10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal years ended 12/31/2019

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________              

Commission file number:  033-96070-LA

Thanksgiving Coffee Company, Inc.

(Exact name of registrant as specified in its charter)

California	94-2823626
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
19100 S. Harbor Dr. Fort Bragg, CA	95437
(Address of principal executive offices)	(Zip Code)

(707) 964-0118

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Exchange Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   ☐   No   ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes   ☐   No   ☒

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Regulation 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   ☐   No   ☒

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes   ☐   No   ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐  No ☒

There currently does not exist a public trading market for the registrant’s common stock. Over the years, there have been isolated and sporadic privately negotiated transactions in the Company’s shares.  See “Part II, Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”  The Company is not aware of any privately negotiated transactions of the Company’s stock since 2008. The Company is unable to determine the current market value of the common equity held by non-affiliates as no reliable secondary trading price exists.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

On December 31, 2019 the registrant had 1,236,744 shares of common stock, no par value per share, outstanding.

Class	Outstanding at December 31, 2019
Common Equity, no par value	1,236,744 shares

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	tcci	none

Table of Contents

PART I.
Item 1.	Business	1
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	7
Item 2.	Properties	7
Item 3.	Legal Proceedings	8
Item 4.	Mine Safety Disclosures	8
PART II.
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	9
Item 6.	Selected Financial Data.	9
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 8.	Financial Statements and Supplementary Data	14
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	14
Item 9A.	Controls and Procedures	14
Item 9B.	Other Information	15
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	16
Item 11.	Executive Compensation	17
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	18
Item 13.	Certain Relationships and Related Transactions, and Director Independence	19
Item 14.	Principal Accountant Fees and Services	20
Part IV
Item 15.	Exhibits and Financial Statement Schedules	21

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FORWARD LOOKING INFORMATION

In addition to historical information, this annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Forward-looking statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” “would,” “should,” “could,” and other similar expressions.  In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.  These statements relate to, among other things, possible expansions into new and existing markets and trends in the operations of the Company.  Any such statements should be considered in light of various risks and uncertainties that could cause results to differ materially from expectations, estimates or forecasts expressed. The various risks and uncertainties include, but are not limited to: changes in general economic conditions, changes in business conditions in the coffee industry, fluctuations in consumer demand for coffee products and in the availability and costs of green coffee beans, continuing competition within the Company’s markets, variances from budgeted sales mix and growth rate, consumer acceptance of the Company’s products, inability to secure adequate capital to fund its operating expenses and working capital requirements, inability to increase prices for the Company’s products, inability to hire, train and retain qualified personnel, concentration of production and sales in Northern California, the loss of one or more major customers, inability to successfully implement the Company’s sales goals, natural disasters, civil unrest in countries which produce coffee, weather and other risks identified herein.  We do not intend, and undertake no obligations, to update any of our forward-looking statements after the date of this annual report to reflect actual results of future events or circumstances.  Given these risks and circumstances, readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this annual report.

Risks that could cause actual results to differ materially from any results projected, forecasted, estimated or budgeted or that may materially and adversely affect our actual results include, but are not limited to, those discussed in Part II, Item 1A. Risk Factors in the 2019 Report and the additional risk factor regarding COVID-19 discussed in Part I, Item 1A of this Report. Readers should carefully review the risk factors described in the 2019 Report, this Report and in other documents that the Company files from time to time with the SEC.

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PART I

ITEM 1.  BUSINESS

INTRODUCTION

Thanksgiving Coffee Company, Inc. (Thanksgiving”, the “Company”, “we”, “us”, or “our”) was founded by Joan and Paul Katzeff in 1972 as a partnership, and they incorporated it on May 10, 1982. Since its inception, the Company has been a pioneer, modeling social and economic justice, and environmental sustainability, employing as many as 50 full-time employees in the Fort. Bragg, CA area. The Company’s motto, “Not Just a Cup, but a Just Cup,” ™ reflects the Company’s principles and mission, and its commitment to cooperatives composed of small coffee farmers in developing nations.

For years the Company has purchased and roasted high quality coffee beans and marketed them to the specialty coffee market, (providing coffee beans of the best flavor which are grown in special micro climates).  The Company buys green coffee beans (which are the color of coffee beans before they are roasted) through six main importers.

The Company wholesales its coffee through its own distribution system and through outside distributors in the Northern California market.  In other parts of the nation, the Company distributes its products directly to retailers. The Company also markets directly to consumers through electronic media. The Company’s coffee product offerings and accessories of third parties are made on the Internet web site.   

In October 1996, the Company completed a direct public offering (a “Qualification by Permit” in California), and the Company filed with several other states¹ to conduct its offering of shares of its Common Equity (“Common Stock”).  As of December 31, 2019, 1,295 non-affiliated shareholders (shareholders who are not officers, directors, 5% or greater holders of the Company’s Common Stock or affiliates of the Company) held shares of the Company’s Common Stock, representing approximately 22% of the outstanding shares.

In 2015, Thanksgiving Coffee became a certified B Corporation. A certified B Corporation is certified by B Lab, which analyzed our operations as a whole and provided a score based on how the Company conducted its operations. The Company is in the process of becoming a “Benefit Corporation”. A Benefit Corporation is a Certified B Corporation with three additional legal attributes: accountability, transparency and purpose. The B Corporation and Benefit Corporation are designed for companies committed to conscious capitalism, combining higher purpose, accountability, and transparency where there is no trade-off between return on investment and social impact.

PRODUCTS

Coffee.  The Company roasts a wide variety of whole bean caffeinated, decaffeinated, flavored, blended and unblended coffees.  With the exception of its high-caffeinated coffee, the Company roasts only high quality Arabica beans with a focus on organic, shade grown and fair-traded beans (these are coffees where a floor price has been established).  Arabica beans are grown at high altitudes where the cooler climate results in slow growth and usually higher quality.  In addition to its current line of classic, Specialty and single origin coffees produced by local farmer cooperatives from over 12 countries, the Company is producing custom products for the American Birding Association, Bee Bold, the Dian Fossey Gorilla Fund International, Defenders of Wildlife and other social justice and environmental non-profits under exclusive licensing agreements, as well as private-label products for retail and food service accounts.

Complementary products.  The Company sells a wide variety of complementary coffee products and accessories, such as coffee makers, thermal carafes and mugs.

