Note 14 - Revenue Recognition

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

14. Revenue Recognition

The Company’s primary source of revenue is sales of coffee creamers, hydration and beverage enhancing products, harvest snacks and other food items, and coffee, tea, and hot chocolate products. The Company recognizes revenue when control of the promised good is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms, or customer pick-up, applicable to the Company’s sales. Each delivery or shipment made to a third-party customer is considered to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collect the sales price under normal credit terms. Additionally, the Company estimates the impact of certain common practices employed by us and other manufacturers of consumer products, such as scan-based trading, product rebate and other pricing allowances, product returns, trade promotions, sales broker commissions and slotting fees. These estimates are recorded at the end of each reporting period.

In accordance with ASC Topic 606, the Company disaggregates net sales from contracts with customers based on the characteristics of the products sold:

	Year Ended December 31,
	2024						2023
	$			% of Total			$			% of Total
Coffee creamers	$	23,088,363			53	%	$	20,425,029			60	%
Coffee, tea, and hot chocolate products		11,184,525			26	%		7,968,956			23	%
Hydration and beverage enhancing products		9,207,964			21	%		5,320,039			16	%
Harvest snacks and other food items		6,215,989			14	%		6,883,980			20	%
Other		172,788			0	%		435,388			1	%
Gross sales		49,869,629			114	%		41,033,392			120	%
Shipping income		506,732			1	%		899,921			3	%
Discounts and promotional activity		(7,081,224	)		(15	)%		(7,709,115	)		(23	)%
Sales, net	$	43,295,137			100	%	$	34,224,198			100	%

The Company generates revenue through two channels: e-commerce and wholesale:

	Year Ended December 31,
	2024					2023
	$		% of Total			$		% of Total
E-commerce	$	25,642,366		59	%	$	19,443,885		57	%
Wholesale		17,652,771		41	%		14,780,313		43	%
Sales, net	$	43,295,137		100	%	$	34,224,198		100	%

Receivables from contracts with customers are included in accounts receivable. Contract assets include deferred cost of goods sold associated with deferred revenue and are included in finished goods inventories. Contract liabilities include deferred revenue, customer deposits, rewards programs, and refund liabilities, and are included in accrued expenses. The balances of receivables from contracts with customers, contract assets, and contract liabilities were as follow:

	January 1,			December 31,			December 31,
	2023			2023			2024
Accounts receivable, net	$	1,494,469		$	1,022,372		$	1,762,911
Contract liabilities	$	(729,667	)	$	(427,974	)	$	(348,869	)

On  May 7, 2024, the Company entered into an accounts receivable factoring agreement (the “Factoring Agreement”) with Alterna Capital Solutions LLC (the “Purchaser”). The Factoring Agreement allows the Company to access up to $2 million on a revolving basis (the “Maximum Amount”). The upfront purchase price for factored accounts is up to 70% of their face value, with the remainder payable to the Company upon collection by the Purchaser. The proceeds will be used to fund general working capital needs. The Company will pay fees, including a funds usage fee (prime rate + 1.5%, minimum 10% per annum) and a collateral monitoring fee (0.05% per month). Pursuant to the Factoring Agreement, the Purchaser can require repurchase of uncollectable or ineligible accounts. 

The Factoring Agreement has an initial term of 12 months and will automatically renew annually, unless terminated in accordance with the Factoring Agreement. The Company may terminate the Factoring Agreement at any time upon 30 days prior written notice and payment to Purchaser of an early termination fee equal to 2.0% of the Maximum Amount if terminated during the first 12 months and 1.0% of the Maximum Amount during the subsequent terms.

The Company has granted a security interest in its personal property to secure the payment and performance of all obligations under the Factoring Agreement. The Factoring Agreement includes customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, and the exercise of remedies upon a breach or default.