þ
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Nevada
|
11-2238111
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
3475
Victory Boulevard, Staten Island, New York
|
10314
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of each class:
|
Name
of each exchange on which registered:
|
|
Common
Stock, Par Value $0.001 Per Share
|
American
Stock Exchange
|
Large accelerated filer | o | Non-accelerated filer | o |
Accelerated filer | o | Smaller Reporting Company | þ |
Page | ||
PART I | 1 | |
ITEM 1.
|
BUSINESS
|
1 |
ITEM 1A.
|
RISK
FACTORS
|
11 |
ITEM 1B.
|
UNRESOLVED STAFF
COMMENTS
|
16 |
ITEM 2.
|
PROPERTIES
|
16 |
ITEM 3.
|
LEGAL
PROCEEDINGS
|
17 |
ITEM 4.
|
SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
|
17 |
PART II | 18 | |
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
|
18 |
ITEM 6.
|
SELECTED FINANCIAL
DATA
|
19 |
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
|
20 |
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
|
26 |
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 27 |
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
27 |
ITEM
9A(T).
|
CONTROLS
AND PROCEDURES
|
27 |
ITEM 9B.
|
OTHER
INFORMATION
|
28 |
PART III | ||
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
|
28 |
ITEM 11.
|
EXECUTIVE
COMPENSATION
|
28 |
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
|
28 |
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
28 |
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND
SERVICES
|
28 |
PART IV | ||
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT
SCHEDULES
|
29 |
SIGNATURES | 30 | |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | F-1 |
|
|
|
|
|
●
For
over 15 years, we have been members of Coffee Kids, an international
non-profit organization that helps to improve the quality of life of
children and their families in coffee-growing communities in Mexico,
Guatemala, Nicaragua and Costa
Rica.
|
|
●
We are
members of Grounds for Health, an organization that educates, screens, and
arranges treatment for women who have cancer and live in the rural coffee
growing communities of Mexico.
|
|
●
We are
a licensed Fair Trade dealer of Fair Trade certified
coffee. Fair Trade helps small coffee farmers to increase their
incomes and improve the prospects of their communities and
families. It guarantees farmers a minimum price of $1.25 per
pound or twelve cents above the current market
price.
|
|
●
Most
recently, we are the administrative benefactors to a new non-profit
organization called Cup for Education. After discovering the
lack of schools, teachers, and basic fundamental learning supplies in the
poor coffee growing communities of Central and Latin America, “Cup” was
established by our employee, Karen Gordon, to help build schools, sponsor
teachers, and purchase basic supplies such as books, chalk and other
necessities for a proper education.
|
ITEM
1A.
|
RISK
FACTORS
|
|
|
ITEM
1B.
|
UNRESOLVED
STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM
3.
|
LEGAL
PROCEEDINGS
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
ITEM
5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
High
|
Low
|
|||||||
2008
|
||||||||
1
st
Quarter
|
$
|
5.25
|
$
|
3.83
|
||||
2
nd
Quarter
|
$
|
4.60
|
$
|
2.36
|
||||
3
rd
Quarter
|
$
|
2.58
|
$
|
1.98
|
||||
4
th
Quarter
|
$
|
3.09
|
$
|
1.23
|
||||
2009
|
||||||||
1
st
Quarter
|
$
|
1.79
|
$
|
0.77
|
||||
2
nd
Quarter
|
$
|
4.91
|
$
|
0.56
|
||||
3
rd
Quarter
|
$
|
4.98
|
$
|
1.87
|
||||
4
th
Quarter
|
$
|
5.21
|
$
|
3.55
|
ITEM
6.
