What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-09-14 compared with 2022-06-14 · 90 added, 94 removed, 194 unchanged (49% of the section changed)

140 unchanged sentences

and transport restrictions, mandated closures and stay-at-home orders, and created significant disruption of the financial markets.

we are classified as an essential business and its factories continued to operate with little to no impact from the pandemic-related

we are classified as an essential business and our factories continued to operate with little to no impact from the pandemic-related

date, we have experienced disruption to our supply chain or distribution network, including the supply of green coffee beans, though

it is possible that more significant disruptions could occur if the COVID-19 pandemic continues to impact markets around the world.

are also working closely with all of our business partners.

As a food producer, we are an essential service and almost all of our employees

continue to work within our production and distribution facilities.

a food producer, we are an essential service and almost all of our employees continue to work within our production and distribution

continuing impact on our business, including the length and impact of stay-at-home orders and/or regional quarantines, labor shortages

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Accounting Policies and Estimates

have been no changes to our critical accounting policies during the three and six months ended April 30, 2022.

have been no changes to our critical accounting policies during the three and nine months ended July 31, 2022.

Critical accounting policies

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report on Form 10-K filed with the SEC on January 31, 2022 for the fiscal year ended October 31, 2021.

Months Ended April 30, 2022 Compared to the Three Months Ended April 30, 2021

Net sales totaled $16,498,169 for the three months ended April 30, 2022, an increase of $2,029,611, or 14.0%, from $14,468,558

for the three months ended April 30, 2021.

The increase in net sales was due to an increase of sales to our legacy customers partially

offset by a decrease in sales from our Generations/Steep N Brew subsidiary.

Cost of sales for the three months ended April 30, 2022 was $14,505,415, or 87.9% of net sales, as compared to $10,699,090,

or 74% of net sales, for the three months April 30, 2021.

Months Ended July 31, 2022 Compared to the Three Months Ended July 31, 2021

Net sales totaled $17,013,286 for the three months ended July 31, 2022, an increase of $3,378,973, or 24.8%, from $13,634,313

for the three months ended July 31, 2021.

The increase in net sales was due to an increase of sales to our legacy customers along with

incremental sales to several significant new customers in the quarter.

Cost of sales for the three months ended July 31, 2022 was $13,867,710, or 81.5% of net sales, as compared to $10,708,461,

or 78.5% of net sales, for the three months July 31, 2021.

Cost of sales consists primarily of the cost of green coffee and packaging

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The increase in cost of sales was due to our increased sales

to our legacy customers, increased prices of green coffee and packaging materials and our continued losses from our Generations/Steep

N Brew subsidiary, which included obsolete inventory write-off of approximately $718,000.

Gross profit for the three months ended April 30, 2022 amounted to $1,992,754 or 12.1% of net sales, as compared to $3,769,468

or 26.1% of net sales, for the three months ended April 30, 2021.

to our customers, increased prices of green coffee and packaging materials.

Gross profit for the three months ended July 31, 2022 amounted to $3,145,576 or 18.5% of net sales, as compared to $2,925,852

or 21.5% of net sales, for the three months ended July 31, 2021.

The decrease in gross profits on a percentage basis was attributable

to the factors listed above.

Total operating expenses increased by $50,899 to $3,366,223 for the three months ended April 30, 2022 from $3,315,324

for the three months ended April 30, 2021.

Selling and administrative expenses increased by $53,399 and officers’ salaries decreased

Total operating expenses decreased by $333,223 to $2,906,094 for the three months ended July 31, 2022 from $3,239,317

for the three months ended July 31, 2021.

Selling and administrative expenses decreased by $326,684 and officers’ salaries decreased

Income (Expense).

Other expense for the three months ended April 30, 2022 was $51,202, an increase of $33,565 from $17,637 for

the three months ended April 30, 2021.

The increase in other expense was attributable to an increase in interest expense of $32,844,

an increase in our loss from our equity investments of $2,758, partially offset by an increase in our interest income of $2,037, during

the three months ended April 30, 2022.

