What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-06-13 compared with 2025-03-21 · 92 added, 57 removed, 167 unchanged (47% of the section changed)

10 unchanged sentences

effectiveness of our hedging policy may impact our profitability;

success of our joint ventures;

success in implementing our business strategy or introducing new products;

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macro global economic environment;

imposition of tariffs;

ability to maintain and develop our brand recognition;

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and options contracts, and intend to continue to use these practices in a limited capacity going forward.

November 6, 2024, Second Empire, a wholly owned subsidiary of the Company, entered into a Secured Creditor Sale Agreement with

Bridge Business Credit, LLC (“Seller”).

The sale was a Uniform Commercial Code (“UCC”) Chapter 9 sale to

purchase equipment, accounts receivable and inventory of Empire Coffee Company, Inc.

(“Empire Coffee

November 6, 2024, Second Empire, a wholly owned subsidiary of the Company, entered into a Secured Creditor Sale Agreement with Bridge

Business Credit, LLC (“Seller”).

The sale was a Uniform Commercial Code (“UCC”) Chapter 9 sale to purchase equipment,

accounts receivable and inventory of Empire Coffee Company, Inc.

(“Empire Coffee Company”).

Accounting Policies and Estimates

have been no changes to our critical accounting policies during the three months ended January 31, 2025.

have been no changes to our critical accounting policies during the three and six months ended April 30, 2025.

Critical accounting policies

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our 2024 10-K.

Months Ended January 31, 2025 Compared to the Three Months Ended January 31, 2024

Net sales totaled $21,305,285 for the three months ended January 31, 2025, an increase of $1,764,883, or 9%, from $19,540,402

for the three months ended January 31, 2024.

The increase in net sales was due to increased sales of private label and our brands to

our wholesale and retail customers.

Cost of sales for the three months ended January 31, 2025 was $15,573,359, or 73.1% of net sales, as compared to $16,060,103,

or 82.2% of net sales, for the three months ended January 31, 2024, a decrease of $486,744.

Cost of sales consists primarily of the cost

of green coffee and packaging materials.

This increase in gross margin was due to favorable green coffee prices that were initiated during

the three months ended January 31, 2025 for our roasted coffee customers and the cost of goods sold was favorably impacted by an improved

inventory situation, along with increased prices to both our wholesale and retail customers, reflecting higher market conditions.

Additionally,

net sales increased due to higher sales of our private label and branded products to both wholesale and retail customers.

Gross profit for the three months ended January 31, 2025 amounted to $5,731,926 or 26.9% of net sales, as compared to

$3,480,299 or 17.8% of net sales, for the three months ended January 31, 2024.

The increase in gross profits on a percentage and dollar

basis was attributable to the factors listed above.

Total operating expenses increased by $1,277,507 to $4,140,895 for the three months ended January 31, 2025 from $2,863,388

for the three months ended January 31, 2024.

Selling and administrative expenses increased by $1,239,551 and officers’ salaries

increased by $37,956.

The increase in selling and administrative expenses was due to higher payroll costs, professional fees, and the

acquisition of Empire Coffee Company.

Months Ended April 30, 2025 Compared to the Three Months Ended April 30, 2024

Net sales totaled $23,320,061 for the three months ended April 30, 2025, an increase of $4,324,148, or 23%, from $18,995,913

for the three months ended April 30, 2024.

The increase in net sales was due to increased sales of our private label and Cafe Caribe

and Cafe Supremo products brands to our wholesale and retail customers.

Cost of sales for the three months ended April 30, 2025 was $18,901,189, or 81.1% of net sales, as compared to $15,291,933,

or 80.5% of net sales, for the three months ended April 30, 2024, an increase of $3,609,256.

Cost of sales consists primarily of the

cost of green coffee and packaging materials.

The increase in cost of sales relates to the increase in net sales of our private label

and branded products to both wholesale and retail customers.