|
SELECTED
FINANCIAL DATA
|
For
the Years Ended October 31,
|
||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Income
Statement Data:
|
||||||||||||||||||||
Net
sales
|
$ | 74,452 | $ | 71,186 | $ | 57,365 | $ | 51,171 | $ | 41,545 | ||||||||||
Cost
of sales
|
64,440 | 68,762 | 49,071 | 43,576 | 33,876 | |||||||||||||||
Gross
profit
|
10,012 | 2,424 | 8,294 | 7,595 | 7,669 | |||||||||||||||
Operating
expenses
|
6,389 | 6,363 | 6,842 | 6,231 | 5,698 | |||||||||||||||
Income
(loss) from operations
|
3,623 | (3,939 | ) | 1,452 | 1,364 | 1,971 | ||||||||||||||
Other
income (expense)
|
1,869 | (86 | ) | (90 | ) | (68 | ) | (60 | ) | |||||||||||
Income
(loss) before income taxes
|
5,492 | (4,025 | ) | 1,362 | 1,296 | 1,911 | ||||||||||||||
Provision
(benefit) for income taxes
|
2,159 | (1,430 | ) | 418 | 602 | 726 | ||||||||||||||
Minority
interest
|
(42 | ) | (2 | ) | (7 | ) | (6 | ) | – | |||||||||||
Net
income (loss)
|
$ | 3,291 | $ | (2,597 | ) | $ | 937 | $ | 700 | $ | 1,185 | |||||||||
Net
income (loss) per share – Basic and diluted
|
$ | 0.60 | $ | (0.47 | ) | $ | 0.17 | $ | 0.13 | $ | 0.25 |
At October 31, | ||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
(Dollars in thousands, except per shares data) | ||||||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||
Total
assets
|
$ | 19,804 | $ | 21,002 | $ | 20,397 | $ | 18,982 | $ | 16,545 | ||||||||||
Short-term
debt
|
792 | 3,522 | 897 | 2,543 | 1,064 | |||||||||||||||
Long-term
debt
|
– | – | – | – | – | |||||||||||||||
Total
liabilities
|
8,625 | 13,151 | 8,194 | 7,640 | 5,904 | |||||||||||||||
Stockholders’
equity
|
11,133 | 7,847 | 12,202 | 11,342 | 10,642 | |||||||||||||||
Book
value per share
|
$ | 2.05 | $ | 1.44 | $ | 2.05 | $ | 2.05 | $ | 1.92 |
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
|
Our
operations have primarily focused on the following areas of the coffee
industry:
|
|
●
the
sale of wholesale specialty green coffee;
|
|
●
the
roasting, blending, packaging and sale of private label coffee;
and
|
|
●
the
roasting, blending, packaging and sale of our seven brands of
coffee.
|
|
Our
operating results are affected by a number of factors
including:
|
|
●
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;
|
|
●
fluctuations in purchase prices and
supply of green coffee and in the selling prices of our products;
and
|
|
●
our
ability to manage inventory and fulfillment operations and maintain gross
margins.
|
|
●
We
recognize revenue in accordance with the authoritative
guidance. Revenue is recognized at the point of passage to the
customer of title and risk of loss, when there is persuasive evidence of
an arrangement, the sales price is determinable, and collection of the
resulting receivable is reasonably assured. We generally
recognize revenue at the time of shipment. Sales are reflected
net of discounts and returns.
|
|
●
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 $102,000 for the year ended October 31,
2009.
|
|
●
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 $48,000 for the year ended
October 31, 2009.
|
|
●
We
account for income taxes in accordance with the authoritative
guidance. Deferred tax assets and liabilities are determined
based on the liabilities, using 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 October
31, 2009 of $150,500 may require a valuation allowance if we do not
generate taxable income.
|
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
|
ITEM
9B.
|
OTHER
INFORMATION
|
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
|
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
ITEM
14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES
|
ITEM
15.
|
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
|
Exhibit No.
|
Description
|
|
2.1
|
Agreement
and Plan of Merger, dated October 31, 1997, by and among Transpacific
International Group Corp. and Coffee Holding Co., Inc. (incorporated
herein by reference to Exhibit 2 to Post-Effective Amendment No. 1 to the
Company’s Registration Statement on Form SB-2 filed on November 10, 1997
(File No. 333-00588-NY)).
|
|
2.2
|
Asset
Purchase Agreement, dated February 4, 2004, by and between Coffee Holding
Co., Inc. and Premier Roasters LLC (incorporated herein by reference to
Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February
20, 2004 (File No. 333-00588-NY)).
|
|
3.1
|
Amended
and Restated Articles of Incorporation of the Company (incorporated herein
by reference to Exhibit 3.1 to the Company’s Registration Statement on
Form 8-A the “2005 Registration Statement” filed on May 2, 2005 (File No.
