COFFEE HOLDING CO INC - Quarter Report: 2008 January (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________
FORM
10-Q
x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the
quarterly period ended: January
31, 2008
OR
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the
transition period from ____________ to ____________
Commission
file number: 001-32491
Coffee
Holding Co., Inc.
(Exact
name of registrant as specified in its charter)
Nevada
|
11-2238111
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
4401
First Avenue, Brooklyn, New York
|
11232-0005
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(718)
832-0800
(Registrant’s
telephone number including area code)
N/A
(Former
name, former address and former fiscal year, if changed from last
report)
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. Yes x
No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o Accelerated
filer o
Non-accelerated
filer o Smaller
reporting company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No
x
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock
as of the latest practicable date.
5,497,130
shares of common stock, par value $0.001 per share, outstanding at February
29,
2008
PAGE
|
||
PART
I — FINANCIAL INFORMATION
|
||
Item
1.
|
Financial
Statements
|
1
|
Condensed
Consolidated Balance Sheets
January 31, 2008 (unaudited) and October 31, 2007 |
1
|
|
Condensed
Consolidated Statements of Income and Retained Earnings
Three Months Ended January 31, 2008 and 2007 (unaudited) |
2
|
|
Condensed
Consolidated Statements of Cash Flows
Three Months Ended January 31, 2008 and 2007 (unaudited) |
3
|
|
Notes
to Condensed Consolidated Financial Statements (unaudited)
|
4
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
11
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
18
|
Item
4.
|
Controls
and Procedures
|
18
|
PART
II — OTHER INFORMATION
|
||
Item
1.
|
Legal
Proceedings
|
19
|
Item 1A.
|
Risk
Factors
|
19
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
19
|
Item
3.
|
Defaults
Upon Senior Securities
|
20
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
20
|
Item
5.
|
Other
Information
|
20
|
Item
6.
|
Exhibits
|
20
|
Signatures
|
21
|
i
PART
I —
FINANCIAL INFORMATION
Item
1.
Financial Statements
COFFEE
HOLDING CO., INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
JANUARY
31, 2008 AND OCTOBER 31, 2007
January
31, 2008
|
October
31, 2007
|
||||||
(unaudited)
|
|||||||
-
ASSETS -
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
|
$
|
1,089,041
|
$
|
890,649
|
|||
Commodities
held at broker
|
3,082,871
|
3,468,530
|
|||||
Accounts
receivable, net of allowances of $127,464 and $136,781 for 2008
and 2007,
respectively
|
5,543,343
|
7,130,467
|
|||||
Inventories
|
4,709,513
|
4,472,097
|
|||||
Prepaid
expenses and other current assets
|
483,649
|
502,240
|
|||||
Prepaid
and refundable income taxes
|
108,712
|
236,406
|
|||||
Deferred
income tax assets
|
270,000
|
279,000
|
|||||
TOTAL
CURRENT ASSETS
|
15,287,129
|
16,979,389
|
|||||
Property
and equipment, at cost, net of accumulated depreciation of $4,601,266
and
$4,542,490 for 2008 and 2007, respectively
|
2,640,353
|
2,651,960
|
|||||
Deposits
and other assets
|
742,016
|
765,368
|
|||||
TOTAL
ASSETS
|
$
|
18,669,498
|
$
|
20,396,717
|
|||
-
LIABILITIES AND STOCKHOLDERS’ EQUITY -
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
4,968,590
|
$
|
6,791,690
|
|||
Line
of credit borrowings
|
889,253
|
897,191
|
|||||
Dividend
payable
|
1,544,568
|
-
|
|||||
Income
taxes payable
|
7,005
|
9,161
|
|||||
TOTAL
CURRENT LIABILITIES
|
7,409,416
|
7,698,042
|
|||||
Deferred
income tax liabilities
|
127,500
|
145,000
|
|||||
Deferred
compensation payable
|
380,559
|
351,332
|
|||||
TOTAL
LIABILITIES
|
7,917,475
|
8,194,374
|
|||||
MINORITY
INTEREST
|
-
|
-
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
STOCKHOLDERS’
EQUITY:
|
|||||||
Preferred
stock, par value $.001 per share; 10,000,000 shares authorized;
none
issued
|
-
|
-
|
|||||
Common
stock, par value $.001 per share; 30,000,000 shares authorized,
5,529,830
shares issued; 5,497,130 shares outstanding for 2008 and 5,514,930
shares
outstanding in 2007
|
5,530
|
5,530
|
|||||
Additional
paid-in capital
|
7,327,023
|
7,327,023
|
|||||
Retained
earnings
|
3,584,164
|
4,946,467
|
|||||
Less:
Treasury stock, 32,700 and 14,900 common shares, at cost for 2008
and
2007, respectively
|
(164,694
|
)
|
(76,677
|
)
|
|||
TOTAL
STOCKHOLDERS’ EQUITY
|
10,752,023
|
12,202,343
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
18,669,498
|
$
|
20,396,717
|
See
notes
to Condensed Consolidated Financial Statements.
