COFFEE HOLDING CO INC
For the period ended Apr 30, 2024. Filed Jun 17, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 30, 2024 · Filed Jun 17, 2024
JVA$4.86+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-01-31; filed 2024-03-18.
0001493152-24-010340
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-04-30; filed 2024-06-17.
0001493152-24-024160
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 50 previous paragraphs and 56 current paragraphs.
27 unchanged; 18 reworded; 7 added; 4 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 3 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Critical Accounting Estimates
Current report
Six Months Ended April 30, 2024 Compared to the Six Months Ended April 30, 2023
Current report
Net Sales. Net sales totaled $38,536,315 for the six months ended April 30, 2024, an increase of $4,889,497, or 15%, from $33,646,818 for the six months ended April 30, 2023. The increase in net sales was due to increased sales to new private label customers..
Current report
Operating Expenses. Total operating expenses increased by $296,055 to $6,634,018 for the six months ended April 30, 2024 from $6,337,963 for the six months ended April 30, 2023. Selling and administrative expenses increased by $306,437 and officers’ salaries decreased by $10,382. Operating expenses increased due to higher payroll costs, professional fees, and insurance expense, partially offset by decreases in medical expenses. automobile costs, and advertising costs. for the six months ended April 30, 2024 compared to the six months ended April 30, 2023.
Current report
Other Income (Expense). Other expense for the six months ended April 30, 2024 was $156,373, an increase of $134,658 from $21,715 for the six months ended April 30, 2023. The increase was attributable to a decrease in other income of $234,041 due to an insurance claim, partially offset by a decrease in our interest expense of $58,780 and an increase in our interest income of $31,300, during the six months ended April 30, 2023.
Current report
On March 15, 2023, the A&R Loan Agreement was also modified to, among other things: (i) provide for a requirement for subordination agreements if necessary, (ii) change the terms of transactions with affiliates from a dollar limitation to allowable in the ordinary course of business, and (iii) establish a new covenant for a fixed charge coverage ratio. As further explained in Note 5 to the unaudited financial statements, we are required to maintain certain financial covenants with respect to our line of credit agreement. We were not in compliance with these requirements as of October 31, 2023. We have since received a waiver from the lender on May 24, 2024 and are in compliance with all requirements.
Current report
The current balance outstanding as of April 30, 2024 under the A&R Loan Agreement is $3.0 million. We are seeking to extend the term of the line of credit agreement and are currently in discussions with the lender. However, until such time as the line of credit is renewed, there is substantial doubt regarding our ability to continue as a going concern and the ability to meet our obligations as they become due within the twelve months from the date the consolidated financial statements are issued.
Removed paragraphs (4)
Previous report
JVA has scheduled a special meeting of its stockholders, to be held on March 28, 2024, to approve the Merger Agreement and the other related proposals related to the Merger.
Previous report
The foregoing description of the Merger Agreement, the Registration Rights Agreement and JVA Voting Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of (i) the Merger Agreement, (ii) the Registration Rights Agreement, and (iii) the form of Voting and Support Agreement, copies of which are filed as exhibits to the Company’s Annual Report on Form 10-K, filed with the SEC on February 9, 20224.
Previous report
Critical Accounting Policies and Estimates
Previous report
As of October 31, 2023, we were not in compliance with the terms of the credit agreement however as of January 31, 2024, the Company was back in compliance with the terms of the credit agreement. The Company did not receive a waiver from the lender when it was not in compliance. The lender has reserved its rights to exercise its rights and remedies at any time at its sole discretion. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Our audited consolidated financial statements do not include any adjustment for the recovery and classification of assets to the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. If we are unable to continue as a going concern, our shareholders would likely lose some or all their investment in our securities.