The Company sells its coffees and other products through a multi-channel distribution network consisting of wholesale distribution operations and direct marketing operations.  Complementary products are purchased from third party vendors on an as-needed basis and resold to the Company’s customers.  The Company generally provides its wholesale customers with brewing, grinding and related equipment (leased from third party leasing companies) and product displays (designed and manufactured by the Company) at no charge if predetermined sales volumes are reached.

COFFEE INDUSTRY

According to the U.S. National Coffee Association (“NCA”) 2019 report, the number of Americans drinking coffee has reached a 60/40 advantage over traditional non-gourmet drinkers. The global market saw a growth rate of 5.5% Compound Annual Growth Rate in 2019. According to NCA the major growth comes from African Americans consumption of gourmet coffee beverages rose from 33 percent up to 40 percent in 2019.

In addition, 30% of coffee was consumed outside the home in 2019 of all the coffees consumed, 60% was specialty versus 40% non-specialty.

Overall, according to the National Coffee Drinking Trends (“NCDT”) the above information demonstrates the continued trend of the coffee consumer desire for more and better tasting coffees among all age demographics in the “gourmet” coffee, non-espresso drinks such as cold brew, and brews from single cup machines.

The NCA states that the younger consumers appear to be leading the trend toward specialty beverages.

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ITEM 1.  BUSINESS - continued

In 2019, the “NCA” surveyed 2,815 Americans about their coffee drinking habits. The survey found that 64 percent of Americans drink a cup of coffee every day, up from 2016. U.S. coffee drinkers consume on average 3 cups a day.

According to the NCDT the United States coffee market has remained fairly flat over the past year, but more Americans are regularly drinking gourmet coffees, cold brew and other specialized beverages compared to non-gourmet coffee.  The espresso-based beverages have remained an all-time high and has risen 24 percent in each of the past three years. In addition, the NCDT reported that among all the ethnicities, African Americans show the most dramatic changes this year. Their consumption of gourmet coffee beverages jumped from 33 percent in 2018 up to 40 percent in 2019.

In the 1970’s, when the Company began to roast coffee, there were less than 15 roasters in the country, with the large roasters accounting for nearly all of the coffees consumed.  Today, there are over 3,000 Specialty coffee roasters, each segmenting and fragmenting the market, adapting to a wide variety of niche markets.  They are focusing on their ability to provide a wide range of coffee origins, freshly roasted in the appropriate style to meet the specific needs of local and regional markets.

According to Adroit Market Research consumers and retailers are increasingly conscious of organic beverages that will gain a further market share. The growing demand for on-the-go coffee and growing population buy-ability, the increasing urbanization and the consumption of premium products of specialty coffee leads to a fast growth in consumption.

More than 64 percent of Americans over the age 18 drink coffee daily. Adroit Research goes on to say Americans drink 400 million cups of coffee a day, making the U.S. the world’s leading coffee consumer. This trend continues as well. In 2019, approximately 80% of the Company’s products sold were certified organic.

According to Coffee Consumption Statistics by My Friends Coffee site that when they identified the main trends in coffee consumption by millennials they found 32 percent of millennials consume an espresso-based beverage every day, which is higher than any other demographic.

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ITEM 1.  BUSINESS - continued

NCA reports that there is fundamental shift in the American coffee landscape. “What it means is that more people are drinking coffee that comes at a higher price premium and could help buoy what’s known as third wave coffee market. The third-wave market does not just understand the espresso made by the barista but gives credit to the producer and roaster. In 2018, the fourth wave market was driven by science and roasting obsessions that were born from custom in-house brews. According to Beverage Daily, the fifth wave market for 2019 will focus on hyper-professionalism, operational excellence and training. It has been Thanksgiving’s mission from the onset to credit the producer for the high quality coffees we receive in all of our marketing materials. As of 2010, “Fair Trade” coffee was roasted by over 300 U.S. companies and sold at thousands of retail outlets.  Fair Trade certified coffee directly supports a better life for farming families in the developing world through fair prices, community development and environmental stewardship. Fair Trade farmers market their own harvests through direct, long-term contracts with international buyers, learning how to manage their businesses and compete in the global marketplace. Dunkin Donuts, the number one U.S. retailer of coffee by the cup, offers a Fair Trade espresso line of drinks. This trend has continued but the trend line has flattened. The Company continues to offer 80% of our coffees as Organic certified.

MARKETING STRATEGY

The Company’s sales and marketing efforts are currently organized in four different sales methods:

1.	Wholesale, Direct Delivery.  This sales method includes customers in Northern California counties contiguous to the Company’s plant in Fort Bragg, California, and is serviced by Company trucks and/or outside distributors.  The Company owns trucks and delivers coffee within a radius of 100 miles or less from Fort Bragg.  Because of operating costs, the Company has reduced its own fleet in favor of using distributors in certain areas serviced by the Company.  Total Company routes have declined, but outside distributors have continued to provide delivery service in those routes.
2.	Wholesale Delivery by Other Means.  This sales method includes accounts that are serviced by UPS or other common carriers.  Deliveries span most of the United States with the concentration of accounts in California.  This method is either handled direct, via broker or by a distributor.
3.	Direct Marketing.  This sales method includes accounts serviced through online programs.

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ITEM 1.  BUSINESS - continued

SOCIAL AND ENVIRONMENTAL RESPONSIBILITY

The Company focuses its marketing on creating and selling products that socially, environmentally and economically justifies the Company’s motto since 1985: “Not Just A Cup, But A Just Cup.” To this end, we:

1.	Purchase 80% of our raw coffees only from small-scale coffee farmer cooperatives.
2.	Purchase 80% of our coffees from certified organic growers.
3.	Have become a certified B Corporation 2, follow B Corporation guidelines for sustainable business practices, and in 2018 began the process of becoming a California Benefit Corporation..
4.	Seek partnerships with environmental and social justice non-profit organizations, and have established long-term exclusive licensing agreements with the following non-profit entities to produce coffee products for them to use as fund raising tools:

● Defenders of Wildlife – “Save the Wolves Coffee”

● American Wild Horses – “save the Wild Horses”

● Baby Rhino Foundation – “Save the Rhinos Coffee”

● American Birding Association – “Songbird Coffee”

● Dian Fossey Gorilla Fund International – “Gorilla Fund Coffee”

● Wild Horse Campaign-National

● Mendocino Coast Humane Society-Local

● Parents& Friends-Local

These licensing agreements enable the creation of meaningful and multi-dimensional coffees that are sold by “brick and mortar” retailers, as well as on-line.

CUSTOMER BASE

The Company’s customer base is wide in scope. Customers include wholesale accounts, such as supermarkets, hotels, restaurants, food services entities and offices. Wholesale sales represent 89% of total sales. The Company also retails its products on-line. The Company’s sales break down roughly as follows: Locally (defined as within a 150 mile radius) - approximately 30% of total sales volume, regionally (defined as 150+ mile radius) - approximately is 62% of sales volume, and on-line (which is more or less a national retail market) – 8% of total sales volume.

² “B Corporation” is a designation provided by B Lab, a nonprofit organization, which provides the designation if a company meets the highest standards of verified social and environmental performance, public transparency, and legal accountability, and aspires to use the power of markets to solve social and environmental problems. 

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ITEM 1.  BUSINESS - continued

The scope of our sales base makes us less vulnerable to competition, although each segment of the business requires a unique marketing approach. We believe our marketing approach enables us to weather economic fluctuations.

Although competition has increased from 2012 through 2019, we have retained market share. Smaller roasters have been acquired by larger entities and the acquisition pace has continued to consolidate the industry as large investments by venture capital and private equity interests have flooded the coffee trade.

We believe our position in the industry is both iconic and solid. In 2015, we were awarded B certification and in 2016 we were awarded “Roaster of the Year” for 2017 by trade publication Roast Magazine. In 2019, we received the Good Food Award for coffee for the North West Region from the Good Food Foundation.

COMPETITION

The Specialty coffee market is highly competitive, and the Company competes against all sellers of Specialty coffee.  At the wholesale level, the Company competes with several nationally known premium coffee brands, such as Smucker’s Millstone label, Nestlé’s Nescafe label and Green Mountain Coffee Roasters as well as other lesser -known brands and store brands.  The Company also competes regionally in Northern California with Specialty roasters such as Peet’s, Gevalia and Jeremiah’s Pick for retail shelf space and with large regional roasters for food service trade.  In the direct mail area, the Company competes with established suppliers such as Gevalia, a division of General Foods Corporation, as well as with other direct mail companies, including Starbucks, the leading independent Specialty coffee retailer and wholesaler.

The Company also competes with other eco-friendly coffee companies such as Equal Exchange, Counter Culture, and other coffee companies that sell eco-friendly coffees as part of their product line.

The Company competes primarily on the basis of the quality of its products, its package design, and its social and environmental philosophies.  Many of the Company’s competitors are larger than the Company and have significantly greater financial, marketing and other resources than the Company, and there can be no assurance that the Company will be able to maintain or expand sales successfully in the future.

The Company cannot guarantee successful competition against other coffee companies.  The Company believes its focus on partnering (such as the relationships with the American Birding Association and the Dian Fossey Gorilla Fund International) has enabled the Company to find a niche in the coffee market. However, there can be no assurance that these or the Company’s other marketing efforts will be successful in future years.

The Company also sells complementary products, primarily to its wholesale serving accounts that are ancillary to the coffee business but are necessary to serve coffee.  These items include coffee sleeves, coffee cups, equipment cleaners and the like.  These items are provided as a convenience for those accounts and assist in increasing revenue per stop for the Company’s distribution system.  The Company also sells these items in its direct marketing division.  The Company experiences competition in the sale of these ancillary items from manufacturers or other distributors, such as foodservice distributors.  There can be no assurance that the Company will be able to maintain or expand sales of these products successfully in the future.

GREEN BEAN COFFEE SUPPLY AND AVAILABILITY

The Company purchases green beans from a number of importers as well as from farmer representatives and small producer cooperatives.  Although most coffee trades in the worldwide commodities markets, coffee of the quality sought by the Company tends to trade on a negotiated basis at a substantial premium or “differential” above commodity coffee pricing, depending upon the supply and demand at the time of purchase. Supply and price can be affected by multiple factors, such as weather, politics and economics in the producing countries.

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ITEM 1.  BUSINESS - continued

The Company believes its long-term relationships with many cooperatives in the various growing regions where it buys coffee and with coffee bean brokers provide adequate sources of supply of high-quality green beans to meet the Company’s needs for the foreseeable future.  However, a worldwide supply shortage of the high quality Arabica coffees the Company purchases, the loss of one or more of these broker relationships or a shortage of organic, fair trade and shade grown beans, in particular, could have an adverse impact on the Company.  See also “Coffee Industry.”

CUSTOMERS AND VENDORS

See Note 1 to the financial statements under “concentrations of credit risk” for a summary of significant customers and vendors.

INTELLECTUAL PROPERTY

The Company holds various federal registrations in the United States for the following trademarks and service marks: Thanksgiving Coffee Company, Royal Gardens Tea Company, Pony Express, Time Bandits, Delicious Peace, “Not Just A Cup, But A Just Cup, “Many Beans are Picked, Few are Chosen.” and End the Embargo. From time to time, federal trademarks and service mark registrations must be renewed.  The Company does not hold any patents.

GOVERNMENT REGULATION

The Company’s roasting plant has been certified wholly organic by the United States Department of Agriculture (“USDA”).  The California Certified Organic Farmers (“CCOF”) is the inspecting agent.  The CCOF has also certified the organic practices of several farms from which the Company receives green beans.  The certification criteria of the CCOF, an independent organization, meet the standards promulgated under the Organic Foods Production Act of 1990, allowing the Company to market product originating at the certified farms as organic.

Our coffee roasting facility is subject to state and local air-quality and emissions regulations.  If we encounter difficulties in obtaining any necessary licenses or complying with these laws and regulations, our ability to produce any of our roasted products would be severely limited.  We believe that we are in compliance in all material respects with all such laws and regulations and that we have obtained all material licenses that are required of our business.

EMPLOYEES

As of December 31, 2019, the Company had twenty-five full-time employees and two part-time employees.

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ITEM 1A.  RISK FACTORS

We are a smaller reporting company and are not required to provide information required by this item. 

However, the Company notes that we are unable to predict the extent to which the global COVID-19 pandemic may adversely impact our business operations, financial performance and results of operations.

The COVID-19 pandemic has spread across the globe and is significantly impacting worldwide economic activity and increasing economic uncertainty. Many of our customers are currently or may become impacted by recommendations and/or mandates from federal, state, and local authorities to stay home ("shelter in place" or "safer at home"). These events have caused a significant increase in unemployment, are expected to result in decreased consumer spending and could cause economic deterioration. In addition, the COVID-19 pandemic and corresponding shelter in place orders have adversely affected our business in a number of ways, including a decreased demand for our products. This crisis has left some of our customers unable to make payments and has resulted in increased delinquencies and may cause other unpredictable and adverse events. If the pandemic continues, or if shelter in place orders are lifted and then another outbreak occurs, there may be continued or heightened impact on demand for our coffee and on our customers’ ability to make payments.

The majority of our retail customer’s businesses remain open subject to local social distancing orders. If one or more of our customer’s businesses becomes unavailable, our ability to attract new customers, conduct business and collect payments from customers may be adversely affected, which could result in increased delinquencies and losses. In addition, changes in consumer behavior and health concerns may continue to impact demand for our coffees. We are taking precautions to protect the safety and well-being of our employees and customers. However, no assurance can be given that the steps being taken will be deemed to be adequate or appropriate, nor can we predict the level of disruption which will occur to our employee’s ability to provide customer support and service.

Some of our employees are subject to shelter-in-place requirements which have resulted in certain team members working remotely. Our roastery in Fort Bragg California remains fully operational subject to social distancing orders. While we have been successful thus far in complying with these orders and keeping the roastery operational, our ability to continue to roast coffee and service our customers is highly dependent on the ability of our team to continue to work, either in the corporate headquarters or remotely. If a significant percentage of our workforce is unable to work effectively as a result of the COVID-19 pandemic, including because of illness, quarantines, ineffective remote work arrangements or technology, utility or other failures or limitations, our operations may be adversely impacted. In addition, the increase in remote working may also result in consumer or employee privacy, as well as increase our exposure to potential IT security and fraud concerns. Additionally, if any of our critical vendors are adversely impacted by COVID-19 and unable to deliver services to us, our operations may be adversely impacted.

The duration and scope of the pandemic, and our ability to make necessary adjustments from it, is highly uncertain. We continue to monitor the effect that the COVID-19 pandemic may have, and while it is not possible at this time to estimate the impact that COVID-19 could have on our business, the continued spread of COVID-19, and the measures taken by the governments of countries affected, may have an adverse effect on our business and financial condition.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

We are a smaller reporting company and are not required to provide information required by this item

ITEM 2.  PROPERTIES

The executive offices of the Company occupy approximately 14,500 square feet at 19100 South Harbor Drive, Fort Bragg, California 95437, which address also includes a warehouse and the capacity for manufacturing operations. These facilities are currently being leased for a ten-year term under a lease affective May of 2015 at a rate of $8,600 per month from Joan and Paul Katzeff, who are founders, principal shareholders, officers and directors. The Company is responsible for real estate taxes, insurance and maintenance on the facilities.  See Item 13 “Certain Relationships and Related Party Transactions, and Director Independence” and Note 8 to the Financial Statements “Related Party Transactions” included in this annual report.

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ITEM 3.  LEGAL PROCEEDINGS

No material legal matters in which the Company is a party or of which its property is the subject are pending at this time.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information.  Trades in the Company’s Common Stock are made through Mutual Securities, Inc., in Camarillo, California, a broker dealer that makes markets in corporation securities over-the-counter.  No established public trading market exists for the Company’s Common Stock.  The Company has no present intention of developing a public trading market for the Common Stock.  No trades have been reported from 2008 through December 31, 2019.

Holders. As of December 31, 2019, there were 1,295 holders of record of the Company’s Common Stock.

Dividends.  The Company has neither declared nor paid any cash dividend since its inception.  The Company intends to retain all earnings for use in its business and therefore does not anticipate paying any cash dividends in the near future.

Securities Authorized for Issuance Under Equity Compensation Plans.  The Company does not presently have an equity compensation plan or any individual compensation arrangement under which the Company’s equity securities, such as options, warrants or rights, have been authorized for issuance.

Recent Sales of Unregistered Securities.  No sales of the Company’s equity securities were made by the Company during the past four fiscal years.

Company Purchases of its Equity Securities.  No purchases of the Company’s equity securities were made by the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934) during the five fiscal years ended December 31, 2019.

ITEM 6.  SELECTED FINANCIAL DATA

We are a smaller reporting company and are not required to provide information required by this item. However, please see “Selected Quarterly Financial Data” in Item 7, which provides unaudited quarterly condensed results of operations for the previous two years ended December 31, 2019.

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition and results of operations should be read in conjunction with the Company’s audited financial statements and notes thereto appearing elsewhere in this annual report.

SUMMARY OF ACTIONS TAKEN BY MANAGEMENT IN 2019

Jonah Katzeff, son of the Co-Founders, Vice President and manager of the Green Coffee Division took on the role of General Manager in 2017. 

Management has the goals of A) generating positive cash flow from operations and B) becoming profitable on a Company–wide basis.

In 2019, the Company generated $352,130 in cash from operations. Further, overall, the Company reflected a net increase in cash for the year of $257,328, used cash of $46,015 in investing activities and used cash of $48,787 in financing activities.

WORLD PRICING FOR RAW (GREEN) COFFEE:

Raw Coffee prices are benchmarked through an International Trading System that is managed by the World Robusta Coffee Exchange in London and by the Trading for Arabica Coffees on the NYCSCE. Coffee is the second most traded commodity in the world after crude oil. Prices fluctuate due to weather, crop disease, fundamental supply/demand shifts and quality.

In the Specialty Coffee Trade, the benchmark price becomes the base price, from which premiums are added for rarity, processing methodology, flavor quality scores, season, age of the raw beans and country of origin. In addition, premiums are added for the cost of certifications such as Fair Trade and Organic. Occasionally, the Company will purchase exotic coffees in small quantities (an example being organic Kona) to offer on our webstore to customers willing to try the best at a higher price.

In response to this risk factor, in 2013 the Company created a Green Coffee Management Team. The team is led by the General Manager (Jonah Katzeff), Roastmaster (Jacob Long) and board member (Nicholas Hoskyns). In creating a Green Coffee Team, the goal was to return a positive credit with our importers, a more precise inventory mix that matches our sales needs and a more stable and predictable cost of product, which would enable our wholesale price to be stabilized for a 12-month crop cycle.

The cost we pay for raw coffee can significantly influence our cost of sales from year to year. Green bean coffee is the most significant component of our cost of sales. Timely green coffee purchasing has positive consequences while untimely inventory can have negative consequences. Keeping a steady flow of products from 10 to 15 countries, locating both large (full containers at 37,500 pounds each) and small micro lots (150 to 1,500 pounds) is a daunting task requiring focus, time and available money for purchase.

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Mr. Hoskyns and Co-founder Paul Katzeff have worked together since 1999 when then CEO Katzeff secured a $304,000 USAID Grant to work with coffee farmers in Nicaragua. The Grant was used for training coffee cooperatives to enable them to relate their coffees to the emerging Specialty Trade. Mr. Hoskyns business, Ethical Trading and Investment Company (“ETICO”), was exporting sesame to England and became the major exporter of sesame in Nicaragua. He built a major credit line relationship with his bank and, being on our Board of Directors, understood the credit crunch that was impacting the Company.

In 2012, Mr. Hoskyns, agreed to use his company to reorganize our purchasing schedules, to act as our importer for all Central American Coffees and to use his company’s line of credit in a way that would enable the Company to pay for our green coffee as it was pulled from bonded warehouses in the San Francisco Bay, lowering interest payments.

There was a mutual benefit to this relationship. We agreed to purchase most of our Central American and African coffees through ETICO in exchange for our ability to pay for the coffee as it was being used, i.e., pulled from US bonded warehouses. ETICO received a $.10 per pound commission and the Company estimates it saved $.05 per pound in reduced import and customs costs. ETICO also gained entry into the growing trade as a coffee importer. The Company now has the ability to purchase coffees using the importer’s (ETICO’s) credit line, which allowed for more favorable pricing on bulk purchases and preferential service cost savings of $.05 per pound.

By 2014, the Company was using ETICO for approximately 70% of our purchasing needs and this control system made Thanksgiving less vulnerable to a changing market. This new approach brought our largest annual cost into a managed cash flow system, relieving the pressure on our cash position and enabling the Company to begin to reestablish its credit with its other suppliers.

In 2019, only 39% of our green coffee beans were purchased from ETICO because we needed to purchase specific green coffee beans for special orders for one of our customers.

RESULTS OF OPERATIONS

The following table shows the changes, both in U.S. Dollars and percent, of the significant income statement line item classifications for the two previous fiscal years.

	2019 over 2018
	$ Inc (Dec)			% Inc (Dec)
Sales		939,648			29.1	%
Cost of sales		430,045			23.1	%
Gross profit		509,603			37.3	%
Operating expense		163,818			11.7	%
Operating profit (loss)		345,785			875.1	%
Other income (expense), net		(33,302	)		(816.6	)%
Income tax expense		7,447			930.9	%
Net income (loss)		305,036			841.8	%

11

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Total sales in 2019 were $4,165,917, an increase of $939,648, or 29.1%, as compared to 2018 sales of $ 3,226,269. The increase in sales is primarily due to one customer losing their roaster in a fire and Thanksgiving Coffee roasted their needed coffees.

Thanksgiving gross profits, increased by $509,603, or 37.3%, from 2019 to 2018. As a percentage of net sales, in 2019, as compared to 2018, gross profits increased 6.4%. Our 2019 cost of sales increased by $430,045, or 23.1%, as compared to 2018. As a percentage of net sales, our cost of sales in 2019 increased by 4.0%. The increase in our cost of sales is the result of the additional purchases of specific varietals of green coffee beans that was required by one customer.

Thanksgiving’s operating expense increased by $163,818 year over year, or 11.7%, compared to2018. Operating expenses, as a percentage of net sales, were 37.7% in 2019 as compared to 43.6% in 2018. The increase in operating expense was primarily the result of additional selling costs.

LIQUIDITY AND CAPITAL RESOURCES

Working capital as of December 31, 2019 was $579,775 as compared to working capital at December 31, 2018 of $371,667, an increase of $208,108 or 56%.

For 2019, the Company generated $354,933 in cash from operations, and generated a net income of $268,800. Included in net income is $80,873 of depreciation expense, which does not affect cash flows. For 2018, the Company generated $18,695 in cash from operations, but incurred a net loss of $36,236. Included in net loss is $51,746 depreciation expense, which does not affect cash flows.

Cash used in investing activities for 2019 and 2018 is primarily the result of fixed asset additions.

Cash flows from financing activities for 2019 and 2018 consisted repayments on long-term debt.

See Note 5 to the accompanying financial statements “Operating Leases, and Long-term Debt and Equipment Financing” for a summary of the Company’s outstanding debt.

SEASONALITY AND OTHER FACTORS AFFECTING PERFORMANCE

Seasonality

The Company’s business is seasonal in nature.  However, since we have been able to smooth out our purchasing and cash flow needs through the continued relationship with ETICO, we face less significant seasonal supply pressures brought on by the availability of green coffee beans. Sales are historically higher in the last two quarters as compared to the first two quarters. Please refer to the table of selected quarterly financial data for quarter-by-quarter results of operations.

COVID-19

A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization on March 11, 2020. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas, including shelter-in-place orders in most of the jurisdictions in which we operate. When we first began to experience the economic impact of the COVID-19 pandemic, we proactively took measures to meet the health and safety needs of our employees and customers.

The impact of the COVID-19 pandemic continues to unfold. The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread economic activity.

12

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

The Company’s future results of operations and earnings could also be significantly affected by other factors, such as changes in general economic conditions, changes in business conditions in the coffee industry, fluctuations in consumer demand for coffee products, the availability and costs of green coffee beans, increased competition, consumer acceptance of the Company’s new products, the loss of one or more major customers, civil unrest in countries that produce coffee, weather and other natural disasters.  There can be no assurance that sales will be maintained or increase in future quarters.

INDEMNIFICATION MATTERS

The Company’s Bylaws provide that the Company may indemnify its directors, officers, employees and other agents to the fullest extent permitted by California law.  The Company believes that indemnification under its Bylaws also permits the Company to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in such capacity, regardless of whether California law would permit indemnification.  The Company maintains such liability insurance for its directors and certain officers and employees.

At present, there is no pending litigation or proceeding involving any director, officer, employee or agent of the Company where indemnification would be required or permitted.  The Company is not aware of any pending or threatened litigation or proceeding that might result in a claim for such indemnification that would be material to the financial statements.

SELECTED QUARTERLY FINANCIAL DATA

	For the Quarters Ended
	2019												2018
	Q4			Q3			Q2			Q1			Q4			Q3		Q2			Q1
Sales	$	1,045,363		$	866,775		$	1,161,644		$	1,092,135		$	812,329		$	800,149	$	818,755		$	795,036
Cost of sales		540,000			514,016			641,348			594,372			474,338			447,840		454,435			483,078
Gross sales		505,363			352,759			520,296			497,763			337,991			352,309		364,320			311,958
Operating expenses		474,298			346,082			363,615			385,915			332,006			342,955		344,259			386,872
Operating profit (loss)		31,065			6,677			156,681			111,848			5,985			9,354		20,061			(74,914	)
Total other income (expense), net		(720	)		(25,634	)		(1,247	)		(1,623	)		(2,008	)		9,423		(3,307	)		(30	)
Income (loss) before income taxes		30,345			(18,957	)		155,434			110,225			3,977			18,777		16,754			(74,944	)
Income tax (expense) benefit		2,147			(9,557	)		(37	)		(800	)		-			-		(800	)		-
Net income (loss)	$	32,492		$	(28,514	)	$	155,397		$	109,425		$	3,977		$	18,777	$	15,954		$	(74,944	)

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

13

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company and are not required to provide information required by this item.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this item is set forth in the financial statements and the accompanying notes beginning on page F-1 of this annual report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The last Company 10-K filing was for the year ended December 31, 2018. In 2019, the Company has retained the services of Moss, Adams LLP to audit the Company’s financial statements for the year ended December 31, 2019. To date, there has not been a change in or disagreement with the independent auditor.

ITEM 9A.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of the Chief Executive Officer and the Chief Operating Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this annual report.

Under the supervision and with the participation of our management, including our Chief Executive Officer and President, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934 Rules 13a-15(f). Based on this evaluation, our Chief Executive Officer and President concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2019.

Management has identified the following material weakness in our internal control over financial reporting:

● Application of New Accounting Standards – we did not have appropriate controls in place to ensure proper and timely implementation of new accounting standards; specifically, with respect to the adoption of ASC 842 – Leases.

Notwithstanding the existence of these material weaknesses in our internal controls, we believe that our financial statements fairly present, in all material respects, our balance sheets at December 31, 2019 and our statements of operations, change in retained earnings (accumulated deficit) and cash flows for the years ended December 31, 2019 in conformity with GAAP.

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and President, of the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2019. Based on that evaluation, the Company’s management, including the Chief Executive Officer, and the President concluded that the Company’s disclosure controls and procedures were effective.

Based on that evaluation, management has concluded that our disclosure controls and procedures, as of December 31, 2019 and for the year ended December 31, 2019, were adequate and effective to insure that material information relating to the Company would be made known to them during the period in which this annual report was being prepared.  Disclosure controls and procedures are designed to ensure that information that is required to be disclosed by us in the reports that we file is accumulated and communicated to management, including our CEO and COO, in a manner to allow timely decisions regarding disclosure, and that such information is recorded, processed, summarized and reported in a timely manner.

14

Management’s Annual Report on Internal Control over Financial Reporting.  Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934).  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes accordance with generally accepted accounting principles in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.   

Management evaluated the effectiveness of the Company’s internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013).  Based on this evaluation, performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer, and the Chief Operating Officer, management believes the Company maintained effective internal control over financial reporting as of December 31, 2019, and for the year ended December 31, 2019.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to Item 308(a)(4) of Regulation S-K.

There have not been any significant changes in the Company’s internal control over financial reporting that occurred during the Company’s fourth fiscal quarter covered by this annual report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting other than those reported above.

ITEM 9B.  OTHER INFORMATION

No information was required to be disclosed in a report on form 8-K during the fourth quarter of the year covered by this annual report.

15

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The directors, nominees, key employees and executive officers of the Company and their ages as of the date of this Form 10-K are as follows:

Name	Age	Position with the Company
Paul Katzeff	81	CEO, Chairman of the Board of Directors
Joan Katzeff	70	COO, Secretary, Treasurer and Director
Nicholas Hoskyns	52	Director

Paul Katzeff, a co-founder of the Company has served as Roastmaster, and a Director since the Company’s incorporation on May 10, 1982, and as our Chairman of the Board of Directors since June 2010.  Mr. Katzeff also served as our Chief Executive Officer from the date of our incorporation.  Mr. Katzeff was a co-founder of the Specialty Coffee Association of America (S.C.A.A.) and served as its Chairman in 1985 and 2000.  He served as Chairman of the Environmental Committee of the Board in 1994.  Mr. Katzeff co-chaired the Second Annual Sustainable Coffee Conference held in April of 1998.  Mr. Katzeff served as S.C.A.A. President in the year 2000.  Mr. Katzeff and Joan Katzeff are husband and wife.  Mr. Katzeff holds a Bachelor’s degree in Agriculture from Cornell University and a Master’s degree in Social Work from Adelphi University.

Joan Katzeff, a co-founder, has served as a Director of the Company since incorporation on May 10, 1982 and as our Secretary and Treasurer since June 2010.  Ms. Katzeff served as the President from the date of our incorporation to June 2010.  Her experience in the Company’s early years included production, delivery and bookkeeping. Ms. Katzeff was appointed Chief Operating Officer, (COO) in 2012. Ms. Katzeff has a B.S. in Speech and Hearing from Emerson College, and an M.S. in Audiology from Temple University.

Nicholas Hoskyns has been a Director of the Company since 2007.  Since 2003, he has served as Managing Director of the Ethical Trading and Investment Company of Nicaragua (“ETICO”), a company that works with small farmer cooperatives on their organizational, business and marketing development.  He has helped found three cooperatives, integrating these bodies at local, regional and national levels and supporting their entry into markets in Europe, the United States and Japan.  His work has been primarily in the coffee and sesame seed trade in the Central American region where he resides.  He has a BA in Development Economics from the University of East Anglia in the United Kingdom.

The authorized number of directors is five.  Currently there are three directors.  All directors will hold office until the next annual meeting of shareholders and until their successors have been elected and qualified, unless they earlier resign or are removed from office.  Committees of the Board may be appointed by resolution passed by a majority of the directors.  

16

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE - continued

The Company does not presently have any standing audit, nominating or compensation committee, or any committee performing similar functions.  The executive officers of the Company are elected annually by the Board of Directors and serve at the discretion of the Board.

At the present time, the Company does not have a standing audit committee of the Board of Directors, or an audit committee financial expert, as those terms are defined by Section 3(a)(58)(A) of the Securities Exchange Act of 1934 and Item 407(d) (5)(ii) of Regulation S-K respectively.  The very small size of the Board, the small size of the Company and the remote location render it difficult at this time to fulfill these requirements.  In addition, our financial statements are relatively simple to read and understand.  The current Board members have had years of experience with the Company and are familiar with its financial reporting and operations.  The Company makes every attempt, in conjunction with our independent auditors, our attorneys and our officers to assure that our filings and financial statements are fairly, clearly and accurately reported.

Code of Ethics.  The Company has adopted a code of ethics that is applicable to all members of senior management and the Company’s employees.  A copy of the code of ethics has been filed with the Securities and Exchange Commission.

Section 16(a) Beneficial Ownership Reporting Compliance.  Our equity securities are not registered pursuant to Section 12 of the Securities Exchange Act of 1934.  Accordingly, our officers, directors and principal shareholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.

ITEM 11.  EXECUTIVE COMPENSATION

The following table provides certain information concerning the compensation paid to our Chief Executive Officer and Chief Operating Officer during the fiscal years ended December 31, 2019 and 2018.

Summary Compensation Table

	2019		2018
	Salary		Salary
Paul Katzeff, Chairman of the Board and CEO	$	0	$	0
Joan Katzeff, COO, Secretary, Treasurer an Board member	$	68,205	$	65,000

During the year ending December 31, 2019, neither Paul Katzeff nor Joan Katzeff received any additional compensation in the form of a bonus, stock or stock option award, non-equity incentive plan compensation, non-qualified deferred compensation earnings or any other form of compensation except for their salary.

Securities Authorized for Issuance Under Equity Compensation Plans.  The Company currently does not have in place any compensation plans (including individual compensation arrangements) under which equity securities of the Company are authorized for issuance.

Compensation of Directors.  Our members of the Board of Directors do not receive compensation for service on the Board.

17

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of the Company’s Common Stock as of December 31, 2019, (i) by each person (or group of affiliated persons) who is known by the Company to own beneficially more than 5% of the Company’s Common Stock, (ii) by each of the named executive officers, (iii) by each of the Company’s directors, and (iv) by all directors and executive officers as a group.  The Company believes that the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws, where applicable.  Beneficial ownership representing less than one percent is denoted with an “*”.  The Company does not have an equity compensation plan. 

	Nature of
	Percent of
	Beneficial			Amount
Name and Address of Beneficial Owner	Ownership (1)			and Class (2)
Joan and Paul Katzeff (1)		964,400	(3)		78	%
(Joan Katzeff, COO, Secretary, Treasurer and Director)
(Paul Katzeff, CEO and Chairman of the Board of Directors)
c/o Thanksgiving Coffee Co., Inc.
POB 1918
Fort Bragg, CA 95437
Nicholas Hoskyns		-			-
Director
c/o Thanksgiving Coffee Co., Inc.
POB 1918
Fort Bragg, CA 95437
All directors and executive officers as a group (2 persons)		964,400			78	%

(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to the securities.

(2) Based upon 1,236,744 shares of the Company’s Common Stock issued and outstanding at December 31, 2019.

(3) Shares are jointly owned by Joan Katzeff and Paul Katzeff.

18

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

In May 2015, the Company signed a new lease for its corporate headquarters, warehouse, and production facilities from Joan and Paul Katzeff, who own the facility and are directors, executive officers, and the majority shareholders of the Company (the “Katzeffs”).  The lease is for ten years and ends May 31, 2025.  The lease provides for monthly payments of approximately $8,600 for the entire term of the lease.  The Company remains responsible for all real estate taxes, insurance and maintenance related to the leased facilities.

The Company carries insurance indemnifying its directors and certain officers and certain employees against certain liabilities by reason of their status or service as directors, officers, or employees of the Company.

The Company uses the services of ETICO, which acts as a broker for us in our purchase of coffees from Nicaragua, Guatemala, Rwanda, Uganda and certain Mexican green coffee beans. Nicholas Hoskyns, a director of the Company, is the managing director of ETICO.  At December 31, 2019, there was $37,333 payable to ETICO for coffee purchases. For the years ended December 31, 2019 and 2018, we have paid ETICO $570,007 and $561,261, respectively. All amounts owed were current and were paid in accordance with our standard vendor payment policies. The relationship with ETICO is ongoing. There is no written agreement. While management believes there is no indication of any concern, the arrangement with ETICO could be cancelled at any time. The loss of the ETICO relationship could have an adverse effect on the Company’s business in the short term. Management believes they have other options that could be utilized in the event the ETICO relationship was terminated.

Our Board of Directors has selected independence standards of the NASDAQ Stock Market (“NASDAQ”), solely for the purpose of making the independence determination in compliance with SEC requirements.  We are not a listed issuer on the NASDAQ and are not required to meet NASDAQ’s director independence standards.  None of the directors of the Company are independent under standards established by NASDAQ.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The aggregate accounting and audit fees billed to the Company for services rendered during the fiscal years ended December 31, 2019 and 2018 are set forth in the table below:

	2019		2018
Audit (1)	$	110,205	$	52,000
Audit-related (1)		-		-
Tax (2)		-		6,000
	$	110,205	$	58,000

(1) Audit fees in 2019 were to Moss Adams LLP and in 2018 were to Vavrinek, Trine, Day & Co., LLP (VTD).

(2)	Tax fees consist of fees billed for professional services rendered for tax compliance, tax planning and tax advice.  All fees were paid to VTD for 2018.
(3)	All other fees consist of fees billed primarily for quarterly and annual compiled financial statements.

