What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-03-17 compared with 2023-03-17 · 284 added, 233 removed, 51 unchanged (91% of the section changed)

1 unchanged sentence

Note on Forward-Looking Statements

of the matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation,”

“Business,” “Risk Factors” and elsewhere in this annual report include 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

upon information available to management as of the date of this Form 10-Q and management’s expectations and projections about future

events, including, among other things:

of the matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results

of Operation,” “Business,” “Risk Factors” and elsewhere in this annual report include 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 upon information available to management as of the date of this Form 10-Q and management’s

expectations and projections about future events, including, among other things:

dependency on a single commodity could affect our revenues and profitability;

9 unchanged sentences

economic conditions and conditions which affect the market for coffee;

potential adverse impact of the COVID-19 pandemic on our operations and results, including as a result of the loss of adequate labor,

any prolonged closures, or series of temporary closures, of our supply chain, or changes in consumer behaviors, when stay-at-home

restriction orders are lifted and/or as a result of the COVID-19 pandemic’s impact on financial markets and economic conditions;

expectations regarding, and the stability of, our supply chain, including potential shortages or interruptions in the supply or delivery

of green coffee, as a result of COVID-19 or otherwise;

potential adverse impact of the COVID-19 pandemic on our operations and results, including as a result of the loss of adequate

labor, any prolonged closures, or series of temporary closures, of our supply chain, or changes in consumer behaviors, when

stay-at-home restriction orders are lifted and/or as a result of the COVID-19 pandemic’s impact on financial markets

and economic conditions;

expectations regarding, and the stability of, our supply chain, including potential shortages or interruptions in the supply

or delivery of green coffee, as a result of COVID-19 or otherwise;

macro global economic environment;

6 unchanged sentences

“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 quarterly 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 that occur after the date of this quarterly report.

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

“intend,” “plan,” “believe,” “estimate” and similar expressions (or the negative

of such expressions).

Any or all of our forward looking statements in this quarterly 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 that occur after the date of this quarterly report.

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.

operations have primarily focused on the following areas of the coffee industry:

9 unchanged sentences

ability to manage inventory and fulfillment operations and maintain gross margins.

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, and will continue to evaluate, strategic decisions to acquire and invest in measures that

are expected to increase net sales.

In addition to our acquisitions, in October 2020, we entered into an agreement to become a 49% owner

in The Jordre Well, a CBD beverage company (“The Jordre Well”).

Under the terms of the agreement with The Jordre Well, The

Jordre Well will assist us in the development and commercialization of CBD-infused line extensions for the existing coffee brands within

our portfolio, as well as launch new brands that are intended to serve consumer demand for non-coffee CBD-infused beverages and products.

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, and will continue to evaluate, strategic decisions to acquire and invest

in measures that are expected to increase net sales.

In addition to our acquisitions, in October 2020, we entered into an agreement

to become a 49% owner in The Jordre Well, a CBD beverage company (“The Jordre Well”).

Under the terms of the agreement

with The Jordre Well, The Jordre Well will assist us in the development and commercialization of CBD-infused line extensions for

the existing coffee brands within our portfolio, as well as launch new brands that are intended to serve consumer demand for non-coffee

CBD-infused beverages and products.

We believe these efforts will allow us to expand our business.

sales are affected by the price of green coffee.

We purchase our green coffee from dealers located primarily within the United States.

The dealers supply us with coffee beans from many countries, including Colombia, Mexico, Kenya, Indonesia, Brazil and Uganda.

and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control.

in Brazil, which produces approximately 40% of the world’s green coffee, the coffee crops are historically 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 in one country 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, irrespective of

sales volume.

supply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control.

We purchase our green coffee from dealers located primarily within the United

The dealers supply us with coffee beans from many countries, including Colombia, Mexico, Kenya, Indonesia, Brazil and

The supply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond

For example, in Brazil, which produces approximately 40% of the world’s green coffee, the coffee crops are

historically 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

in one country generally have not had a material effect on our results of operations, liquidity and capital resources.

Historically,

we have used, and intend to continue to use in a limited capacity, short-term coffee futures and options contracts primarily for the

purpose of partially hedging the effects of changing green coffee prices.

In addition, we acquired, and expect to continue to acquire,

futures contracts with longer terms, generally three to four months, primarily for the purpose of guaranteeing an adequate supply of

green coffee.

Realized and unrealized gains or losses on options and futures contracts are reflected in our cost of sales.

Gains on options

and futures contracts reduce our cost of sales and losses on options and futures contracts increase our cost of sales.