1
COFFEE
HOLDING CO., INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
THREE
MONTHS ENDED JANUARY 31, 2008 AND 2007
(Unaudited)
2008
|
2007
|
||||||
NET
SALES
|
$
|
14,962,541
|
$
|
12,635,112
|
|||
COST
OF SALES
|
13,082,423
|
10,466,517
|
|||||
GROSS
PROFIT
|
1,880,118
|
2,168,595
|
|||||
OPERATING
EXPENSES:
|
|||||||
Selling
and administrative
|
1,378,924
|
1,390,690
|
|||||
Writedown
of amount due from dissolved joint venture
|
-
|
242,000
|
|||||
Officers’
salaries
|
161,377
|
117,012
|
|||||
TOTALS
|
1,540,301
|
1,749,702
|
|||||
INCOME
FROM OPERATIONS
|
339,817
|
418,893
|
|||||
OTHER
INCOME (EXPENSE):
|
|||||||
Interest
income
|
24,271
|
34,116
|
|||||
Equity
in loss from dissolved joint venture
|
-
|
(63,939
|
)
|
||||
Writedown
of investment in dissolved joint venture
|
-
|
(33,000
|
)
|
||||
Management
fee income
|
-
|
12,026
|
|||||
Interest
expense
|
(29,006
|
)
|
(24,232
|
)
|
|||
TOTALS
|
(4,735
|
)
|
(75,029
|
)
|
|||
INCOME
BEFORE INCOME TAXES AND MINORITY INTEREST IN
SUBSIDIARY
|
335,082
|
343,864
|
|||||
Provision
for income taxes
|
142,051
|
37,850
|
|||||
INCOME
BEFORE MINORITY INTEREST
|
193,031
|
306,014
|
|||||
Minority
interest in earnings (loss) of subsidiary
|
(10,766
|
)
|
3,670
|
||||
NET
INCOME
|
182,265
|
309,684
|
|||||
Retained
earnings – beginning
|
4,946,467
|
4,009,151
|
|||||
Dividend
declared
|
(1,544,568
|
)
|
-
|
||||
RETAINED
EARNINGS - ENDING
|
$
|
3,584,164
|
$
|
4,318,835
|
|||
Basic
and diluted earnings per share
|
$
|
.03
|
$
|
.06
|
|||
Weighted
average common shares outstanding:
|
|||||||
Basic
|
5,506,326
|
5,529,830
|
|||||
Diluted
|
5,576,326
|
5,599,830
|
See
notes
to Condensed Consolidated Financial Statements.
2
COFFEE
HOLDING CO., INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE
MONTHS ENDED JANUARY 31, 2008 AND 2007
(Unaudited)
2008
|
2007
|
||||||
OPERATING
ACTIVITIES:
|
|||||||
Net
income
|
$
|
182,265
|
$
|
309,684
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
119,572
|
60,630
|
|||||
Writedown
of amount due from dissolved joint venture
|
-
|
242,000
|
|||||
Loss
from dissolved joint venture
|
-
|
63,939
|
|||||
Writedown
of investment in dissolved joint venture
|
-
|
33,000
|
|||||
Deferred
income taxes
|
(8,500
|
)
|
(229,200
|
)
|
|||
Changes
in operating assets and liabilities:
|
|||||||
Commodities
held at broker
|
385,659
|
1,375,961
|
|||||
Accounts
receivable
|
1,587,124
|
1,916,454
|
|||||
Inventories
|
(237,416
|
)
|
(561,482
|
)
|
|||
Prepaid
expenses and other assets
|
18,591
|
84,362
|
|||||
Prepaid
and refundable income taxes
|
127,694
|
256,672
|
|||||
Accounts
payable and accrued expenses
|
(1,823,100
|
)
|
(867,450
|
)
|
|||
Due
from dissolved joint venture
|
-
|
(183,232
|
)
|
||||
Deposits
and other assets
|
41,813
|
(132,557
|
)
|
||||
Income
taxes payable
|
(2,156
|
)
|
-
|
||||
Net
cash provided by operating activities
|
391,546
|
2,368,781
|
|||||
INVESTING
ACTIVITIES:
|
|||||||
Purchases
of property and equipment
|
(107,965
|
)
|
(92,091
|
)
|
|||
Net
cash (used in) investing activities
|
(107,965
|
)
|
(92,091
|
)
|
|||
FINANCING
ACTIVITIES:
|
|||||||
Advances
under bank line of credit
|
14,282,082
|
11,103,226
|
|||||
Principal
payments under bank line of credit
|
(14,290,020
|
)
|
(12,660,888
|
)
|
|||
Purchase
of treasury stock
|
(88,017
|
)
|
-
|
||||
Net
cash (used in) financing activities
|
(95,955
|
)
|
(1,557,662
|
)
|
|||
MINORITY
INTEREST
|
10,766
|
(3,670
|
)
|
||||
NET
INCREASE IN CASH
|
198,392
|
715,358
|
|||||
Cash,
beginning of year
|
890,649
|
1,112,165
|
|||||
CASH,
END OF PERIOD
|
$
|
1,089,041
|
$
|
1,827,523
|
|||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW DATA:
|
|||||||
Interest
paid
|
$
|
19,515
|
$
|
18,642
|
|||
Income
taxes paid
|
$
|
24,962
|
$
|
3,550
|
|||
NONCASH
INVENTORY AND FINANCING ACTIVITIES:
|
|||||||
On
January 31, 2008, the Company declared dividends in the amount
of
$1,544,568.
|
See
notes
to Condensed Consolidated Financial Statements.
3
NOTE 1 - |
BUSINESS
ACTIVITIES:
|
Coffee
Holding Co., Inc. (the “Company”) conducts wholesale coffee operations,
including manufacturing, roasting, packaging, marketing and distributing
roasted
and blended coffees for private labeled accounts and its own brands, and
sells
green coffee. The Company’s sales are primarily to customers that are located
throughout the United States with limited sales in Canada, consisting of
supermarkets, wholesalers, gourmet roasters and individually owned and
multi-unit retailers.
The
Company owns a 60% interest in Generations Coffee Company, LLC (“GCC”) effective
April 7, 2006. GCC is in the same business as the Company and had limited
operations since it commenced its operations during the quarter ended October
31, 2006. The Company also exercises control of GCC. As a result of its 60%
interest and control, the financial statements of GCC are consolidated with
the
Company.
The
Company also owned a 50% interest in Cafe La Rica, LLC (“CLR”) effective March
10, 2006. CLR was in the same business as the Company and was being recorded
as
an investment in joint venture since the Company did not exercise control
of
CLR. As a result, the financial statements of CLR were not consolidated and
was
accounted for by the equity method of accounting. Effective October 17, 2007
the
Company dissolved the joint venture.
