31, 2012
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Accounts Receivable Details | ||
Allowance for doubtful accounts | $ 126,674 | $ 126,674 |
Reserve for other allowances | 47,000 | 47,000 |
Reserve for sales discounts | 40,000 | 40,000 |
Totals | $ 213,674 | $ 213,674 |
4. PREPAID GREEN COFFEE (Details Narrative) (USD $)
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3 Months Ended | 9 Months Ended | |||
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Jul. 31, 2013
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Jul. 31, 2012
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Jul. 31, 2013
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Jul. 31, 2012
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Oct. 31, 2012
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Prepaid Green Coffee Details Narrative | |||||
Interest earned | $ 12,370 | $ 6,238 | $ 22,596 | $ 19,423 | |
Prepaid coffee balance | $ 428,231 | $ 428,231 | $ 150,000 |
14. FAIR VALUE MEASUREMENTS (Tables)
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value hierarchy |
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2. BASIS OF PRESENTATION
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9 Months Ended |
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Jul. 31, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | The following (a) condensed consolidated balance sheet as of October 31, 2012, which has been derived from audited financial statements, and (b) the unaudited interim condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Companys latest shareholders Annual Report on Form 10-K filed with the SEC on January 30, 2013 for the fiscal year ended October 31, 2012 (Form 10-K).
In the opinion of management, all adjustments (which include normal and recurring nature adjustments) necessary to present a fair statement of the Companys financial position as of July 31, 2013, and results of operations for the three and nine months ended July 31, 2013 and 2012 and the cash flows for the nine months ended July 31, 2013 and 2012, as applicable, have been made.
The results of operations for the three and nine months ended July 31, 2013 and 2012 are not necessarily indicative of the operating results for the full fiscal year or any future periods.
The condensed consolidated financial statements include the accounts of the Company, OPTCO and GCC. All significant inter-company transactions and balances have been eliminated in consolidation. |
5. ACCOUNTS RECEIVABLE
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2013
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Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||
5. 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 collectibility 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 collectibility. If the financial condition of the Companys customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on managements 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:
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3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY
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9 Months Ended |
---|---|
Jul. 31, 2013
|
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Accounting Changes and Error Corrections [Abstract] | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY | During the first quarter, the Financial Accounting Standards Board has issued Accounting Standards Update (ASU) No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. Upon adoption an entity is required to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The amendments in this guidance became effective for the Company for the first annual reporting period beginning on or after January 1, 2013, and interim periods within those annual periods. Management is still evaluating the effects of adoption of this Accounting Standards Update.
The FASB has issued Accounting Standards Update (ASU) No. 2012-02, Intangibles--Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU states that an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Codification Subtopic 350-30, Intangibles--Goodwill and Other, General Intangibles Other than Goodwill.
Under the guidance in this ASU, an entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments in this ASU became effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entitys financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The Company has determined that the adoption of the ASU has not had a material effect on the Company.
In January 2013, the Financial Accounting and Standards Board (FASB) issued Accounting Standards Update (ASU) ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosure about Offsetting Assets and Liabilities. The ASU clarifies disclosures required for derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements, and securities borrowing and lending transactions that are either offset in accordance with Section 310-20-45 or Section 815-10-46 or subject to an enforceable master netting arrangement or similar agreement. The ASU became effective for annual and interim periods beginning after January 1, 2013. The Company adopted this guidance in 2013 without material impact on its financial position, results of operations or cash flows.
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7. COMMODITIES HELD BY BROKER (Details) (USD $)
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Jul. 31, 2013
|
Oct. 31, 2012
|
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Commodities Held By Broker Details | ||
Option Contracts | $ (27,456) | $ 253,369 |
Future Contracts | (1,022,741) | (1,620,758) |
Commodities due to broker | $ (1,050,197) | $ (1,367,389) |
8. LINE OF CREDIT (Details Narrative) (USD $)
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Jul. 31, 2013
|
Oct. 31, 2012
|
---|---|---|
Line Of Credit Details Narrative | ||
Bank line of credit | $ 3,300,000 | $ 562,500 |