Our benefit for income taxes for the three months ended April 30, 2022 totaled $385,681 compared to a provision of $129,086

for the three months ended April 30, 2021.

The change was primarily attributable to the difference in the loss for the quarter ended

April 30, 2022 versus the income in the quarter ended April 30, 2021.

Other expense for the three months ended July 31, 2022 was $60,452, an increase of $54,496 from $5,956 for

the three months ended July 31, 2021.

The increase in other expense was attributable to an increase in interest expense of $47,898 due

to our additional advances, an increase in our loss from our equity investments of $3,900 and a decrease in our interest income of $2,698,

during the three months ended July 31, 2022.

Our provision for income taxes for the three months ended July 31, 2022 totaled $46,649 compared to a benefit of $91,003

for the three months ended July 31, 2021.

The change was primarily attributable to the difference in the loss for the quarter ended July

31, 2022 versus the income in the quarter ended July 31, 2021.

(Loss) Income .

We had a net loss of $368,096 or $(0.06) per share basic and diluted, for the three months ended April 30, 2022

compared to net income of $357,044, or $0.06 per share basic and diluted for the three months ended April 30, 2021.

The decrease in net

income was due primarily to the continued losses from our Generations/Steep N Brew subsidiary.

Months Ended April 30, 2022 Compared to the Six Months Ended April 30, 2021

Net sales totaled $33,203,029 for the six months ended April 30, 2022, an increase of $600,634, or 1.8%,

from $32,602,395 for the six months ended April 30, 2021.

The increase in net sales was due to an increase of sales to our legacy customers

partially offset by a decrease in sales from our Generations/Steep N Brew subsidiary.

Cost of sales for the six months ended April 30, 2022 was $26,938,669, or 81.1% of net sales, as compared

to $24,353,356, or 74.7% of net sales, for the six months April 30, 2021.

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 increase in cost of sales was due to increased

prices of green coffee and packaging materials and our continued losses from our Generations/Steep N Brew subsidiary, which included

obsolete inventory write-off of approximately $718,000.

Gross profit for the six months ended April 30, 2022 amounted to $6,264,360 or 18.9% of net sales, as compared

to $8,249,039 or 25.3% of net sales, for the six months ended April 30, 2021.

The decrease in gross profit percentage was attributable

to higher raw material costs and the impact of continued losses from our Generations/Steep N Brew subsidiary.

Total operating expenses increased by $458,585 to $7,087,099 for the six months ended April 30, 2022

from $6,628,514 for the six months ended April 30, 2021.

Selling and administrative expenses increased by $463,173 and officers’

salaries decreased by $4,588.

Our efforts to control costs through the elimination of redundancy in our operations and the elimination

of certain unnecessary variable costs was offset by the increase in our freight costs as the cost of truckload deliveries to our largest

wholesale customers and an increase of $415,096 in bad debt expense related to our Generations subsidiary.

We had net income of $132,381 or $0.02 per share basic and diluted, for the three months ended July 31, 2022 compared

to a net loss of $127,051, or $(0.02) per share basic and diluted for the three months ended July 31, 2021.

The increase in net income

was due to the factors listed above.

Months Ended July 31, 2022 Compared to the Nine Months Ended July 31, 2021

Net sales totaled $50,216,316 for the nine months ended July 31, 2022, an increase of $3,979,608, or 8.6%, from $46,236,708

for the nine months ended July 31, 2021.

The increase in net sales was due to an increase of sales to our customers partially offset

by a decrease in sales from our Generations/Steep N Brew subsidiary.

Cost of sales for the nine months ended July 31, 2022 was $40,806,381, or 81.3% of net sales, as compared to $35,061,947,

or 75.8% of net sales, for the nine months July 31, 2021.

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 increase in cost of sales was due to increased prices

of green coffee and packaging materials and the balance of our losses from our Generations/Steep N Brew subsidiary, which included obsolete

inventory write-off of approximately $718,000.