001-32491)).
|
|
3.2
|
By-Laws
of the Company (incorporated herein by reference to Exhibit 3.2 to the
2005 Registration Statement (File No. 001-32491)).
|
|
4.1
|
Form
of Stock Certificate of the Company (incorporated herein by reference to
the Company’s Registration Statement on Form SB-2 filed on June 24, 2004
(Registration No. 333-116838)).
|
|
10.1
|
Loan
and Security Agreement, dated February 17, 2009, by and between Sterling
National Bank and Coffee Holding Co., Inc. (incorporated herein by
reference to Exhibit 10.21 to the Company’s Current Report on Form 8-K
filed on February 23, 2009 (File No. 001-32491)).
|
|
10.2
|
Lease,
dated February 4, 2004, by and between Coffee Holding Co., Inc. and the
City of La Junta, Colorado (incorporated herein by reference to Exhibit
10.12 to Amendment No. 1 to the Company’s Registration Statement on Form
SB-2/A filed on August 12, 2004 (Registration No.
333-116838)).
|
|
10.3
|
Trademark
License Agreement, dated February 4, 2004, between Del Monte Corporation
and Coffee Holding Co, Inc. (incorporated herein by reference to Exhibit
10.13 to the Company’s Quarterly Report on Form 10-QSB/A for the quarter
ended April 30, 2004 filed on August 26, 2004 (File No.
333-00588-NY)).
|
|
10.4
|
Amended
and Restated Employment agreement, dated April 11, 2008, by and between
Coffee Holding Co., Inc. and Andrew Gordon (incorporated herein by
reference to Exhibit 10.14 of the Company’s Current Report on Form 8-K
filed on April 16, 2008 (File No. 001-32491)).
|
|
10.5
|
Amended
and Restated Employment agreement, dated April 11, 2008, by and between
Coffee Holding Co., Inc. and David Gordon (incorporated herein by
reference to Exhibit 10.15 of the Company’s Current Report on Form 8-K
filed on April 16, 2008 (File No. 001-32491)).
|
|
10.6
|
Coffee
Holding Co., Inc. Non-Qualified Deferred Compensation Plan (incorporated
herein by reference to the Company’s Quarterly Report on Form 10-QSB filed
on June 14, 2005 (File No. 001-32491)).
|
|
10.7
|
Contract
of Sale, dated April 14, 2009, by and between Coffee Holding Co., Inc. and
4401 1st Ave LLC.
|
|
11.1
|
Calculation
of Earnings Per Share.
|
|
31.1
|
Principal
Executive Officer and Principal Financial Officer’s Certification pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Principal
Executive Officer and Principal Financial Officer’s Certification
furnished pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
COFFEE HOLDING CO., INC. | |||
|
By:
|
/s/ Andrew Gordon | |
Andrew Gordon | |||
President, Chief Executive Officer |
Name
|
Title
|
Date
|
||
/s/ Andrew Gordon | ||||
Andrew
Gordon
|
President,
Chief Executive Officer, Chief Financial Officer, Treasurer and Director
(principal executive officer and principal financial and accounting
officer)
|
January
28, 2010
|
||
/s/ David Gordon
|
||||
David
Gordon
|
Executive
Vice President – Operations, Secretary and Director
|
January
28, 2010
|
||
/s/ Gerard DeCapua | ||||
Gerard
DeCapua
|
Director
|
January
28, 2010
|
||
/s/ Daniel Dwyer | ||||
Daniel
Dwyer
|
Director
|
January
28, 2010
|
||
/s/ Barry Knepper
|
||||
Barry
Knepper
|
Director
|
January
28, 2010
|
||
/s/ John Rotelli | ||||
John
Rotelli
|
Director
|
January
28, 2010
|
||
/s/ Robert M. Williams | ||||
Robert
M. Williams
|
Director
|
January
28, 2010
|
Exhibit No.