Reworded paragraphs (18)
Previous wording
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current wording
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous wording
On September 29, 2022, the Company (or “JVA”) entered into a Merger and Share Exchange Agreement, as amended and supplemented (the “Merger Agreement”), by and among JVA, Delta Corp Holdings Limited, a Cayman Islands exempted company (“Pubco”), Delta Corp Holdings Limited, a company incorporated in England and Wales (“Delta”), CHC Merger Sub Inc., a Nevada corporation and wholly owned subsidiary of Pubco (“Merger Sub”), and each of the holders of ordinary shares of Delta as named therein (the “Sellers”). Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into JVA, with JVA surviving as a direct, wholly-owned subsidiary of Pubco (the “Merger”). On June 29, 2023, JVA, Pubco, Delta, Merger Sub and the Sellers entered into Amendment 1 to the Merger Agreement (the “First Amendment”). On January 4, 2024, JVA, Pubco, Delta, Merger Sub and the Sellers entered into Amendment 2 to the Merger Agreement (the “Second Amendment”).
Current wording
On September 29, 2022, Coffee Holding Co., Inc, a Nevada corporation (“JVA”), entered into a Merger and Share Exchange Agreement (the “Merger Agreement”), by and among JVA, Delta Corp Holdings Limited, a Cayman Islands exempted company (“Pubco”), Delta Corp Holdings Limited, a company incorporated in England and Wales (“Delta”), CHC Merger Sub Inc., a Nevada corporation and wholly owned subsidiary of Pubco (“Merger Sub”), and each of the holders of ordinary shares of Delta as named therein (the “Sellers”). Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into JVA, with JVA surviving as a direct, wholly-owned subsidiary of Pubco (the “Merger”). On June 29, 2023, JVA, Pubco, Delta, Merger Sub and the Sellers entered into Amendment 1 to the Merger Agreement (the “First Amendment”). On January 4, 2024, JVA, Pubco, Delta, Merger Sub and the Sellers entered into Amendment 2 to the Merger Agreement (the “Second Amendment”).
Previous wording
On September 29, 2022, concurrently with the entry into the Merger Agreement, Delta, Pubco and JVA entered into Voting and Support Agreements (the “JVA Voting Agreement”) with Andrew Gordon, President and Chief Executive Officer of JVA, and David Gordon, Executive Vice President and Chief Operating Officer of JVA, pursuant to which Messrs. Gordon have agreed to vote in favor of adopting the Merger Agreement and the related transactions as contemplated thereunder. JVA Voting Agreements will terminate upon the earliest to occur of (i) the mutual written consent of each of Delta, Pubco, JVA and Messrs. Gordon, (ii) the Merger Effective Time, and (iii) the date of termination of the Merger Agreement in accordance with its terms.
Current wording
On September 29, 2022, concurrently with the entry into the Merger Agreement, Delta, Pubco and JVA entered into Voting and Support Agreements (the “JVA Voting Agreement”) with Andrew Gordon, President and Chief Executive Officer of JVA, and David Gordon, Executive Vice President and Chief Operating Officer of JVA, pursuant to which Messrs. Gordon have agreed to vote in favor of adopting the Merger Agreement and the related transactions as contemplated thereunder. JVA Voting Agreements will terminate upon the earliest to occur of (i) the mutual written consent of each of Delta, Pubco, JVA and Messrs. Gordon, (ii) the Merger Effective Time, and (iii) the date of termination of the Merger Agreement in accordance with its terms. There was a shareholder vote in April 2024 on the Merger Agreement that did not pass. An additional vote is expected to occur before the end of fiscal 2024.
Previous wording
There have been no changes to our critical accounting policies during the three months ended January 31, 2024. Critical accounting policies and the significant estimates in accordance with such policies are regularly discussed with our Audit Committee. Those policies are discussed under “Critical Accounting Policies” in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our consolidated financial statements and footnotes thereto, each included in our annual report on Form 10-K filed with the SEC on February 9, 2024 for the fiscal year ended October 31, 2023.
Current wording
There have been no changes to our critical accounting policies during the three and six months ended April 30, 2024. Critical accounting policies and the significant estimates in accordance with such policies are regularly discussed with our Audit Committee. Those policies are discussed under “Critical Accounting Policies” in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our consolidated financial statements and footnotes thereto, each included in our annual report on Form 10-K filed with the SEC on February 9, 2024 for the fiscal year ended October 31, 2023.
Previous wording
Net Sales. Net sales totaled $19,540,402 for the three months ended January 31, 2024, an increase of $1,214,288, or 6.6%, from $18,326,114 for the three months ended January 31, 2023. The increase in net sales was mostly due to additions of new private label customers partially offset by lower green coffee sales to our green coffee customer base.
Current wording
Net Sales. Net sales totaled $18,995,913 for the three months ended April 30, 2024, an increase of $3,675,210, or 24%, from $15,320,703 for the three months ended April 30, 2023. The increase in net sales was due to increased sales to new private label customers.
Previous wording
Cost of Sales. Cost of sales for the three months ended January 31, 2024 was $16,060,103, or 82% of net sales, as compared to $16,005,814, or 87% of net sales, for the three months January 31, 2023. Cost of sales consists primarily of the cost of green coffee and packaging materials and realized and unrealized gains or losses on hedging activity. The decrease in cost of sales was due to higher margins on sales of our roasted and packaged products partially offset by a decrease in sales of green coffee with the net effect of higher gross profit on our total business.
Current wording
Cost of Sales. Cost of sales for the three months ended April 30, 2024 was $15,291,933, or 80.5% of net sales, as compared to $12,488,522, or 81.5% of net sales, for the three months ended April 30, 2023, an increase of $2,803,411. Cost of sales consists primarily of the cost of green coffee and packaging materials and realized and unrealized gains or losses on hedging activity. This increase was due to higher green coffee costs during the period.
Previous wording
Gross Profit. Gross profit for the three months ended January 31, 2024 amounted to $3,480,299 or 18% of net sales, as compared to $2,320,300 or 13% of net sales, for the three months ended January 31, 2023. The increase in gross profits on a percentage basis was attributable to the factors listed above.
Current wording
Gross Profit. Gross profit for the three months ended April 30, 2024 amounted to $3,703,980 or 19.5% of net sales, as compared to $2,832,181 or 18.5% of net sales, for the three months ended April 30, 2023. The increase in gross profits on a percentage and dollar basis was attributable to the factors listed above.
Previous wording
Operating Expenses. Total operating expenses decreased by $257,937 to $2,863,388 for the three months ended January 31, 2024 from $3,121,325 for the three months ended January 31, 2023. Selling and administrative expenses decreased by $251,390 and officers’ salaries decreased by $6,547.
Current wording
Operating Expenses. Total operating expenses increased by $553,995 to $3,770,630 for the three months ended April 30, 2024 from $3,216,635 for the three months ended April 30, 2023. Selling and administrative expenses increased by $557,831 and officers’ salaries decreased by $3,836. The increase in selling and administrative expenses was due to higher payroll costs, professional fees, and insurance expense, partially offset by decreases in medical expenses. automobile costs, and advertising costs.
Previous wording
Other Income (Expense). Other expense for the three months ended January 31, 2024 was $123,550, a decrease of $225,222 from other income of $101,672 for the three months ended January 31, 2023. The decrease was attributable to a decrease in other income of $234,041, a decrease in interest income of $3,100, an increase in our loss from our equity investments of $1,007, partially offset by a decrease in our interest expense of $12,926, during the three months ended January 31, 2024.
Current wording
Other Income (Expense). Other expense for the three months ended April 30, 2024 was $32,823, a decrease of $90,563 from $123,386 for the three months ended April 30, 2023. The decrease in other expense was attributable to a decrease in interest expense of $45,853, and an increase in our interest income of $34,400, partially offset by an increase in our loss from our equity investments of $10,310 during the three months ended April 30, 2024.
Previous wording
Income Taxes. Our provision for income taxes for the three months ended January 31, 2024 totaled $142,337 compared to a benefit of $167,250 for the three months ended January 31, 2023. The change was primarily attributable to the difference in the income for the quarter ended January 31, 2024 versus the income in the quarter ended January 31, 2023.
Current wording
Income Taxes. Our benefit for income taxes for the three months ended April 30, 2024 totaled $77,632 compared to a benefit of $148,000 for the three months ended April 30, 2023. The change was primarily attributable to the difference in the loss for the quarter ended April 30, 2024 versus the loss in the quarter ended April 30, 2023.
Previous wording
Net Income. We had net income of $351,024 or $0.06 per share basic and diluted, for the three months ended January 31, 2024 compared to a net loss of ($532,103), or ($0.09) per share basic and diluted for the three months ended January 31, 2023. The increase in net income was due primarily to the reasons described above.
Current wording
Net (Loss) Income. We had net income of $329,183 or $0.06 per share basic and diluted, for the six months ended April 30, 2024 compared to a net loss of $891,943, or $0.16 per share basic and diluted for the six months ended April 30, 2023. The increase in net income was due primarily to the reasons described above.
Previous wording
As of January 31, 2024, we had working capital of $18,901,482, which represented a $301,220 increase from our working capital of $18,600,262 as of October 31, 2023. Our working capital increased primarily due to increases of $87,395 in accounts receivable, $556,360 in due from broker, $79,767 in prepaid expenses and other current assets, decreases of $760,103 in accounts payable and accrued expenses, $4,920,000 in our line of credit, partially offset by decreases of $326,114 in cash, $2,700,000 in receivable from sale of investment, $1,974,274 in inventories, $54,970 in prepaid and refundable taxes, increases of $739,198 in due to broker and $307,849 in lease liability – current portion. As of January 31, 2024, the outstanding balance on our line of credit was $4,700,000 compared to $9,620,000 as of October 31, 2023.
Current wording
As of April 30, 2024, we had working capital of $18,723,150, which represented a $122,888 increase from our working capital of $18,600,262 as of October 31, 2023. Our working capital increased primarily due to the decrease of the outstanding balance on our line of credit to $3,000,000 from $9,620,000 as of April 30, 2024 and October 31, 2023, respectively, along with a decrease of $982,781 in accounts payable and accrued expenses, and a $572,725 increase in due from broker. This is offset by a $306,288 decrease in cash and cash equivalents, a $589,995 decrease in accounts receivable, a $3,474,176 decrease in inventories, a $76,151 decrease in prepaid expenses and other current assets, a $102,023 increase in due to broker and a $371,584 increase in lease liability – current portion.
Previous wording
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 (later acquired by Webster Bank N.A.) (“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.
Current wording
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 was later acquired by Webster Financial Corp. (“Webster”), 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.
Previous wording
On June 28, 2022, the Company reached an agreement for a new loan modification agreement and credit facility with Webster Bank. The terms of the new agreement, among other things: (i) provided for a new maturity date of June 30, 2024, and (ii) changed the interest rate per annum to SOFR plus 1.75% (with such interest rate not to be lower than 3.50%). All other terms of the A&R Loan Agreement and A&R Loan Facility remained the same.
Current wording
On June 28, 2022, we reached an agreement for a new loan modification agreement and credit facility with Webster. The terms of the new agreement, among other things: (i) provided for a new maturity date of June 30, 2024, and (ii) changed the interest rate per annum to SOFR plus 1.75% (with such interest rate not to be lower than 3.50%). All other terms of the A&R Loan Agreement and A&R Loan Facility remained the same.
Previous wording
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 fixed charge coverage ratio, debt to tangible net worth and tangible net worth. The Company as of October 31, 2023 has failed to comply with one of these covenants and resulted in an event of default under the loan agreement. The lender has various defenses that it can apply against the Company, which includes up to and calling the line of credit. There is no guarantee that the lender will issue a waiver or not call the line of credit. The outstanding balance on the Company’s lines of credit were $4,700,000 and $9,620,000 as of January 31, 2024 and October 31, 2023, respectively.
Current wording
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 outstanding balance on our lines of credit were $3,000,000 and $9,620,000 as of April 30, 2024 and October 31, 2023, respectively.
Previous wording
For the three months ended January 31, 2024, our operating activities provided net cash of $4,594,849 as compared to the three months ended January 31, 2023 when operating activities provided net cash of $2,803,512. The increased cash flow from operations for the three months ended January 31, 2024 was primarily due to our receivable from sale of investment.
Current wording
For the six months ended April 30, 2024, our operating activities provided net cash of $3,390,694 as compared to the six months ended April 30, 2023 when operating activities used net cash of $1,234,180. The increase in cash flow from operations was partially due to net income of $329,183 for the six months ended April 30, 2024, compared to a net loss of $891,943 for the six months ended April 30, 2023. Non-cash charges, including depreciation and amortization, unrealized gain on commodities, loss on equity method investments, amortization of ROU assets, and deferred income taxes, resulted in cash provided of $46,835 for the six months ended April 30, 2024 and cash used of $798,995 for the six months ended April 30, 2023. The aggregate of accounts receivable, inventories, prepaid expenses and other current assets, and prepaid and refundable income taxes provided $4,194,892 and $4,791,092 in operating cash flow for the six months ended April 30, 2024 and 2023, respectively. The aggregate of lease liability, deposits and other assets, and accounts payable and accrued expenses used $1,089,577 and $1,865,974 of operating cash flow for the six months ended April 30, 2024 and 2023, respectively.
Previous wording
For the three months ended January 31, 2024, our investing activities used net cash of $0 as compared to the three months ended January 31, 2023 when net cash used by investing activities was $202,018. The decrease in our uses of cash in investing activities was due to our decreased purchases of machinery and equipment during the three months ended January 31, 2024.
Current wording
For the six months ended April 30, 2024, our investing activities used net cash of $2,925,927 as compared to the six months ended April 30, 2023 when net cash used by investing activities was $609,131. The decrease in our use of cash in investing activities was due to our decreased purchases of machinery and equipment during the six months ended April 30, 2024.
Previous wording
For the three months ended January 31, 2024, our financing activities used net cash of $4,920,963 compared to net cash used by financing activities of $862,739 for the three months ended January 31, 2023. The change in cash flow from financing activities for the three months ended January 31, 2024 was due to our credit line activity.
Current wording
For the six months ended April 30, 2024, our financing activities used net cash of $6,622,909 compared to net cash used by financing activities of $1,672,910 for the six months ended April 30, 2023. The change in cash flow from financing activities for the six months ended April 30, 2024 was due to our credit line activity.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Net (Loss) Income. We had a net loss of $21,841 or $— per share basic and diluted, for the three months ended April 30, 2024 compared to a net loss of $359,840, or $0.06 per share basic and diluted for the three months ended April 30, 2023.
Current report — wording carried from elsewhere
Cost of Sales. Cost of sales for the six months ended April 30, 2024 was $31,352,036, or 81.4% of net sales, as compared to $28,494,333, or 84.7% of net sales, for the six months ended April 30, 2023. Cost of sales consists primarily of the cost of green coffee and packaging materials and realized and unrealized gains or losses on hedging activity. This increase was due to higher green coffee costs during the period.
Current report — wording carried from elsewhere
Gross Profit. Gross profit for the six months ended April 30, 2024 amounted to $7,184,279 or 18.6% of net sales, as compared to $5,152,485 or 15.3% of net sales, for the six months ended April 30, 2023. The increase in gross profits on a percentage basis was attributable to the factors listed above.
Current report — wording carried from elsewhere
Income Taxes. Our expense for income taxes for the six months ended April 30, 2024 totaled $64,705 compared to a benefit of $315,250 for the six months ended April 30, 2023. The change was primarily attributable to the difference in the income for the six months ended April 30, 2024 versus the loss in the six months ended April 30, 2023.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On March 17, 2022, the Company reached an agreement for a new loan modification agreement and credit facility which extended the maturity date to June 29, 2022. The facility was then approved for a two-year extension. All other terms of the A&R Loan Agreement and A&R Loan Facility remained the same.