Gross profit for the nine months ended July 31, 2022 amounted to $9,409,935 or 18.7% of net sales, as compared to $11,174,761

or 24.2% of net sales, for the nine months ended July 31, 2021.

The decrease in gross profit percentage was attributable to higher raw

material costs and the impact of losses from our Generations/Steep N Brew subsidiary through April 30, 2022.

Total operating expenses increased by $112,492 to $9,980,192 for the nine months ended July 31, 2022 from $9,867,700

for the nine months ended July 31, 2021.

Selling and administrative expenses increased by $123,618 and officers’ salaries decreased

Our efforts to control costs through the elimination of redundancy in our operations and the elimination of certain unnecessary

variable costs was offset by the increase in our freight costs and an increase of $415,096 in bad debt expense related to our Generations

Income (Expense).

Other expense for the six months ended April 30, 2022 was $122,000, an increase of $75,507 from $46,493 for

the six months ended April 30, 2021.

The increase in other expense was attributable to an increase in interest expense of $46,786, an

increase in our loss from our equity investments of $31,885, partially offset by an increase in our interest income of $3,165,

during the six months ended April 30, 2022 as compared to the six months ended April 30, 2021.

Our benefit for income taxes for the six months ended April 30, 2022 totaled $248,275 compared to a provision of $510,329

for the six months ended April 30, 2021.

The change was primarily attributable to the difference in the loss for the six months ended

April 30, 2022 versus the income in the six months ended April 30, 2021.

Other expense for the nine months ended July 31, 2022 was $182,452, an increase of $130,002 from $52,450 for

the nine months ended July 31, 2021.

The increase in other expense was attributable to an increase in interest expense of $94,683 due

to additional advances on our line of credit, an increase in our loss from our equity investments of $35,785, partially offset by an

increase in our interest income of $466, during the nine months ended July 31, 2022 as compared to the nine months ended July 31, 2021.

Our benefit for income taxes for the nine months ended July 31, 2022 totaled $188,626 compared to a provision of $419,326

for the nine months ended July 31, 2021.

The change was primarily attributable to the difference in the loss for the nine months ended

July 31, 2022 versus the income in the nine months ended July 31, 2021.

(Loss) Income .

We had a net loss of $87,233 or ($0.02) per share basic and diluted, for the six months ended April 30,

2022 compared to net income of $1,034,355, or $0.18 per share basic and diluted for the six months ended April 30, 2021.

in net income was due primarily to the reasons described above.

We had net income of $45,148 or $0.01 per share basic and diluted, for the nine months ended July 31, 2022 compared

to net income of $907,305, or $0.16 per share basic and diluted for the nine months ended July 31, 2021.

The decrease in net income was

due primarily to the reasons described above.

and Capital Resources

of April 30, 2022, we had working capital of $18,543,499, which represented a $1,439,936 decrease from our working capital of $19,983,435

of July 31, 2022, we had working capital of $24,543,495, which represented a $4,560,060 increase from our working capital of $19,983,435

as of October 31, 2021.

Our working capital decreased primarily due to decreases of $671,138 in cash, $1,964,031 in accounts receivable,

$111,286 in prepaid expenses and other current assets, $463,750 in due from broker and an increase in our line of credit of $2,099,150,

partially offset by increases in inventory of $10,662, $299,465 in prepaid and refundable taxes, decreases of $2,423,835 in accounts

payable and accrued expenses, decreases of $576,196 in due to broker, decrease of $149,026 in lease liabilities – current portion,

and $410,235 in income taxes payable.

As of April 30, 2022, the outstanding balance on our line of credit was $5,900,000 compared to

Our working capital increased primarily due to increases in inventory of $3,277,595, $165,419 in prepaid expenses

and other current assets, $577,043 in prepaid and refundable taxes, decreases of $175,173 in accounts payable and accrued expenses, decrease

of $3,800,850 in our line of credit current portion, decreases of $269,074 in due to broker, decrease of $217,944 in lease liabilities

– current portion, and $414,949 in income taxes payable, partially offset by decreases of $2,265,798 in cash, $1,764,874 in accounts

receivable, $307,315 in due from broker.