Gross profit for the three months ended April 30, 2025 amounted to $4,418,872 or 18.9% of net sales, as compared to $3,703,980

or 19.5% of net sales, for the three months ended April 30, 2024.

The increase in gross profits on a percentage and dollar basis was

attributable to the factors listed above.

Total operating expenses decreased by $240,373 to $3,530,257 for the three months ended April 30, 2025 from $3,770,630

for the three months ended April 30, 2024.

Selling and administrative expenses decreased by $342,595 and officers’ salaries increased

The decrease in selling and administrative expenses was due to lower payroll costs and professional fees.

Income (Expense).

Other income for the three months ended January 31, 2025 was $31,683, a decrease of $91,867 from other income

of $123,550 for the three months ended January 31, 2024.

Other income for the three months ended April 30, 2025 was $17,487, a decrease of $15,336 from other income

of $32,823 for the three months ended April 30, 2024.

The change was attributable to a decrease in interest expense of $55,701.

Our expense for income taxes for the three months ended January 31, 2025 totaled $406,092 compared to an expense of $142,337

for the three months ended January 31, 2024.

Our expense for income taxes for the three months ended April 30, 2025 totaled $227,073 compared to our benefit of $77,632

for the three months ended April 30, 2024.

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

January 31, 2025 versus the income in the quarter ended January 31, 2024.

April 30, 2025, versus the loss in the quarter ended April 30, 2024.

Income (Loss).

We had net income of $1,153,256, or $0.20 per share basic and diluted, for the three months ended January 31,

2025 compared to a net loss of $351,024, or $0.06 per share basic and diluted, for the three months ended January 31, 2024.

We had net income of $644,055, or $0.11 per share basic and diluted, for the three months ended April 30, 2025,

compared to a net loss of $21,841, or $0.00 per share basic and diluted, for the three months ended April 30, 2024.

Months Ended April 30, 2025, Compared to the Six Months Ended April 30, 2024

Net sales totaled $44,625,346 for the six months ended April 30, 2025, an increase of $6,089,031, or 16%, from $38,536,315

for the six months ended April 30, 2024.

The increase in net sales was due to increased sales of our private label and Cafe Caribe and

Cafe Supremo products brands to our wholesale and retail customers.

Cost of sales for the six months ended April 30, 2025 was $34,474,548, or 77.3% of net sales, as compared to $31,352,036,

or 81.4% of net sales, for the six months ended April 30, 2024.

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

materials and realized and unrealized gains or losses on hedging activity.

This increase in gross margin was due to favorable green coffee

prices that were initiated during the six months ended April 30, 2025, for our roasted coffee customers and the cost of goods sold was

favorably impacted by improved inventory management, along with increased prices to both our wholesale and retail customers, reflecting

higher market conditions.

Additionally, net sales increased due to higher sales of our private label and branded products to both wholesale

and retail customers.

Gross profit for the six months ended April 30, 2025 amounted to $10,150,798 or 22.8% of net sales, as compared to $7,184,279

or 18.6% of net sales, for the six months ended April 30, 2024.

The increase in gross profits on a percentage basis was attributable

to the factors listed above.

Total operating expenses increased by $1,037,134 to $7,671,152 for the six months ended April 30, 2025 from $6,634,018

for the six months ended April 30, 2024.

Selling and administrative expenses increased by $896,956 and officers’ salaries increased

Operating expenses increased for the six months ended April 30, 2025 compared to the six months ended April 30, 2024 primarily

due to the acquisition of Second Empire adding approximately $1.3 to operating expenses for the six months ended.

Income (Expense).

Other expense for the six months ended April 30, 2025 was $49,170, a decrease of $107,203 from $156,373 for

the six months ended April 30, 2024.

The decrease was attributable to a decrease in interest income of $34,390 and a decrease in our

interest expense of $141,564, during the six months ended April 30, 2024.

Our expense for income taxes for the six months ended April 30, 2025 totaled $633,165 compared to an expense of $64,705

for the six months ended April 30, 2024.