NOTE 2 - |
BASIS
OF PRESENTATION:
|
The
interim condensed consolidated financial information as of January 31, 2008
and
for the three-month periods ended January 31, 2008 and 2007 has been prepared
without audit, 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 have been condensed or omitted pursuant to
such
rules and regulations, although we believe that the disclosures made are
adequate to provide for fair presentation. These Financial Statements should
be
read in conjunction with the Financial Statements and the notes thereto,
included in the Company’s Annual Report on Form 10-K for the fiscal year ended
October 31, 2007, previously filed with the SEC.
In
the
opinion of management, all adjustments (which include normal recurring
adjustments) necessary to present a fair statement of financial position
as of
January 31, 2008, and results of operations and cash flows for the three
months
ended January 31, 2008 and 2007, as applicable, have been made. The results
of
operations for the three months ended January 31, 2008 and 2007 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
and GCC. The equity method of accounting was used to record the Company’s share
of the loss in CLR for the quarter ended January 31, 2007 only. All significant
inter-company transactions and balances have been eliminated in
consolidation.
4
NOTE 3 - |
ADOPTION
OF RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENT:
|
In
June
2006, the Financial Accounting Standards Board issued Interpretation No.
48,
Accounting for Uncertainty in Income Taxes (“Fin 48”). This Interpretation
clarifies the accounting for uncertainty in income taxes recognized in an
entity’s financial statements and prescribes a recognition threshold of
more-likely-than-not to be sustained upon examination. Measurement of the
tax
uncertainty occurs if the recognition threshold has been met. This
Interpretation also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. The Company conducts business primarily in the US and, as a result,
files income tax returns for US, New York, New York City and in four other
states and jurisdictions. In the normal course of business the Company is
subject to examination by taxing authorities. At present, there are no ongoing
income tax audits or unresolved disputes with the various tax authorities
that
the Company currently files or has filed with. The Company’s New York State tax
returns have been accepted as filed through October 31, 2004 and the Company’s
New York City tax returns have been accepted as filed through October 31,
2003.
Given the Company’s history with the taxing authorities, conservative tax
approach and no material uncertain tax positions, the adoption of FIN 48
on
November 1, 2007 did not have any effect on our financial position, results
of
operations or cash flows as of and for the three months ended January 31,
2008.
NOTE 4 - |
CAFÉ
LA RICA, LLC - JOINT
VENTURE
|
The
following represents condensed financial information of CLR as of January
31,
2007 and for the three months then ended.
Current
assets
|
$
|
423,828
|
||
Machinery
and other assets
|
448,555
|
|||
Total
assets
|
$
|
872,383
|
||
Current
liabilities
|
$
|
643,172
|
||
Other
liabilities
|
5,889
|
|||
Capital
(deficit)
|
223,322
|
|||
Total
liabilities and capital
|
$
|
872,383
|
||
Sales
|
$
|
314,806
|
||
Expenses
|
442,684
|
|||
Net
loss
|
$
|
(127,878
|
)
|
|
Company’s
share of net loss
|
$
|
(63,939
|
)
|
As
of
January 31, 2007, the Company wrote-down the amount due from joint venture
by
$242,000 and wrote-down its investment in joint venture by $33,000 as a result
of the Company’s plans to dissolve CLR. CLR was dissolved on October 17, 2007,
so no condensed financial information is presented as of January 31, 2008
and
for the three months then ended.
5
NOTE 5 - |
ACCOUNTS
RECEIVABLE:
|
Accounts
receivable are recorded net of allowances. The allowance for doubtful accounts
represents the estimated uncollectible portion of accounts receivable. The
reserve for sales discounts represents the estimated discount that customers
will take upon payment. The allowances are summarized as follows:
2008
(unaudited)
|
2007
(audited)
|
||||||
Allowance
for doubtful accounts
|
$
|
92,464
|
$
|
92,464
|
|||
Reserve
for sales discounts
|
35,000
|
44,317
|
|||||
Totals
|
$
|
127,464
|
$
|
136,781
|
NOTE 6 - |
INVENTORIES:
|
Inventories
at January 31, 2008 and October 31, 2007 consisted of the
following:
January
31,
2008
(unaudited)
|
October
31,
2007
(audited)
|
||||||
Packed
coffee
|
$
|
1,207,559
|
$
|
1,233,457
|
|||
Green
coffee
|
2,722,505
|
2,379,212
|
|||||
Packaging
supplies
|
779,449
|
859,428
|
|||||
Totals
|
$
|
4,709,513
|
$
|
4,472,097
|
NOTE 7 - |
HEDGING:
|
The
Company uses options and futures contracts to partially hedge the effects
of
fluctuations in the price of green coffee beans. Options and futures contracts
are marked to market with current recognition of gains and losses on such
positions. The Company’s accounting for options and futures contracts may
increase earnings volatility in any particular period. The Company has open
position contracts held by the broker which includes primarily cash and
commodities for futures and options in the amount of $3,082,871 and $3,468,530,
which includes unrealized gains of $326,887 and $335,750 at January 31, 2008
and
October 31, 2007, respectively. The Company classifies its options and future
contracts as trading securities and accordingly, unrealized holding gains
and
losses are included in earnings and not reflected as a net amount in a separate
component of shareholders’ equity.
At
January 31, 2008, the Company held 210 options (generally with terms of two
months or less) covering an aggregate of 7,875,000 pounds of green coffee
beans
at a price of $1.30 per pound including the value of the option. The fair
market
value of these options, which was obtained from major financial institutions,
was $654,000 at January 31, 2008.
At
January 31, 2007, the Company held 40 options (generally with terms of two
months or less) covering an aggregate of 1,500,000 pounds of green coffee
beans
at a price of $1.15 per pound including the value of the option. The fair
market
value of these options, which was obtained from a major financial institution,
was $54,000 at January 31, 2007.
6
NOTE 7 - |
HEDGING
(Continued):
|
The
Company acquires futures contracts with longer terms (generally three to
four
months) primarily for the purpose of guaranteeing an adequate supply of green
coffee.