|
Description
|
|
10.7
|
Contract
of Sale, dated April 14, 2009, by and between Coffee Holding Co., Inc. and
4401 1st Ave LLC.
|
|
11.1
|
Calculation
of Earnings per Share.
|
|
31.1
|
Principal
Executive Officer and Principal Financial Officer’s Certification pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Principal
Executive Officer and Principal Financial Officer’s Certification
furnished pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
PAGE | |||
FINANCIAL STATEMENTS: | |||
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, PARENTEBEARD LLC
|
F-2 | ||
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, LAZAR LEVINE &
FELIX, LLP
|
F-3 | ||
CONSOLIDATED
BALANCE SHEETS AS OF OCTOBER 31, 2009 AND 2008
|
F-4 | ||
CONSOLIDATED
STATEMENTS OF OPERATIONS - YEARS ENDED
OCTOBER
31, 2009 AND 2008
|
F-5 | ||
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY - YEARS ENDED OCTOBER 31,
2009 AND 2008
|
F-6 | ||
CONSOLIDATED
STATEMENTS OF CASH FLOWS - YEARS ENDED
OCTOBER
31, 2009 AND 2008
|
F-7 | ||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | F-9 |
2009
|
2008
|
|||||||
NET
SALES
|
$ | 74,451,673 | $ | 71,186,312 | ||||
COST OF SALES
(which
includes purchases of approximately $16.7 million and $24.2 million in
fiscal years 2009 and 2008, respectively, from a related
party)
|
64,439,494 | 68,762,310 | ||||||
GROSS
PROFIT
|
10,012,179 | 2,424,002 | ||||||
OPERATING
EXPENSES:
|
||||||||
Selling
and administrative
|
5,530,357 | 5,714,032 | ||||||
Bad
debt expense
|
95,294 | 37,575 | ||||||
Officers’
salaries
|
763,399 | 610,927 | ||||||
TOTALS
|
6,389,050 | 6,362,534 | ||||||
INCOME
(LOSS) FROM OPERATIONS
|
3,623,129 | (3,938,532 | ) | |||||
OTHER
INCOME (EXPENSE)
|
||||||||
Interest
income
|
9,191 | 46,209 | ||||||
Other
income and gains
|
5,700 | 9,331 | ||||||
Gain
on sale of manufacturing facility
|
2,107,501 | - | ||||||
Interest
expense
|
(253,092 | ) | (142,087 | ) | ||||
TOTALS
|
1,869,300 | (86,547 | ) | |||||
INCOME
(LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST IN
SUBSIDIARY
|
5,492,429 | (4,025,079 | ) | |||||
Provision
(Benefit) for income taxes
|
2,159,319 | (1,430,110 | ) | |||||
INCOME
(LOSS) BEFORE MINORITY INTEREST
|
3,333,110 | (2,594,969 | ) | |||||
Minority
interest in profit of subsidiary
|
(42,044 | ) | (2,325 | ) | ||||
NET
INCOME (LOSS)
|
$ | 3,291,066 | $ | (2,597,294 | ) | |||
Basic
and diluted earnings (loss) per share
|
$ | .60 | $ | (.47 | ) | |||
Weighted
average common shares outstanding:
|
||||||||
Basic
|
5,441,462 | 5,476,173 | ||||||
Diluted
|
5,441,462 | 5,476,173 |
Common
Stock
|
Treasury
Stock
|
Additional
Paid-in Capital
|
Retained
Earnings
|
Total
|
|||||||||||||||
$.001
Par Value
|
|||||||||||||||||||
Number
of Shares
|
Amount
|
Number
of Shares
|
Amount
|
||||||||||||||||
Balance,
10/31/07
|
5,514,930
|
5,530
|
14,900
|
(76,677)
|
7,327,023
|
4,946,467
|
12,202,343
|
||||||||||||
Stock
repurchase
|
(69,414)
|
-
|
69,414
|
(213,058)
|
-
|
-
|
(213,058)
|
||||||||||||
Dividend
|
-
|
-
|
-
|
-
|
-
|
(1,544,568)
|
(1,544,568)
|
||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(2,597,294)
|
(2,597,294)
|
||||||||||||
Balance,
10/31/08
|
5,445,516
|
$
|
5,530
|
84,314
|
$
|
(289,735)
|
$
|
7,327,023
|
$
|
804,605
|
$
|
7,847,423
|
|||||||
Stock
repurchase
|
(4,693)
|
-
|
4,693
|
(5,526)
|
-
|
-
|
(5,526)
|
||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
3,291,066
|
3,291,066
|
||||||||||||
Balance,
10/31/09
|
5,440,823
|
$
|
5,530
|
89,007
|
$
|
(295,261)
|
$
|
7,327,023
|
$
|
4,095,671
|
$
|
11,132,963
|
2009
|
2008
|
|||||||
OPERATING
ACTIVITIES:
|
||||||||
Net
income (loss)
|
$ | 3,291,066 | $ | (2,597,294 | ) | |||
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating
activities:
|
||||||||
Depreciation
|
537,375 | 541,204 | ||||||
Gain
on sale of manufacturing facility
|
(2,107,501 | ) | - | |||||
Unrealized
(gain) loss on commodities
|
(329,187 | ) | 587,631 | |||||
Other
gains
|
(5,700 | ) | - | |||||
Bad
debt expense
|
95,294 | 37,575 | ||||||
Deferred
rent
|
29,108 | (4,588 | ) | |||||
Deferred
income taxes
|
687,377 | (703,877 | ) | |||||
Minority
interest
|
42,044 | 2,326 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Commodities
held at broker
|
188,710 | 2,538,630 | ||||||
Accounts
receivable
|
(1,201,718 | ) | (1,974,905 | ) | ||||
Inventories
|
246,411 | (574,457 | ) | |||||
Prepaid
expenses and other current assets
|
(134,840 | ) | 239,144 | |||||
Prepaid
and refundable income taxes
|
989,867 | (789,529 | ) | |||||
Deposits,
other assets and deferred compensation
|
91,464 | (138,939 | ) | |||||
Accounts
payable and accrued expenses
|
(2,464,207 | ) | 2,402,981 | |||||
Income
tax payable
|
453,512 | (9,161 | ) | |||||
Net
cash provided by (used in) operating activities
|
409,075 | (443,259 | ) | |||||
INVESTING
ACTIVITIES:
|
||||||||
Purchases
of property and equipment including equipment
deposit
|
(204,808 | ) | (341,982 | ) | ||||
Proceeds
from the sale of equipment
|
30,000 | - | ||||||
Proceeds
from the sale of manufacturing facility
|
2,906,473 | - | ||||||
Security
deposits
|
- | (9,500 | ) | |||||
Net
cash provided by (used in) investing activities
|
2,731,665 | (351,482 | ) | |||||
FINANCING
ACTIVITIES:
|
||||||||
Advances
under bank line of credit
|
76,276,346 | 60,576,960 | ||||||
Principal
payments under bank line of credit
|
(75,484,718 | ) | (57,951,944 | ) | ||||
Pay-off
of previous bank line of credit
|
(3,522,207 | ) | - | |||||
Payment
of dividend
|
- | (1,544,568 | ) | |||||
Purchase
of treasury stock
|
(5,526 | ) | (213,058 | ) | ||||
Net
cash (used in) provided by financing activities
|
(2,736,105 | ) | 867,390 | |||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
404,635 | 72,649 | ||||||
Cash
and cash equivalents, beginning of year
|
963,298 | 890,649 | ||||||
CASH
AND CASH EQUIVALENTS, END OF YEAR
|
$ | 1,367,933 | $ | 963,298 |
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW DATA:
|
||||||||
Interest
paid
|
$ | 250,266 | $ | 127,082 | ||||
Income
taxes paid
|
$ | 737,494 | $ | 33,477 | ||||