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

April 30, 2025 versus the income in the six months ended April 30, 2024.

(Loss) Income.

We had net income of $1,797,311 or $0.31 per share basic and diluted, for the six months ended April 30, 2025

compared to net income of $329,183, or $0.06 per share basic and diluted for the six months ended April 30, 2024.

The increase in net

income was due primarily to the reasons described above.

Capital Resources and Going Concern

of January 31, 2025, we had working capital of $22,386,733, which represented a $859,750 increase from our working capital of $ 21,526,983

of April 30, 2025, we had working capital of $25,831,578, which represented a $965,841 increase from our working capital of $21,526,983

as of October 31, 2024.

Our working capital increased primarily due to the $495,767 increase in due from broker, a $980,195 increase

in cash and cash equivalents, and a $2,398,168 increase in accounts receivable offset by a $2,200,000 increase on the line of credit.

Our working capital increased primarily due to the $1,509,920 increase in inventory, a $1,221,965 increase in

due from broker, and a $779,055 increase in accounts receivable offset by a $3,000,000 increase on the line of credit.

April 25, 2017, we and one of our subsidiaries, Organic Products Trading Company, LLC (“OPTCO” and together with us, collectively

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Loan Agreement.

April 17, 2025, the Borrowers entered into the Eleventh Loan Modification Agreement with Webster which (i) amended the A&R Loan Agreement

to provide for a new loan maturity date of June 28, 2026 and (ii) provided limited consent for the Company to declare dividends to shareholders

for its fiscal year ending October 31, 2025.

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

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The outstanding balance on our line of credit was $3,000,000 and

$9,620,000 as of January 31, 2025 and October 31, 2024, respectively.

the three months ended January 31, 2025, our operating activities used cash of $401,898 as compared to the three months ended January

31, 2024 when operating activities provided net cash of $4,594,849.

The decrease in cash flow from operations was primarily due to the

increase in accounts receivable from October 31, 2024 to January 31, 2025, compared to a decrease in accounts receivable of $2,524,747

from October 31, 2023 to January 31, 2024.

$0 as of April 30, 2025 and October 31, 2024, respectively.

the six months ended April 30, 2025, our operating activities used cash of $1,555,954 as compared to the six months ended April 30, 2024

when operating activities provided cash of $3,390,694.

The decrease in cash flow from operations was primarily due to the increase in

inventory from October 31, 2024 to April 30, 2025.

Non-cash charges, including depreciation and amortization, unrealized gain on commodities,

loss on equity method investments, amortization of right-of-use assets, and deferred income taxes, resulted in cash used of $393,042

for the three months ended January 31, 2025 compared to non-cash charges provided of $513,003 for the three months ended January 31,

the three months ended January 31, 2025, our investing activities provided used cash of $817,906 as compared to the three months ended

January 31, 2024 when net cash used in investing activities was $0.

The decrease in our cash provided by investing activities was due

to purchases of machinery and equipment during the three months ended January 31, 2025.

the three months ended January 31, 2025, our financing activities used net cash of $2,200,000 compared to net cash used in financing

activities of $4,920,963 for the three months ended January 31, 2024.

The change in cash flow from financing activities for the three

months ended January 31, 2025 was primarily due to our credit line activity.

amortization of right-of-use assets, and deferred income taxes, resulted in cash used of $603,581 for the six months ended April 30,

2025 compared to non-cash charges provided of $24,165 for the six months ended April 30, 2024.

the six months ended April 30, 2025, our investing activities used cash of $992,907 as compared to the six months ended April 30, 2024

when net cash provided in investing activities was $2,925,927.

The decrease in our cash provided by investing activities was due to the

proceeds from the sale of an investment of $3,150,000 during the three months ended April 30, 2024.

the six months ended April 30, 2025, our financing activities provided net cash of $3,000,000 compared to net cash used in financing

activities of $6,622,909 for the six months ended April 30, 2024.

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

ended April 30, 2025 was primarily due to our credit line activity.

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