As of July 31, 2022, the outstanding balance on our line of credit was $6,114,000 compared to

$3,800,850 as of October 31, 2021.

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(the “A&R Loan Agreement”) and Amended and Restated Loan Facility (the “A&R Loan Facility”) with Sterling

National Bank (“Sterling”), which consolidated (i) the financing agreement between the Company and Sterling, dated February

17, 2009, as modified, (the “Company Financing Agreement”) and (ii) the financing agreement between us, as guarantor, OPTCO

and Sterling, dated March 10, 2015 (the “OPTCO Financing Agreement”), amongst other things.

National Bank (“Sterling”), which consolidated (i) the financing agreement between us and Sterling, dated February 17, 2009,

as modified, (the “Company Financing Agreement”) and (ii) the financing agreement between us, as guarantor, OPTCO and Sterling,

dated March 10, 2015 (the “OPTCO Financing Agreement”), amongst other things.

March 13, 2020, we reached an agreement for a new loan modification agreement and credit facility with Sterling.

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LIBOR plus 1.75% (with such interest rate not to be lower than 3.50%).

On March 17, 2022, we reached an agreement for a new loan modification

agreement and credit facility which extended the maturity date to June 29, 2022.

The facility has been approved for a two year extension

and the related documents are currently being prepared.

All other terms of the A&R Loan Agreement and A&R Loan Facility remain

On June 28, 2022, we 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

All other terms of the A&R Loan Agreement and A&R Loan Facility remain the same.

of the A&R Loan Facility and A&R Loan Agreement contain covenants, subject to certain exceptions, that place annual restrictions

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and preferred stock), and restrictions on intercompany transactions.

We were in compliance with all covenants as of April 30, 2022 and

We were in compliance with all covenants as of July 31, 2022 and

October 31, 2021.

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Other than as amended

and restated by the A&R Loan Agreement, the Company Financing Agreement and the OPTCO Financing Agreement remains in full force and

the six months ended April 30, 2022, our operating activities used net cash of $1,496,738 as compared to the six months ended April 30,

and restated by the A&R Loan Agreement, the Company Financing Agreement and the OPTCO Financing Agreement remain in full force and

the nine months ended July 31, 2022, our operating activities used net cash of $2,820,251 as compared to the nine months ended July 31,

2021 when operating activities provided net cash of $4,428,138.

The decreased cash flow from operations for the six months ended April

30, 2022 was primarily due to our net loss, and paydown of our accounts payable and accrued expenses and income taxes payable and our

accounts receivable and inventory write-offs.

the six months ended April 30, 2022, our investing activities used net cash of $871,919 as compared to the six months ended April 30,

The decreased cash flow from operations for the nine months ended July

31, 2022 was primarily due to our net loss, and the increase in our inventory.

the nine months ended July 31, 2022, our investing activities used net cash of $1,357,066 as compared to the nine months ended July 31,

2021 when net cash used by investing activities was $1,491,233.

The increase in our uses of cash in investing activities was due to our

increased purchases of machinery and equipment during the six months ended April 30, 2022.

the six months ended April 30, 2022, our financing activities provided net cash of $1,697,519 compared to net cash used by financing

activities of $3,796,829 for the six months ended April 30, 2021.

The change in cash flow from financing activities for the six months

ended April 30, 2022 was due to our increased advances on our credit line.

increased purchases of machinery and equipment during the nine months ended July 31, 2022.

the nine months ended July 31, 2022, our financing activities provided net cash of $1,911,519 compared to net cash used by financing

activities of $1,300,605 for the nine months ended July 31, 2021.

The change in cash flow from financing activities for the nine months

ended July 31, 2022 was due to our increased advances on our credit line.

expect to fund our operations, including paying our liabilities, funding capital expenditures and making required payments on our indebtedness,

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis