COMMITMENTS AND CONTINGENCIES

6 Months Ended

Apr. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8 – COMMITMENTS AND CONTINGENCIES:

CLASS ACTION COMPLAINTS

The Company was named as a defendant in a putative class action lawsuit filed in the United States District Court for the Northern District of Illinois on or about December 21, 2020. The plaintiffs, Eileen Brodsky and Rhonda Diamond, purporting to represent a class of individuals who purchased coffee products at Aldi, Inc. (“Aldi”), a supermarket chain, generally allege that Aldi sold private label coffee products manufactured by the Company and another coffee roasting company, which falsely described the number of cups of coffee that could be made from the amount of product purchased. Aldi and Pan American are also named as defendants in the action. The complaint asserts a variety of claims under New York and California consumer protection laws, and seeks unspecified monetary damages, including disgorgement and restitution, as well as other forms of relief including class certification, declaratory and injunctive relief, attorneys’ fees, and interest. The Company believes the allegations in the complaint are wholly without merit and that the claims asserted are legally deficient, and the company intends to vigorously defend the action. The Company has filed a motion to dismiss, and the plaintiff has sought leave to file an amended complaint. At this time, the Company is unable to predict the ultimate outcome of this lawsuit.

A significant customer of the Company was named as a defendant in a putative class action lawsuit filed in the United States District Court for the District of Massachusetts on or about February 2, 2021, concerning the labeling on private label coffee productions we sold to the customer. The plaintiff, David Cohen, purporting to represent a class of individuals who purchased coffee products from our customer, generally allege that the customer sold private label coffee products manufactured by the Company which falsely described the number of cups of coffee that could be made from the amount of product purchased. The Company is not named as a defendant in the action, but has agreed to indemnify the customer for the costs and expenses incurred in defending the lawsuit and for any liability the customer may suffer as a result. The complaint asserts a variety of claims under Massachusetts consumer protection laws, and seeks unspecified monetary damages as well as other forms of relief including class certification, declaratory and injunctive relief, attorneys’ fees, and interest. The Company believes the allegations in the complaint are wholly without merit and that the claims asserted are legally deficient, and intends to vigorously support the customer in defending the action. As of the filing of this Form 10-Q, the Company is unable to predict the ultimate outcome of this lawsuit.

A number of lawsuits similar to those above have been filed in recent years against coffee sellers in the industry in which the Company competes. Many of these lawsuits have yet to be finally adjudicated. The Company believes the lawsuits filed against it are without merit.

LEASES

The following summarizes the Company’s operating leases:

	April 30, 2021
Right-of-use operating lease assets	$	1,954,072
Current lease liability	$	500,804
Non-current lease liability	$	1,580,684
Total lease liability		2,081,488

The amortization of the right-of-use asset for the six and three months ended April 30, 2021 was $226,155 and $112,587, respectively.

	April 30, 2021
Average remaining lease term		3.2
Discount rate		4.75	%

Maturities of lease liabilities by year for our operating leases are as follows:

2021 (remaining six months)	$	303,370
2022		570,854
2023		546,542
2024		316,477
2025		168,288
Thereafter		434,744
Total lease payments	$	2,340,275
Less: imputed interest		(258,787	)
Present value of operating lease liabilities	$	2,081,488

The aggregate cash payments under these leasing agreements was $300,306 for the six months ended April 30, 2021.

COFFEE HOLDING CO., INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2021

(UNAUDITED)