At
January 31, 2008, the Company held 35 futures contracts for the purchase
of
1,312,500 pounds of coffee at an average price of $1.33 per pound. The market
price of coffee applicable to such contracts was $1.38 per pound at that
date.
At
January 31, 2007, the Company held 75 futures contracts for the purchase
of
2,812,500 pounds of coffee at an average price of $1.10 per pound. The market
price of coffee applicable to such contracts was $1.1765 per pound at that
date.
Included
in cost of sales and due from commodities held at broker for the three months
ended January 31, 2008 and 2007, the Company recorded realized and unrealized
gains and losses respectively, on these contracts as follows:
Three Months Ended January 31,
|
|||||||
2008
(unaudited)
|
2007
(unaudited)
|
||||||
Gross
realized gains
|
$
|
1,145,109
|
$
|
688,456
|
|||
Gross
realized losses
|
$
|
(542,803
|
)
|
$
|
(94,401
|
)
|
|
Unrealized
losses
|
$
|
(8,863
|
)
|
$
|
(3,739
|
)
|
NOTE 8 - |
LINE
OF CREDIT:
|
The
Company has a financing agreement with Merrill Lynch Business Financial
Services, Inc. for a line of credit of up to $4,000,000 with a maturity date
of
October 31, 2008. The line of credit is secured by a blanket lien on all
the
assets of the Company and the personal guarantees of two of the Company’s
officer/shareholders, requires monthly interest payments at a rate of LIBOR
plus
1.95%, or 5.21% as of January 31, 2008 (the rate was LIBOR plus 2.15%, or
6.66%,
as of October 31, 2007), and requires the Company to comply with various
financial covenants. As of January 31, 2008 and 2007, the Company was in
compliance with all financial covenants. As of January 31, 2008 and October
31,
2007, the borrowings under the line of credit were $889,253 and $897,191,
respectively.
NOTE 9 - |
LEGAL
PROCEEDINGS:
|
The
Company is a party to various legal proceedings. In the opinion of management,
these actions are routine in nature and will not have a material adverse
effect
on the Company’s results of operations or financial position in future
periods.
7
NOTE 10 - |
EARNINGS
PER SHARE:
|
The
Company presents “basic” and “diluted” earnings per common share pursuant to the
provisions of Statement of Financial Accounting Standards No. 128, “Earnings per
Share.” Basic earnings per share is based on the weighted-average number of
common shares outstanding and diluted earnings per share is based on the
weighted-average number of common shares outstanding plus all potential dilutive
common shares outstanding. The only potential dilutive common shares outstanding
pertain to warrants. The following weighted average number of shares was
used
for the computation of basic and diluted earnings per share.
Quarters Ended
January
31,
|
|||||||
2008
(unaudited)
|
2007
(unaudited)
|
||||||
Net
Income
|
$
|
182,265
|
$
|
309,684
|
|||
BASIC
EARNINGS:
|
|||||||
Weighted
average number of common shares outstanding
|
5,506,326
|
5,529,830
|
|||||
Basic
earnings per common share
|
$
|
0.03
|
$
|
0.06
|
|||
DILUTED
EARNINGS:
|
|||||||
Weighted
average number of common shares outstanding
|
5,506,326
|
5,529,830
|
|||||
Warrants
- common stock equivalents
|
70,000
|
70,000
|
|||||
Weighted
average number of common shares outstanding - as adjusted
|
5,576,326
|
5,599,830
|
|||||
Diluted
earnings per common share
|
$
|
0.03
|
$
|
0.06
|
8
COFFEE
HOLDING CO., INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2008 AND 2007
(Unaudited)
NOTE 11 - |
ECONOMIC
DEPENDENCY:
|
For
the
three months ended January 31, 2008, approximately 34% and 13% of the Company’s
sales were derived from two customers. Sales to these customers were
approximately $5,100,000 and $1,950,000 and the corresponding accounts
receivable from these customers at January 31, 2008 were approximately $729,000
and $493,000, respectively.
For
the
three months ended January 31, 2007, approximately 27% of the Company’s sales
were derived from one customer. Sales to this customer were approximately
$3,500,000 and the corresponding accounts receivable at January 31, 2007 from
this customer was approximately $441,000.
For
the
three months ended January 31, 2008, approximately 51% and 10% of the Company’s
purchases were from two vendors. Purchases from these vendors were approximately
$6,600,000 and $1,200,000 and the corresponding accounts payable to these
vendors at January 31, 2008 were approximately $724,000 and $389,000,
respectively.
For
the
three months ended January 31, 2007, approximately 29% and 14% of the Company’s
purchases were from two vendors. Purchases from these vendors were approximately
$3,100,000 and $1,500,000 and the corresponding accounts payable to these
vendors at January 31, 2007 were approximately $537,000 and $271,000,
respectively.
In
addition, an employee of one of these vendors is a director of the Company.
Purchases from that vendor totaled approximately $6,600,000 and $3,100,000
for
the three months ended January 31, 2008 and 2007, respectively. The
corresponding accounts payable balance to this vendor were approximately
$724,000 at January 31, 2008 and $943,000 at October 31, 2007. Management does
not believe that the loss of any one vendor would have a material adverse effect
of the Company’s operations due to the availability of many alternate
suppliers.
NOTE 12 - |
STOCK
OPTION PLAN:
|
As
of
January 31, 2008, the Company had a stock option plan whereby options could
be
granted to the Company’s directors, officers, other key employees and
consultants. The Company had reserved 800,000 shares of common stock for
issuance under this plan. The plan expired on February 10, 2008 in accordance
with its terms. No options were granted under the plan since its
inception.
9
COFFEE
HOLDING CO., INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY
31, 2008 AND 2007
(Unaudited)
NOTE 13 - |
WARRANTS
FOR PURCHASE OF COMMON
STOCK:
|
The
Company entered into an agreement with Maxim Group, LLC (“Maxim”) for Maxim to
serve as the Company’s financial advisors and lead managing underwriter for a
public offering which concluded on June 16, 2005 of the Company’s common stock.
Subsequently, Maxim and Joseph Stevens & Company, Inc. (“Joseph Stevens”)
entered into an agreement pursuant to which Joseph Stevens agreed to act as
managing underwriter and Maxim participated in the underwriting syndicate of
the
offering. The Company also sold to Joseph Stevens and Maxim for $100, warrants
to purchase 70,000 shares of common stock at a price of $6.00 per share. The
fair value of these warrants were credited to additional paid in capital. The
warrants are exercisable for a period of five (5) years and contain provisions
for cashless exercise, anti-dilution and piggyback registration
rights.
NOTE 14 - |
TREASURY
STOCK AND DIVIDENDS:
|
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. During the
three months ended January 31, 2008, the Company purchased 17,800 shares for
$88,017.
The
Company declared a 28 cent per share dividend, aggregating $1,544,568 on January
31, 2008. The dividend is payable to all shareholders of record as of February
15, 2008 and was disbursed on February 29, 2008.
10
Item
2. Management’s
Discussion and Analysis of
Financial Condition and Results of Operations.
Cautionary
Note on Forward Looking Statements
This
report contains forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. We have
based these forward-looking statements on our current expectations and
projections about future events, including, among other things:
·
|
the
impact of rapid or persistent fluctuations in the price of coffee
beans;
|
·
|
fluctuations
in the supply of coffee beans;
|
·
|
general
economic conditions and conditions which affect the market for
coffee;
|
· |
our
success in implementing our business strategy or introducing new
products;
|
· |
our
ability to attract and retain
customers;
|
· |
our
success in expanding our market presence in new geographic
regions;
|
·
|
the
effects of competition from other coffee manufacturers and other
beverage
alternatives;
|
·
|
changes
in tastes and preferences for, or the consumption of,
coffee;
|
·
|
the
success of our hedging strategy;
|
·
|
our
ability to obtain additional financing;
and
|
·
|
other
risks which we identify in future filings with the Securities and
Exchange
Commission.
|
In
some
cases, you can identify forward-looking statements by terminology such as “may,”
“will,” “should,” “could,” “predict,” “potential,” “continue,” “expect,”
“anticipate,” “future,” “intend,” “plan,” “believe,” “estimate” and similar
expressions (or the negative of such expressions). Any or all of our
forward-looking statements in this annual report and in any other public
statements we make may turn out to be wrong. They can be affected by inaccurate
assumptions we might make or by known or unknown risks and uncertainties.
Consequently, no forward looking statement can be guaranteed. In addition,
we
undertake no responsibility to update any forward-looking statement to reflect
events or circumstances which occur after the date of this report.
11
Overview
We
are an
integrated wholesale coffee roaster and dealer in the United States and one
of
the few coffee companies that offers a broad array of coffee products across
the
entire spectrum of consumer tastes, preferences and price points. As a result,
we believe that we are well positioned to increase our profitability and endure
potential coffee price volatility throughout varying cycles of the coffee market
and economic conditions.
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;
|
·
|
the
success of our hedging strategy;
|
·
|
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
operate from an East Coast facility located in Brooklyn, New York and a Western
facility located in La Junta, Colorado. Operating out of these two facilities
allows us to produce and distribute large quantities of fresh coffee products
throughout the United States. In addition, by operating out of two facilities,
we are able to gain economies of scale in both manufacturing and logistical
efficiencies. This has allowed us to compete aggressively throughout the United
States. As discussed in more detail below, we also own 60% of a specialty coffee
joint venture located in Brecksville, Ohio.
Our
net
sales are driven primarily by the success of our sales and marketing efforts
and
our ability to retain existing customers and attract new customers. For this
reason, we have made the strategic decision to invest in measures that will
increase net sales. For example, we recently established a West Coast sales
department to increase our sales to West Coast customers.
In
April
2006, we entered into a joint venture with Caruso’s Coffee of Brecksville, Ohio
and formed Generations Coffee Company, LLC, a Delaware limited liability
company, which engages in the roasting, packaging and sale of private label
specialty coffee products. We own 60% of the joint venture and are the exclusive
supplier of its coffee inventory. We believe that the Generations Coffee joint
venture allows us to bid on the private label gourmet whole bean business
we had not been equipped to pursue from an operational standpoint in the past.
With this specialty roasting facility in place, in many cases right in the
backyard of our most important wholesale and retail customers, we believe
that we are in an ideal position to combine our current canned private label
business with high-end private label specialty whole bean business. High-end
specialty whole bean coffee sells for as much as three times more per pound
than
the canned coffees in which we currently specialize.
Generations
had approximately $99,000 in net sales for the quarter ended January 31, 2008
and had eleven accounts, five of which made Generations the exclusive supplier
for their fast growing and highly visible organic coffee programs.
12
As
a
result of these efforts, net sales increased in our specialty green coffee,
private label and branded coffee business lines in both dollars and pounds
sold.
In addition, we increased the number of our customers in all three
areas.
In
July
2007, we entered into a three-year licensing agreement with Entenmann’s
Products, Inc., a subsidiary of Entenmann’s, Inc., which is one of the nation’s
oldest baking companies. The agreement gives us the exclusive rights to
manufacture, market and distribute a full line of Entenmann’s brand coffee
products throughout the United States. Our
first
production run was in February 2008 and we expect to have Entenmann’s coffee
products placed in supermarkets in the Northeast by mid-March 2008. We expect
to
develop not only mainstream Entenmann’s coffee items, but upscale flavored
Entenmann’s products in twelve ounce valve bags as well. These products will
give the line a visible upscale image to our retailers and their customers,
which we believe will be integral to the long term success of this
arrangement.
Our
net
sales are affected by the price of green coffee. We import green coffee from
Colombia, Mexico, Kenya, Brazil and Uganda. The supply and price of coffee
beans
are subject to volatility and are influenced by numerous factors which are
beyond our control. For example, coffee crops in Brazil, which produces
one-third of the world’s green coffee, are susceptible to frost in June and July
and drought in September, October and November. However, because we purchase
coffee from a number of countries and are able to freely substitute one
country’s coffee for another in our products, price fluctuations in one country
generally have not had a material impact on the price we pay for coffee.
Accordingly, price fluctuations generally have not had a material effect on
our
results of operations, liquidity and capital resources. Historically, because
we
generally have been able to pass green coffee price increases through to
customers, increased prices of green coffee generally result in increased net
sales. However, the average indicator price for Robusta coffee, the main
component for our leading espresso brands (Café Caribe and Café Supremo) is
still at its highest level seen in the last eight years. In October 2006,
national brands reacted to these price increases, raising list prices by $0.12
per unit, and we were able to increase our prices as well. In addition, we
initiated another price increase in January 2007 for $0.10 per pound on most
roasted products and an additional price increase of $0.10 per pound in late
fiscal 2007 which took effect in fiscal 2008. During the beginning of calendar
2008, prices of Arabica and Robusta coffee have continued to rise, increasing
over 20% in a few weeks time. These price appreciations have negatively impacted
our profit margins for a significant portion of our business. We again initiated
price increases in response to these conditions and have been able to obtain
price concessions from most of our customers. However, these price increases
will not have a positive impact until late in our second quarter at the
earliest. In addition, the recent volatility in the markets has prevented us
from successfully implementing our hedging strategies.
Historically,
we have used short-term coffee futures and options contracts primarily for
the
purpose of partially hedging and minimizing the effects of changing green coffee
prices and to reduce our cost of sales. In addition, we acquire futures
contracts with longer terms, generally three to four months, primarily for
the
purpose of guaranteeing an adequate supply of green coffee at favorable prices.
Although the use of these derivative financial instruments has enabled us to
mitigate the effect of changing prices, no strategy can entirely eliminate
pricing risks and we generally remain exposed to loss when prices decline or
increase significantly in a very short period of time. If the hedges that we
enter do not adequately offset the risks of coffee bean price volatility or
our
hedges result in losses, our cost of sales may increase, resulting in a decrease
in profitability. In addition, we generally remain exposed to supply risk in
the
event of non-performance by the counter-parties to any futures
contract.
13
Critical
Accounting Policies and Estimates
The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported
in
the financial statements and accompanying notes. Estimates are used for, but
not
limited to, the accounting for the allowance for doubtful accounts, inventories,
income taxes and loss contingencies. Management bases its estimates on
historical experience and on various other assumptions that are believed to
be
reasonable under the circumstances. Actual results could differ from these
estimates under different assumptions or conditions.
We
believe the following critical accounting policies, among others, may be
impacted significantly by judgment, assumptions and estimates used in the
preparation of the financial statements:
·
|
We
recognize revenue in accordance with Securities and Exchange Commission
Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”).
Under SAB 104, 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 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 reduce our operating
income
by approximately $55,000.
|
·
|
Inventories
are stated at cost (determined on a first-in, first-out basis). 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 writedowns of inventories may be
required. Each additional one percent of potential inventory write-down
would have reduced operating income by approximately $47,000 for
the three
months ended January 31, 2008.
|
·
|
We
account for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS No.
109”). Under SFAS No. 109, 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 January 31, 2008 of $142,500 could need
to be
written off if we do not remain
profitable.
|
·
|
In
addition, the calculation of our tax liabilities involves the inherent
uncertainty associated with the application of complex tax laws.
We are
also subject to examination by various taxing authorities. We will
estimate and provide adequate accruals, when necessary, for potential
additional taxes and related interest expense that may ultimately
result
from such examinations in accordance with FIN
48.
|
14
Comparison
of Results of Operations for the Three Months Ended January 31, 2007 and
2008
Net
Income.
We had
net income of $182,265, or $0.03 per share (basic and diluted), for the three
months ended January
31, 2008 compared
to net income of $309,684, or $0.06 per share (basic and diluted), for the
three
months ended January 31, 2007. The decrease in net income primarily reflects
the
fact that increases in cost of sales outpaced our increased net sales for the
quarter, resulting in decreased gross profit.
Net
Sales.
Net
sales totaled $14,962,541 for the three months ended January 31, 2008, an
increase of $2,327,429, or 18.4%, from $12,635,112 for the three months ended
January 31, 2007. The increase in net sales reflects both increased amounts
of
green coffee and private label coffee sold as well as increased sales prices
compared to the first quarter of fiscal 2007. The increase in net sales also
reflects the price increases we implemented in January
2007 and late fiscal 2007. We were forced to implement these price increases
because sharp increases in the coffee commodity market over the past couple
of
years has increased the amount we pay for coffee beans.
Cost
of Sales.
Cost of
sales for the three months ended January 31, 2008 was $13,082,423 or 87.4%
of
net sales, as compared to $10,466,517 or 82.8% of net sales for the three months
ended January 31, 2007. The increase in cost of sales primarily reflects
increased purchases of green coffee. Green coffee purchases increased $2,386,679
from $9,123,877 to $11,510,556 due to higher green coffee prices and private
label sales volumes. Net gains on options and futures contracts, a component
of
cost of sales, remained relatively unchanged at $593,443 for the first quarter
of fiscal 2008 compared to $590,316 for the first quarter of fiscal 2007. The
increase in cost of sales as a percentage of net sales reflects higher green
coffee prices which could not fully be passed along to customers through sales
price increases.
Gross
Profit.
Gross
profit decreased by $288,477 from $2,168,595 for the three months ended January
31, 2007 to $1,880,118 for the three months ended January 31, 2008. Gross profit
as a percentage of net sales decreased to 12.6% for the three months ended
January 31, 2008 from 17.2% for the three months ended January 31, 2007. The
decrease in our margins is attributable to higher green coffee prices and
increased sales to our two largest customers, each of whom receives volume
discounts and with whom our margins are therefore somewhat lower.
During
the beginning of calendar 2008, prices of Arabica and Robusta coffee have risen
over 20% in a few weeks time. We have initiated price increases in response
to
these conditions and have been able to obtain price concessions from most of
our
customers. However, these price increases will not have a positive impact until
late in our second quarter at the earliest and will negatively impact our profit
margins for a significant portion of our business to the extent we are not
able
to fully pass the price increases on to our customers.
Operating
Expenses.
Total
operating expenses decreased by $209,401, or 12.0%, to $1,540,301 for the three
months ended January
31, 2008 from
$1,749,702 for the three months ended January 31, 2007. The decrease in
operating expenses primarily reflects a $242,000 write-down of amount due from
Café La Rica during the three months ended January 31, 2007 and no corresponding
write-down during the corresponding period in 2008. Selling and administrative
expenses also decreased by $11,766 and officers’ salaries increased by $44,365.
The decrease in selling and administrative expenses mainly reflects decreases
of
approximately $69,000 in professional services and $67,000 in shipping costs,
partially offset by increases of approximately $26,000 in utilities, $15,000
in
office salaries and $14,000 in show and demo expense. The decrease in
professional services expense reflects litigation costs associated with Café La
Rica during the first quarter of fiscal 2007. Shipping costs decreased due
to
increased sales to our large green coffee customers who pay the shipping
expenses for product they purchase from us. Utilities expense increased due
to
higher natural gas prices. Office salaries expense increased due to hiring
and
salary increases to support increased net sales. We attended more shows and
demos during the first quarter of fiscal 2008, which is the reason for the
expense increase in that category.
15
Other
Expense.
Other
expense decreased by $70,294 to $4,735 for the three months ended January 31,
2008 compared to $75,029 for the three months ended January 31, 2007. The major
components of other expense, interest income and interest expense, decreased
by
$9,845 and increased by $4,774, respectively, during the first quarter of fiscal
2008 compared to fiscal 2007. However, we incurred expense of $63,939 during
the
three months ended January 31, 2007, which constituted our share of the loss
incurred by our Café La Rica joint venture. We also wrote-down $33,000 of our
investment in Café La Rica during that quarter. Because Café La Rica was
dissolved effective October 17, 2007, we incurred neither of those expenses
during the first quarter of fiscal 2008.
Income
Before Income Taxes and Minority Interest in
Subsidiary.
We had
income of $335,082 before income taxes and minority interest in subsidiary
for
the three months ended January 31, 2008 compared to $343,864 during the
comparable period in 2007. The decrease was attributable to decreased income
from operations, partially offset by decreased other expense.
Income
Taxes.
Our
provision for income taxes for the three months ended January 31, 2008 totaled
$142,051 compared to a provision of $37,850 for the three months ended January
31, 2007. A decrease in net deferred tax assets and a decrease in current taxes
as a result of a decrease in taxable income resulted in the net increase in
tax
expense for the quarter, despite lower book income.
Liquidity
and Capital Resources
As
of
January 31, 2008, we had working capital of $7,877,713 which represented a
$1,403,634 decrease from our working capital of $9,281,347 as of October 31,
2007, and total stockholders’ equity of $10,752,023, which decreased by
$1,450,320 from our total stockholders’ equity of $12,202,343 as of October 31,
2007. Our working capital decreased primarily due to a decrease in accounts
receivable of $1,587,124, a $1,544,568 increase in dividend payable and a
$385,659 decrease in commodities held at broker, offset in part by a $1,823,100
decrease in accounts payable and accrued expenses, a $237,416 increase in
inventories and a $198,392 increase in cash. At January 31, 2008, the
outstanding balance on our line of credit was $889,253 compared to $897,191
at
October 31, 2007. Total stockholders’ equity decreased due to the declaration of
a cash dividend of $0.28 per share and the repurchase of 17,800 shares of our
outstanding common stock during the quarter at a cost of $88,017.
As
of
January 31, 2008, we had a financing agreement with Merrill Lynch Business
Financial Services Inc. This line of credit is for a maximum $4,000,000, expires
on October 31, 2008 and requires monthly interest payments at a rate of LIBOR
plus 1.95%. This loan is secured by a blanket lien on all of our assets. The
credit facility contains covenants that place restrictions on our operations.
Among other things, these covenants and the personal guarantees of two of the
Company’s officers/shareholders: require us to maintain certain financial
ratios; require us to maintain a minimum net worth; and prohibit us from merging
with or into other companies, acquiring all or substantially all of the assets
of other companies, or selling all or substantially all of our assets without
the consent of the lender. These restrictions could adversely impact our ability
to implement our business plan, or raise additional capital, if needed. In
addition, if we default under our existing credit facility or if our lender
demands payment of a portion or all of our indebtedness, we may not have
sufficient funds to make such payments. As of January 31, 2008, we were in
compliance with all covenants contained in the credit facility.
For
the
three months ended January 31, 2008, our operating activities provided net
cash
of $391,546 as compared to the three months ended January 31, 2007 when net
cash
provided by operating activities was $2,368,781 The decreased cash flow from
operations for the three months ended January 31, 2008 was primarily due to
decreased accounts payable and accrued expenses and increased inventories,
partially offset by decreased accounts receivable and commodities held at
broker.
For
the
three months ended January 31, 2008, our investing activities used net cash
of
$107,965 as compared to the three months ended January 31, 2007 when net cash
used in investing activities was $92,091. During each of the three month periods
ended January 31, 2008 and January 31, 2007, all of the net cash used in
investing activities related to purchases of property and
equipment.
16
For
the
three months ended January 31, 2008, our financing activities used net cash
of
$95,955 as compared to the three months ended January 31, 2007 when net cash
used by financing activities was $1,557,662. The decreased cash flow from
financing activities reflects increased net cash payments under our line of
credit and repurchases of our common stock.
We
expect
to fund our operations, including paying our liabilities, payment of any
dividends, funding capital expenditures and making required payments on our
debts, through the next twelve months with cash provided by operating activities
and the use of our credit facility. In addition, an increase in eligible
accounts receivable and inventory would permit us to make additional borrowings
under our line of credit. We also believe we could, if necessary, obtain
additional loans by mortgaging our headquarters.
Off-Balance
Sheet Arrangements
We
do not
have any off-balance sheet arrangements that have or are reasonably likely
to
have a current or future effect on our financial condition, results of
operations, liquidity, capital expenditures or capital resources, that is
material to investors.
17
Item
3. Quantitative
and Qualitative Disclosures About Market Risk.
Market
risks relating to our operations result primarily from changes in interest
rates
and commodity prices as further described below.
Interest
Rate Risks. We
are
subject to market risk from exposure to fluctuations in interest rates. At
January 31, 2008, our debt consisted of $889,253 of variable rate debt under
our
revolving line of credit. At January 31, 2008, interest on the variable rate
debt was payable at 5.21 (or 1.95% above the one-month LIBOR rate) for the
revolving line of credit.
Commodity
Price Risks. The
supply and price of coffee beans are subject to volatility and are influenced
by
numerous factors which are beyond our control. Historically, we have used
short-term coffee futures and options contracts primarily for the purpose of
hedging and minimizing the effects of changing green coffee prices, as further
explained in Note 7 of the notes to condensed consolidated financial statements
in this report. At January 31, 2008, we held 210 options (generally with terms
of two months or less) covering an aggregate of 7,875,000 pounds of green coffee
beans at a price of $1.30 per pound. The fair market value of these options,
which was obtained from major financial institutions, was $654,000 at January
31, 2008. In addition, we acquire futures contracts with longer terms (generally
three to four months) primarily for the purpose of guaranteeing an adequate
supply of green coffee. At
January 31, 2008, we held 35 futures contracts for the purchase of 1,312,500
pounds of coffee at an average price of $1.33 per pound. The market
price of coffee applicable to such contracts was $1.38 per pound at that
date.
The
use
of these derivative financial instruments has enabled us to mitigate the effect
of changing prices although we generally remain exposed to loss when prices
decline significantly in a short period of time or remain at higher levels,
preventing us from obtaining inventory at favorable prices. We generally have
been able to pass green coffee price increases through to customers, thereby
maintaining our gross profits. However, we cannot predict whether we will be
able to pass inventory price increases through to our customers in the future.
Increased green coffee prices cause our margins to shrink to the extent we
are
unable to pass the full amount of increase through to our customers. We believe
our hedging policies remain a vital element to our business model not only
in
controlling our cost of sales, but also giving us the flexibility to obtain
the
inventory necessary to continue to grow our sales while minimizing margin
compression during a time of historically high coffee prices.
Item
4. Controls
and Procedures.
Management,
including our President, Chief Executive Officer and Chief Financial Officer,
has evaluated the effectiveness of our disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the
period covered by this report. Based upon that evaluation, the President and
Chief Executive Officer, who is also the Chief Financial Officer, concluded
that
the disclosure controls and procedures were effective to ensure that information
required to be disclosed in the reports that we file and submit under the
Exchange Act is (1) recorded, processed, summarized and reported as and
when required; and (2) accumulated and communicated to the Company’s management,
including its President and Chief Executive Officer, who is also the principal
executive officer and principal financial officer, as appropriate to allow
timely discussions regarding disclosure.
There
have been no changes in our internal control over financial reporting identified
in connection with the evaluation that occurred during our last fiscal quarter
that has materially affected, or that is reasonably likely to materially affect,
our internal control over financial reporting.
18
Part
II — OTHER INFORMATION
Item
1. Legal
Proceedings.
We
are
not a party to, and none of our property is the subject of, any pending legal
proceedings other than routine litigation that is incidental to our business.
To
our knowledge, no governmental authority is contemplating initiating any such
proceedings.
Item
1A. Risk
Factors.
Not
applicable.
Item
2. Unregistered
Sales of Equity in Securities and Use of Proceeds.
The
following table provides information regarding repurchases of our common stock
in each month of the quarter ended January 31, 2008.
COMPANY
PURCHASES OF EQUITY SECURITIES
Period
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans
or Programs(1)
|
|
Maximum
Number of
Shares that may
yet
be Purchased
under the Plans
or Programs(1)
|
|||||
November
1, 2007 through November 30, 2007
|
8,600
|
$
|
4.92
|
8,600
|
252,991
|
||||||||
December
1, 2007 through December 31, 2007
|
1,400
|
$
|
4.89
|
1,400
|
251,591
|
||||||||
January
1, 2008 through January 31, 2008
|
7,800
|
$
|
4.98
|
7,800
|
243,791
|
||||||||
Total
|
17,800
|
$
|
4.94
|
17,800
|
243,791
|
__________
(1) |
On
April 13, 2007, our Board of Directors authorized a stock repurchase
plan
pursuant to which we could repurchase up to 276,491 shares (5% of
our
common stock outstanding as of April 12, 2007) in either open market
or
private transactions. The stock repurchase plan is not subject to
an
expiration date.
|
19
Item
3. Defaults
upon Senior Securities.
None.
Item
4. Submission
of Matters to a Vote of Security Holders.
During
the three months ended January 31, 2008, no matters were submitted to a vote
of
security holders.
Item
5. Other
Information.
None.
Item
6. Exhibits.
11.1
|
Earnings
Per Share Calculation.
|
31.1
|
Rule
13a - 14(a)/15d - 14a Certification.
|
32.1
|
Section
1350 Certification.
|
20
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Coffee
Holding Co., Inc.
|
||
(Registrant)
|
||
By:
|
/s/
Andrew Gordon
|
|
Andrew
Gordon
|
||
President,
Chief Executive Officer and Chief Financial Officer
|
||
(Principal
Executive, Financial and Accounting
Officer)
|
March
14,
2008
21