Income
taxes (refunded)
|
$ | (703,123 | ) | $ | - |
NOTE
1
|
-
|
BUSINESS
ACTIVITIES:
|
NOTE
2
|
-
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
|
NOTE
2
|
-
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
|
2009
|
2008
|
|||||||
Allowance
for doubtful accounts
|
$ | 105,078 | $ | 92,464 | ||||
Reserve
for sales discounts
|
60,000 | 49,451 | ||||||
Totals
|
$ | 165,078 | $ | 141,915 |
NOTE
2
|
-
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
|
Year
Ended October 31,
|
||||||||
2009
|
2008
|
|||||||
Gross
realized gains
|
$ | 1,789,424 | $ | 2,759,642 | ||||
Gross
realized (losses)
|
(269,702 | ) | (5,240,461 | ) | ||||
Unrealized
gains (losses)
|
329,187 | (587,631 | ) | |||||
Total
|
$ | 1,848,909 | $ | (3,068,450 | ) |
NOTE
2
|
-
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
|
NOTE
2
|
-
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
|
NOTE
3
|
-
|
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS AFFECTING THE
COMPANY:
|
NOTE 3
|
-
|
RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS
AFFECTING THE
COMPANY
(Continued):
|
|
NOTE
3
|
-
|
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS AFFECTING THE
COMPANY
(Continued):
|
NOTE
3
|
-
|
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS AFFECTING
THE
COMPANY (Continued):
|
NOTE
4
|
-
|
INVENTORIES:
|
2009
|
2008
|
|||||||
Packed
coffee
|
$ | 1,388,547 | $ | 1,135,700 | ||||
Green
coffee
|
2,484,518 | 3,147,572 | ||||||
Packaging
supplies
|
927,078 | 763,282 | ||||||
Totals
|
$ | 4,800,143 | $ | 5,046,554 |
NOTE
5
|
-
|
PROPERTY
AND EQUIPMENT:
|
Estimated
Useful Life
|
2009
|
2008
|
|||||||
Building
and improvements
|
15-30
years
|
$ | 161,298 | $ | 1,536,991 | ||||
Machinery
and equipment
|
7
years
|
5,708,166 | 5,723,855 | ||||||
Furniture
and fixtures
|
7
years
|
460,308 | 422,780 | ||||||
6,329,772 | 7,683,626 | ||||||||
Less,
accumulated depreciation
|
4,681,558 | 5,020,573 | |||||||
1,648,214 | 2,663,053 | ||||||||
Land
|
- | 141,000 | |||||||
$ | 1,648,214 | $ | 2,804,053 |
Sales
price
|
$ | 3,000,000 | ||
Less:
net book value of the Facility
|
(798,972 | ) | ||
Less:
closing costs
|
(93,527 | ) | ||
Gain
on sale of manufacturing facility
|
$ | 2,107,501 |
NOTE
6
|
-
|
LINE
OF CREDIT:
|
NOTE
6
|
-
|
LINE
OF CREDIT (Continued):
|
NOTE
7
|
-
|
INCOME
TAXES:
|
2009
|
2008
|
|||||||
Current
|
||||||||
Federal
|
$ | 1,270,286 | $ | (14,175 | ) | |||
State
and local
|
201,656 | (9,135 | ) | |||||
1,471,942 | (23,310 | ) | ||||||
Deferred
|
||||||||
Federal
|
420,877 | $ | (1,149,000 | ) | ||||
State
and local
|
266,500 | (257,800 | ) | |||||
687,377 | (1,406,800 | ) | ||||||
Provision
(benefit) for income taxes
|
$ | 2,159,319 | $ | (1,430,110 | ) |
NOTE
7
|
-
|
INCOME
TAXES (Continued):
|
2009
|
2008
|
|||||||||||||||
Federal
income tax statutory rate
|
$ | 1,867,426 | 34 | % | $ | (1,368,527 | ) | (34 | %) | |||||||
State
income taxes
|
291,893 | 5 | % | (61,583 | ) | (2 | %) | |||||||||
Effective
tax rate
|
$ | 2,159,319 | 39 | % | $ | (1,430,110 | ) | (36 | %) |
|
The
tax effects of the temporary differences that give rise to the deferred
tax assets and liabilities as of October 31, 2009 and 2008 are as
follows:
|
2009
|
2008
|
|||||||
Deferred
tax assets:
|
||||||||
Accounts
receivable
|
$ | 69,000 | $ | 55,000 | ||||
Deferred
compensation
|
181,000 | 136,000 | ||||||
Unrealized
loss
|
- | 97,000 | ||||||
Federal
net operating loss
|
- | 579,877 | ||||||
Inventory
|
36,000 | 56,000 | ||||||
Total
current deferred tax asset
|
$ | 286,000 | $ | 923,877 | ||||
Deferred
tax liabilities:
|
||||||||
Current
deferred tax liability:
|
||||||||
Unrealized
gains
|
$ | 121,000 | $ | – | ||||
Non-current
deferred tax liability:
|
||||||||
Property
and equipment
|
14,500 | 86,000 | ||||||
Total
deferred tax liabilities
|
$ | 135,500 | $ | 86,000 |
NOTE
8
|
-
|
COMMITMENTS
AND CONTINGENCIES:
|
|
a)
|
The
Company occupied warehouse facilities, in Brooklyn, New York under an
operating lease, which terminated in March 2009, and was originally set to
expire on December 31, 2011, at a monthly rental of
$15,000. The lease required the Company to pay utilities and
other maintenance expenses. Rent charged to operations amounted
to $75,000 and $180,000 for the years ended October 31, 2009 and 2008,
respectively.
|
|
b)
|
In
February 2004, the Company entered into a lease for office and warehouse
space in La Junta, Colorado. This lease, which is at a monthly
rental of $8,341 beginning January 2005, expires on January 31,
2024. Rent charged to operations amounted to $95,504 for the
years ended October 31, 2009 and
2008.
|
|
c)
|
In
October 2008, the Company entered into a lease for office and warehouse
space in Staten Island, New York. This lease, which is at a
monthly rental of $9,500 beginning November 2008, expires on October 31,
2023 and includes annual rent increases. Rent charged to
operations amounted to $147,696 for the year ended October 31,
2009.
|
|
d)
|
The
Company also uses a variety of independent, bonded commercial warehouses
to store its green coffee beans with leases on a month-to-month
basis.
|
October
31
,
|
||||
2010
|
$ | 217,513 | ||
2011
|
221,036 | |||
2012
|
223,454 | |||
2013
|
227,155 | |||
2014
|
232,238 | |||
Thereafter
|
2,406,372 | |||
$ | 3,527,768 |
NOTE
9
|
-
|
ECONOMIC
DEPENDENCY:
|
NOTE
10
|
-
|
RELATED
PARTY TRANSACTIONS:
|
NOTE
11
|
-
|
STOCKHOLDERS’
EQUITY:
|
|
a.
|
Warrants
to Purchase Common Stock:
|
|
b.
|
Treasury
Stock:
|
NOTE
11
|
-
|
STOCKHOLDERS’
EQUITY (Continued):
|
|
c.
|
Dividends:
|
NOTE
12
|
-
|
NON-QUALIFIED
DEFERRED COMPENSATION PLAN:
|
NOTE
13
|
-
|
FAIR
VALUE MEASUREMENTS:
|
Fair
Value Measurements as of October 31, 2009
|
||||||||||||||||
Total
|
Level
1
|
Level
2
|
Level
3
|
|||||||||||||
Assets:
|
||||||||||||||||
Commodities
|
$ | 482,746 | $ | 482,746 | - | - | ||||||||||
Total
Assets
|
$ | 482,746 | $ | 482,746 | $ | - | $ | - |
2 | ||
3 | ||
7 | ||
7 | ||
9 | ||
10 | ||
11 | ||
12 | ||
12 | ||
13 | ||
15 | ||
15 | ||
16 | ||
18 | ||
18 | ||
18 | ||
19 | ||
19 |
Section
1.
|
Sale
of Premises and Acceptable Title
|
Section
2.
|
Purchase
Price, Acceptable Funds, Existing Mortgages, Purchase Money Mortgage,
Escrow of Downpayment and Foreign Persons
|
Section
3.
|
The
Closing
|
Section
4.
|
Representations
and Warranties of Seller
|
Section
5.
|
Acknowledgments,
Representations and Warranties of Purchaser
|
Section
6.
|
Seller’s
Obligations as to Leases
|
Section
7.
|
Responsibility
for Violations
|
Section
8.
|
Destruction,
Damage or Condemnation
|
Section
9.
|
Covenants
of Seller
|
Section
10.
|
Seller’s
Closing Obligations
|
Section
11.
|
Purchaser’s
Closing Obligations
|
Section
12.
|
Apportionments
|
Section
13.
|
Objections
to Title, Failure of Seller or Purchaser to Perform and Vendee’s
Lien
|
Section
14.
|
Broker
|
Section
15.
|
Notices
|
Section
16.
|
Limitations
on Survival of Representations, Warranties, Covenants and other
Obligations
|
Section
17.
|
Due
Diligence Period - SEE ADDITIONAL RIDER
|
Section
18.
|
Miscellaneous
Provisions
|
Seller: | COFFEE HOLDING CO., INC. | |||
/s/ Andrew Gordon | ||||
By: | Andrew Gordon |
Purchaser: | 4401 1st AVE LLC | |||
By: | /s/ Anthony Gallina | |||
By: | /s/ Y. Baron |
(a) By
check subject to collection, the receipt of which is hereby acknowledged
by Seller:
|
$ | 150,000.00 | ||
(b) By
check or checks delivered to Seller at the Closing in accordance with the
provisions of §2.02:
|
$ | - | ||
(c) By
acceptance of title subject to the following Existing
Mortgage(s):
|
$ | 2,850,000.00 | ||
(d) By
execution and delivery to Seller by Purchaser or its assignee of a note
secured by a Purchase Money Mortgage on the Premises, payable as
follows:
|
$ | -0- | ||
Purchase
Price
|
$ | 3,000,000.00 |
|
If to
Seller:
COFFEE
HOLDING CO., INC.
with a
copy to Seller’s attorney:
GERARD
DE CAPUA, ESQ.
430
Sunrise Highway
Rockville Centre, NY
11570
If to
Purchaser:
4401
1st AVE LLC.
with a
copy to Purchaser’s attorney:
ANTHONY
CLEMENZA, ESQ.
CARONE
& ASSOCIATES, PLLC
2132
Flatbush Ave.
Brooklyn, NY 11234
|
Coffee Holding Co., Inc. | 4401 1st AVE LLC | |||
/s/
Andrew Gordon
|
/s/
Anthony Gallina
|
|||
By:
Andrew Gordon, Seller
|
|
|||
|
/s/
Y. Baron
|
COFFEE
HOLDINGS CO., INC.
|
|||
SELLER:
|
By:
|
/s/ Andrew Gordon | |
Name: | |||
Title: | |||
4401
1st AVE LLC
|
|||
PURCHASER:
|
By:
|
/s/ Anthony Gallina | |
Name | |||
Title | |||
|
By:
|
/s/ Y. Baron | |
Name | |||
Title | |||
1.
|
I
have reviewed this annual report on Form 10-K of Coffee Holding Co., Inc.
and Subsidiary for the fiscal year ended October 31,
2009;
|
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
annual report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this annual 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)) and
internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and I
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 us by others within those
entities, particularly during the period in which this annual report is
being prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our 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 registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual 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: January 27, 2010 | |||
|
By:
|
/s/ Andrew Gordon | |
Andrew Gordon | |||
President, Chief Executive Officer and
Chief Financial Officer (Principal Executive Officer and Principal
Accounting 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: January 27, 2010 | |||
|
By:
|
/s/ Andrew Gordon | |
Andrew Gordon | |||
President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Accounting Officer) | |||