The use of these

derivative financial instruments has generally enabled us to mitigate the effect of changing prices.

We believe that, in normal economic

times, 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 trying to minimize margin compression during a

time of historically high coffee prices.

However, no strategy can entirely eliminate pricing risks and we generally remain exposed to

losses on futures contracts when prices decline significantly in a short period of time, and we would generally remain exposed to supply

risk in the event of non-performance by the counterparties to any of our futures contracts.

Although we have had net gains on options

and futures contracts in the past, we have incurred significant losses on options and futures contracts during some recent reporting

In these cases, our cost of sales has increased, resulting in a decrease in our profitability or increase our losses.

have and could in the future materially increase our cost of sales and materially decrease our profitability and adversely affect our

If our hedging policy is not effective, we may not be able to control our coffee costs, we may be forced to pay greater

than market value for green coffee and our profitability may be reduced.

Failure to properly design and implement an effective hedging

strategy may materially adversely affect our business and operating results.

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

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, irrespective of sales volume.

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, and intend to continue to use in a limited capacity, short-term coffee futures and options contracts

primarily for the purpose of partially hedging the effects of changing green coffee prices.

In addition, we acquired, and expect

to continue to acquire, futures contracts with longer terms, generally three to four months, primarily for the purpose of guaranteeing

an adequate supply of green coffee.

Realized and unrealized gains or losses on options and futures contracts are reflected in

our cost of sales.

Gains on options and futures contracts reduce our cost of sales and losses on options and futures contracts

increase our cost of sales.

The use of these derivative financial instruments has generally enabled us to mitigate the effect

of changing prices.

We believe that, in normal economic times, 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 trying to minimize margin compression during a time of historically high coffee prices.

However, no strategy

can entirely eliminate pricing risks and we generally remain exposed to losses on futures contracts when prices decline significantly

in a short period of time, and we would generally remain exposed to supply risk in the event of non-performance by the counterparties

to any of our futures contracts.

Although we have had net gains on options and futures contracts in the past, we have incurred

significant losses on options and futures contracts during some recent reporting periods.

In these cases, our cost of sales has

increased, resulting in a decrease in our profitability or increase our losses.

Such losses have and could in the future materially

increase our cost of sales and materially decrease our profitability and adversely affect our stock price.

If our hedging policy

is not effective, we may not be able to control our coffee costs, we may be forced to pay greater than market value for green

coffee and our profitability may be reduced.” Failure to properly design and implement an effective hedging strategy may

materially adversely affect our business and operating results.

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

or increased losses.

As previously announced, as a result of the volatile nature of the commodities markets, we have and are continuing

to scale back our use of hedging and short-term trading of coffee futures and options contracts, and intend to continue to use these

practices in a limited capacity going forward.

to scale back our use of hedging and short-term trading of coffee futures and options contracts, and intend to continue to use

these practices in a limited capacity going forward.

global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S.

in March 2020 and has negatively affected the U.S.

and global economies, disrupted global supply chains, resulted in significant travel

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

date, we have experienced minimal 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.

and global economies, disrupted global supply chains, resulted in significant

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

However, we are classified as an essential business and its factories continued to operate with little to no impact from

the pandemic-related closures.

date, we have experienced minimal 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.

We 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.

COVID-19 pandemic has had a material adverse impact on our condensed consolidated financial statements for the three and six months ended

April 30, 2021, and it has resulted, and is expected to continue to result for at least the near and immediate term, in significant economic

disruptions and changes to consumer behaviors in the United States, which, has impacted and is expected to continue to negatively impact

our business.

Many of our customers who purchase green coffee from us for use in cafés, restaurants and food service operations,

were forced to temporarily suspend or close operations, adversely impacting our sales to customers in that segment.

However, as sales

to the café, restaurant and food service segment decreased in the quarter, sales to large wholesaler and retail customers increased,

as there was a shift in buying and consumption of coffee products to this segment.

As a food producer, we are an essential service

and almost all of our employees continue to work within our production and distribution facilities.

COVID-19 pandemic has had a material adverse impact on our condensed consolidated financial statements for the three months ended

January 31, 2021, and it has resulted, and is expected to continue to result for at least the near and immediate term, in significant

economic disruptions and changes to consumer behaviors in the United States, which, has impacted and is expected to continue to

negatively impact our business.

Many of our customers who purchase green coffee from us for use in cafés, restaurants and

food service operations, were forced to temporarily suspend or close operations, adversely impacting our sales to customers in

that segment.

However, as sales to the café, restaurant and food service segment decreased in the quarter, sales to large

wholesaler and retail customers increased, as there was a shift in buying and consumption of coffee products to this segment.

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

and employment trends, disruptions to supply chains, including our ability to obtain products from global suppliers, higher operating

costs, the form and impact of economic stimulus and general overall economic instability, is uncertain at this time and could have a

material adverse effect on our business, results of operations, and financial condition.

costs, the form and impact of economic stimulus and general overall economic instability, is uncertain at this time and could

have a material adverse effect on our business, results of operations, and financial condition.

Accounting Policies and Estimates

have been no changes to our critical accounting policies during the three and six months ended April 30, 2021.

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.

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 16, 2021 for the fiscal year ended October 31, 2020.

Months Ended April 30, 2021 Compared to the Three Months Ended April 30, 2020 (restated)

sales totaled $14,468,558 for the three months ended April 30, 2021, a decrease of $2,877,293, or 16.6%, from $17,345,851

for the three months ended April 30, 2020.

The decrease in net sales was due to multiple factors, including a decline of $5.2 million

in sales of packed coffee.

During April 2021 we experienced a 50% decline, as compared to April 2020, in production at our largest operating

facility in Colorado.

This reduction was due to supermarkets no longer building their inventories as they did in April 2020 during COVID-19

Further, we experienced a loss of approximately $750,000 in revenue as we dropped Aldi, Inc.

(“Aldi”) as a customer

due to unacceptably low net margins.

The above losses were slightly offset by gains in sales to new private label accounts as well as

an increase in sales of our flagship Café Caribe brand.

Cost of sales for the three months ended April 30, 2021 was $10,699,090, or 74% of net sales, as compared to $12,839,425,

or 74% of net sales, for the three months April 30, 2020.

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 our decreased

sales offset by higher packaging costs due to increases in materials, most notably steel for our cans.

Gross profit for the three months ended April 30, 2021 amounted to $3,769,468 or 26% of net sales, as compared to $4,506,426

or 26% of net sales, for the three months ended April 30, 2020.

The decrease in gross profit numerically was attributable

to decreased sales for the quarter ended April 30, 2021 as compared to the quarter ended April 30, 2020.

Total operating expenses decreased by $297,553 to $3,315,324 for the three months ended April 30, 2021 from $3,612,877

for the three months ended April 30, 2020.

Selling and administrative expenses decreased by $294,037 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 were the primary reasons for this decrease.

These efforts were partially offset by the increase in our freight costs as

the cost of truckload deliveries to our largest wholesale customers was up approximately 20% year over year.

Income (Expense).

Other expense for the three months ended April 30, 2021 was $17,637, a decrease of $31,816 from $49,453 for

the three months ended April 31, 2020.

The decrease in other expense was attributable to a decrease in interest expense of $32,886, a

decrease in our loss from our equity investments of $363 and a decrease in our interest income of $1,433, during the three months ended

April 30, 2021 as compared to the three months ended April 30, 2020.

Our provision for income taxes for the three months ended April 30, 2021 totaled $129,086 compared to a provision of $154,767

for the three months ended April 30, 2020.

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

April 30, 2021 versus the income in the quarter ended April 30, 2020, as well as a true up to the provision that was recorded in the

three months ended April 30, 2020.

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

to net income of $498,518, or $0.09 per share basic and diluted for the three months ended April 30, 2020.

The decrease in net income

was due primarily to the reasons described above.

Months Ended April 30, 2021 Compared to the Six Months Ended April 30, 2020 (restated)

Net sales totaled $32,602,395 for the six months ended April 30, 2021, a decrease of $1,870,499, or 5.4%,

from $34,472,894 for the six months ended April 30, 2020.

The decrease in net sales was due to multiple factors, including the

continued loss of sales of packed coffee to our customers who have not fully re-opened due to COVID-19 restrictions.

During April 2021

we experienced a 50% decline, as compared to April 2020, in production at our largest operating facility in Colorado.

This reduction

was due to supermarkets no longer building their inventories as they did in April 2020 during COVID-19 shutdowns.

Further, we experienced

a loss of approximately $750,000 in revenue as we dropped Aldi as a customer due to unacceptably low net margins.

Cost of sales for the six months ended April 30, 2021 was $24,353,356, or 74.7% of net sales, as compared to $26,851,714,

or 77.9% of net sales, for the six months April 30, 2020.

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 our decreased

sales partially offset by higher packaging costs due to increases in materials, most notably steel for our cans.

Gross profit for the six months ended April 30, 2021 amounted to $8,249,039 or 25.3% of net sales, as compared to $7,621,092

or 22.1% of net sales, for the six months ended April 30, 2020.

The increase in gross profit percentage was attributable to increased

margins on our roasted and branded products partially due to the movement of lower cost green coffee inventory built up in previous quarters,

partially offset by higher packaging costs due to increases in materials, most notably steel for our cans.

Total operating expenses decreased by $659,416 to $6,628,514 for the six months ended April 30, 2021 from $7,287,930

for the six months ended April 30, 2020.

Selling and administrative expenses decreased by $638,875 and officers’ salaries

decreased by $20,541.

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

unnecessary variable costs were the primary reasons for this decrease.

These efforts were partially offset by the increase in our freight

costs as the cost of truckload deliveries to our largest wholesale customers was up approximately 20% year over year.

preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the

United States of America (“U.S.

GAAP”) 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, assets held for sale, business combinations, carrying amounts of intangible assets

and goodwill, deferred taxes, income taxes, commodities held 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.

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:

Company has adopted the new revenue recognition standard ASC 606 on November 1, 2018 using the modified retrospective method.

The majority of the Company’s business is ship and bill.

The Company recognizes revenue in accordance with the five-step

model in which the Company evaluates the transfer of promised goods or services and recognizes revenue when its customer obtains

control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled

to receive in exchange for those goods or services.

To determine revenue recognition for the arrangements, the Company performs

the following five steps:

(1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract,

(3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and

(5) recognize revenue when (or as) the entity satisfies a performance obligation.

November 1, 2019, we adopted ASC Topic 842, Leases (“ASC 842”).

The new guidance increases transparency by requiring

the recognition of right to use assets and lease liabilities on the statement of financial condition.

The recognition of these

lease assets and lease liabilities represents a change from previous US GAAP requirement, which did not require lease assets

and lease liabilities to be recognized for most operating leases.

The recognition, measurement and presentation of expenses

and cash flows arising from a lease, have not significantly changed from previous US GAAP requirements.

On November 1, 2019,

the effective date of ASC 842, existing leases of ours were required to be recognized and measured.

Additionally any leases

entered into during the year were also required to recognized and measured.

In applying ASC 842, we made an accounting policy

election not to recognize the right of use assets and lease liabilities relating to short-term leases.

Implementation of ASC

842 included an analysis of contracts, including real estate leases and service contracts to identify embedded leases, to

determine the initial recognition of the right to use assets and lease liabilities, which required subjective assessment over

the determination of the associated discount rates to apply in determining the lease liabilities.

The new standard provides

a number of transition practical expedients, which we have elected, including:

A “package of three” expedients

that must be taken together and allow entities to (1) not reassess whether existing contracts contain leases, (2) carryforward

the existing lease classification, and (3) not reassess initial direct costs associated with existing leases.

allowance for doubtful accounts is maintained to provide for losses arising from customers’ inability to make required

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 net accounts receivable that becomes uncollectible, would decrease our operating

income by approximately $78,000 for the three months ended January 31, 2021.

The reserve for sales discounts represents the

estimated discount that customers will take upon payment.

The reserve for other allowances represents the estimated amount

of returns, slotting fees and volume based discounts estimated to be incurred by us from our customers.

are stated at lower of cost (determined on a first-in, first-out basis) or market.

Based on our assumptions about future demand

and market conditions, inventories are subject to be written-down to market value.

If our assumptions about future demand

change and/or actual market conditions are less favorable than those projected, additional write-downs of inventories may

Each additional one percent of potential inventory write-down would have decreased operating income by approximately

$157,000 for the three months ended January 31, 2021.

commodities held at broker represent the market value of our trading account, which consists of option and futures contracts

for coffee held with a brokerage firm.

We use options and futures contracts, which are not designated or qualifying as hedging

instruments, to partially hedge the effects of fluctuations in the price of green coffee beans.

Options and futures contracts

are recognized at fair value in the consolidated financial statements with current recognition of gains and losses on such

We classify options and futures contracts as trading securities and accordingly, unrealized holding gains and losses

are included in earnings.

We record realized and unrealized gains and losses in our cost of sales in the statement of operations/income.

account for income taxes in accordance with the relevant authoritative guidance.

Deferred tax assets and liabilities are computed

for temporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable

or deductible amounts in the future based on enacted tax rates in effect for the year in which the differences are expected

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.

goodwill consists of the cost in excess of the fair market value of the acquired net assets of OPTCO, SONO, CFI and Steep

& Brew, through GCC, which has been integrated into a structure that does not provide the basis for separate reporting

Consequently, we are a single reporting unit for goodwill impairment testing purposes.

We also have intangible assets

consisting of our customer lists and relationships and trademarks acquired from OPTCO and SONO.

At January 31, 2021 our balance

sheet reflected goodwill and intangible assets as set forth below:

Customer list and relationships,

Non-compete, net

Trademarks and tradenames

and the trademarks which are deemed to have indefinite lives are subject to annual impairment tests.

Goodwill impairment tests

require the comparison of the fair value and carrying value of reporting units.

We assess the potential impairment of goodwill

and intangible assets annually and on an interim basis whenever events or changes in circumstances indicate that the carrying

value may not be recoverable.

Upon completion of such review, if impairment is found to have occurred, a corresponding charge

will be recorded.

The value assigned to the customer list and relationships is being amortized over a twenty year period.

value assigned to non-compete is being amortized over a five year period.

we are a single reporting unit, the closing Nasdaq Capital Market price of our common stock as of the acquisition date was used

as the basis to measure the fair value of goodwill.

Goodwill and the intangible assets will be tested annually at the end of each

fiscal year to determine whether they have been impaired.

Upon completion of each annual review, there can be no assurance that

a material charge will not be recorded.

Impairment testing is required more often than annually if an event or circumstance indicates

that an impairment or decline in value may have occurred.

Months Ended January 31, 2021 Compared to the Three Months Ended January 31, 2020 (restated)

Net sales totaled $18,133,837 for the three months ended January 31, 2021, an increase of $1,006,794, or 6%, from

$17,127,043 for the three months ended January 31, 2020.

The increase in net sales was due to the easing of the COVID-19 pandemic

which caused many of our green coffee customers who service the restaurant and food service industries to reopen.

Cost of sales for the three months ended January 31, 2021 was $13,654,169, or 75.3% of net sales, as compared

to $14,012,289, or 81.8% of net sales, for the three months January 31, 2020.

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 favorable green coffee position and hedging.

Gross profit for the three months ended January 31, 2021 amounted to $4,479,668 or 24.7% of net sales, as compared

to $3,114,754 or 18.2% of net sales, for the three months ended January 31, 2020.

The increase in gross profits was attributable

to increased margins on our roasted and branded products partially due to the movement of lower cost green coffee inventory

built up in previous quarters.

Total operating expenses decreased by $361,767 to $3,313,286 for the three months ended January 31, 2021 from

$3,675,053 for the three months ended January 31, 2020.

Selling and administrative expenses decreased by $344,743 and officers’

salaries decreased by $17,024.

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

of certain unnecessary variable costs were the primary reasons for this decrease.

These efforts were partially offset by the increase in our freight costs as we increased and expanded our product distribution.

Income (Expense).

Other expense for the six months ended April 30, 2021 was $46,493, a decrease of $59,261 from $105,754 for

the six months ended April 30, 2020.

The decrease in other expense was attributable to a decrease in interest expense of $61,952, partially

offset by an increase in our loss from our equity investments of $924 and a decrease in our interest income of $1,767, during the six

months ended April 30, 2021 as compared to the six months ended April 30, 2020.

Our provision for income taxes for the six months ended April 30, 2021 totaled $510,329 compared to a provision of $89,351

for the six months ended April 30, 2020.

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

April 30, 2021 versus the income in the six months ended April 30, 2020.

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

to net loss of $101,330, or $0.02 per share basic and diluted for the six months ended April 30, 2020.

The increase in net income was

due primarily to the reasons described above, as well as a true up to the provision that was recorded in the three months ended April

Other expense for the three months ended January 31, 2021 was $28,857, a decrease of $27,444 from $56,301

for the three months ended January 31, 2020.

The decrease in other expense was attributable to a decrease in interest expense

of $29,065, an increase in our loss from our equity investments of $1,287 and a decrease in our interest income of $334, during

the three months ended January 31, 2021.

Our provision for income taxes for the three months ended January 31, 2021 totaled $381,243 compared to a benefit

of $65,416 for the three months ended January 31, 2020.

The change was primarily attributable to the difference in the income

for the quarter ended January 31, 2021 versus the income in the quarter ended January 31, 2020.

We had net income of $677,312 or $0.12 per share basic and diluted, for the three months ended January 31, 2021

compared to a net loss of $599,848, or $0.11 per share basic and diluted for the three months ended January 31, 2020.

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

and Capital Resources

of April 30, 2021, we had working capital of $21,447,364, which represented a $2,592,174 decrease from our working capital of $24,039,538

as of October 31, 2020, and total stockholders’ equity of $27,932,559 which increased by $1,413,893 from our total stockholders’

equity of $26,518,666 as of October 31, 2020.

Our working capital decreased primarily due to decreases of $709,476 in accounts receivable,

$1,935,996 in inventories, $91,684 in prepaid and refundable income taxes, increases of $970,875 in accounts payable and accrued expenses,

increases of $255,611 in income taxes payable, increase of $16,641 in lease liabilities – current portion, partially offset by

increase of $653,017 in cash, $173,177 in prepaid expenses, $559,408 in due to broker.

As of April 30, 2021, the outstanding balance on our line of credit was $2,500 compared to $3,796,822 as of October 31, 2020.

April 25, 2017, we and Organic Products Trading Company, LLC (“OPTCO”)(collectively, 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 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.

of January 31, 2021, we had working capital of $22,539,372, which represented a $1,500,166 decrease from our working capital of

$24,039,538 as of October 31, 2020, and total stockholders’ equity of $27,385,746 which increased by $867,080 from our total

stockholders’ equity of $26,518,666 as of October 31, 2020.

Our working capital decreased primarily due to decreases of

$146,339 in cash, $1,403,694 in inventories, $85,114 in prepaid and refundable income taxes, increases of $708,929 in accounts

payable and accrued expenses, increases of $115,411 in income taxes payable, partially offset by increase of $399,548 in accounts

receivable, $19,408 in prepaid expenses, reductions of $124,044 in lease liabilities – current portion, $1,246 in note payable

– current portion, $415,075 in due to broker.

As of January 31, 2021, the outstanding balance on our line of credit was

$952,732 compared to $3,796,822 as of October 31, 2020.

April 25, 2017, we and OPTCO (collectively, 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 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.

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

The terms of the new

agreement among other things:

(i) provides for a new maturity date of March 31, 2022 and (ii) decreases the interest rate per annum to

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

the new agreement among other things:

(i) provides for a new maturity date of March 31, 2022 and (ii) decreases the interest rate

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

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.

We were in compliance with all covenants as of April 30, 2021 and

October 31, 2020.

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.

We were in compliance with all covenants as

of January 31, 2021 and October 31, 2020.

of the A&R Loan Facility and the A&R Loan Agreement is secured by all of our tangible and intangible assets.

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, 2021, our operating activities provided net cash of $5,047,290 as compared to the six months ended April

30, 2020 when operating activities provided net cash of $2,438,729.

The increased cash flow from operations for the three months ended

April 30, 2021 was primarily due to our inventory usage during the quarter and our net income.

the six months ended April 30, 2021, our investing activities used net cash of $597,444 as compared to the six months ended April 30,

2020 when net cash used by investing activities was $132,967.

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, 2021.

the six months ended April 30, 2021, our financing activities used net cash of $3,796,829 compared to net cash used by financing activities

of $2,060,862 for the six months ended April 30, 2020.

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

30, 2021 was due to our increased principal payments on our credit line.

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

through June 14, 2022 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.

as amended and restated by the A&R Loan Agreement, the Company Financing Agreement and the OPTCO Financing Agreement remains

in full force and effect.

the three months ended January 31, 2021, our operating activities provided net cash of $2,765,148 as compared to the three months

ended January 31, 2020 when operating activities provided net cash of $1,720,450.

The increased cash flow from operations for

the three months ended January 31, 2021 was primarily due to our inventory usage during the quarter and our net income.

the three months ended January 31, 2021, our investing activities used net cash of $66,151 as compared to the three months ended

January 31, 2020 when net cash used by investing activities was $71,974.

The decrease in our uses of cash in investing activities

was due to our reduced purchases of machinery and equipment during the three months ended January 31, 2021.

the three months ended January 31, 2021, our financing activities used net cash of $2,845,336 compared to net cash used by financing

activities of $1,299,900 for the three months ended January 31, 2020.

The change in cash flow from financing activities for the

three months ended January 31, 2021 was due to our increased principal payments on our credit line.

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

our indebtedness, through March 16, 2022 with cash provided by operating activities and the use of our credit facility.

an increase in eligible accounts receivable and inventory would permit us to make additional borrowings under our line of credit.

Sheet Arrangements

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, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources

that is material to investors.

condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital

resources that is material to investors.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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/A

Item 2. Management’s Discussion and Analysis