19

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES - continued

Pre-approval Policies and Procedures for Audit and Non-Audit Services.  As we do not have a standing audit committee, our Board of Directors performs the functions that may be delegated to an audit committee.  Section 10A(i) of the Securities Exchange Act of 1934 prohibits our auditors from performing audit services for us as well as any services not considered to be “audit services” unless such services are pre-approved by the Company’s Board of Directors (in lieu of the audit committee) or unless the non-audit services meet certain de minimis standards.  On December 13, 2019, the Company retained the firm of Moss Adams LLP to audit the Company’s financial statements for the year ended December 31, 2019. On January 28, 2019, The Company retained VTD to audit the Company’s financial statements for the prior year ended December 31, 2018.

20

PART IV

ITEM 15.  EXHIBITS and FINANCIAL STATEMENT SCHEDULES

(a)  The following documents are filed as part of this annual report:

Financial Statements

-	Reports of Independent Registered Public Accounting Firms	F-2
-	Balance Sheets as of December 31, 2019 and December 31, 2018	F-4
-	Statements of Operations for the years ended December 31, 2019 and December 31, 2018	F-5
-	Statement of Changes in Retained Earnings (Accumulated Deficit) for the years ended December 31, 2019 and December 31, 2018	F-6
-	Statements of Cash Flows for the years ended December 31, 2019 and December 31, 2018	F-7
-	Notes to Financial Statements	F-8

Financial Statement Schedules

Not Applicable

Exhibits
3.1	Restated Articles of Incorporation of the Company.****
3.2	Bylaws of the Company and amendments.****
3.2.1	Amendment No. 1 to Bylaws of the Company, dated June 3, 1996.++
10.4	Sample Coffee Purchase Agreement.**
10.10	License Agreement between the Company and the American Birding Association, Inc. and amendment.
10.13	Lease agreement for the Company’s headquarters and manufacturing and storage facility dated November 1, 2005 and amendment.
14.1	Code of Ethics*
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.*
31.2	Certification of President Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

+ Incorporated by reference to the exhibits to the Company’s Registration Statement on Form S-1 (File No 33-96070-LA).

++ Incorporated by reference to the exhibits to the Company’s Form 10-QSB for the quarter ended March 31, 1998.

+++ Incorporated by reference to the exhibits to the Company’s Form 10-QSB for the quarter ended September 30, 1998.

++++ Incorporated by reference to the exhibits to the Company’s Form 10-QSB for the quarter ended June 30, 2007.

* Incorporated by reference to the exhibits to the Company’s Form 10-KSB for the year ended December 31, 2003.

** Incorporated by reference to the exhibits to the Company’s Form 10-KSB for the year ended December 31, 2017

*** Incorporated by reference to the exhibits to the Company’s Form 10-KSB for the year ended December 31, 2005.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Thanksgiving Coffee Company, Inc.
Date: October 26, 2020	By:	/s/ Paul Katzeff
		Name: Paul Katzeff
		Title: Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Paul Katzeff	Chairman of the Board, CEO	October 26, 2020
Paul Katzeff
/s/ Joan Katzeff	Secretary, Treasurer and Director, COO	October 26, 2020
Joan Katzeff
/s/ Nicholas Hoskyns	Director	October 26, 2020
Nicholas Hoskyns

22

Supplemental Information to be Furnished with Reports Filed Pursuant to

Section 15(d) of the Securities Exchange Act of 1934 by Registrants Which Have Not Registered Securities

Pursuant to Section 12 of the Securities Exchange Act of 1934

No annual report covering the registrant’s last fiscal year or proxy materials with respect to any annual or other meeting of shareholders have been sent to the registrant’s shareholders.

23

Audited Financial Statements

For the Years Ended December 31, 2019 and 2018

Table of Contents

Report
Reports of Independent Registered Public Accounting Firms	F-2
Audited Financial Statements
Balance Sheets as of December 31, 2019 and December 31, 2018	F-4
Statements of Operations for the years ended December 31, 2019 and December 31, 2018	F-5
Statement of Changes in Retained Earnings (Accumulated Deficit) for the years ended December 31, 2019 and December 31, 2018	F-6
Statements of Cash Flows for the years ended December 31, 2019 and December 31, 2018	F-7
Notes to Financial Statements	F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors

of Thanksgiving Coffee Company, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Thanksgiving Coffee Company, Inc. (the “Company”) as of December 31, 2019, the related statements of income, changes in retained earnings (accumulated deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 5 to the financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASC 842, Leases.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Moss Adams LLP

Sacramento, California

October 26, 2020

We have served as the Company’s auditor since 2019.

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Thanksgiving Coffee Company, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Thanksgiving Coffee Company, Inc. (Company) as of year-end, December 31, 2018, and the related statements of income, changes in retained earnings (accumulated deficit), and cash flows for year period ended December 31, 2018, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows the two ended December 31,2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Vavrinek, Trine, Day & Co., LLP

Palo Alto, California

March 20, 2019

We served as the Company’s auditor from 2016 to 2019.

F-3

Thanksgiving Coffee Company, Inc.

Balance Sheets

December 31:

	2019		2018
Assets
Current assets
Cash	$	410,974	$	153,646
Accounts receivable, net of allowance		218,454		218,789
Inventory		236,258		237,708
Prepaid expenses		49,534		90,431
Total current assets		915,220		700,574
Property and equipment, net		259,490		308,649
Right of use leased assets		543,465		-
Deposits and other assets		1,056		4,168
Total assets	$	1,719,231	$	1,013,391
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	165,743	$	217,828
Accrued liabilities		44,996		62,817
Current portion of operating lease liabilities		96,566		-
Current portion of long-term debt and equipment financing		25,949		48,262
Total current liabilities		333,254		328,907
Noncurrent long-term debt and equipment financing		22,096		36,302
Noncurrent operating lease liabilities		446,899		-
Total liabilities		802,249		365,209
Stockholders’ equity
Common stock, no par value, 1,960,000 shared authorized, 1,236,744 shares issued and outstanding		861,816		861,816
Additional paid in capital		24,600		24,600
Retained earnings (accumulated deficit)		30,566		(238,234	)
Total stockholders’ equity		916,982		648,182
Total liabilities and stockholders’ equity	$	1,719,231	$	1,013,391

See accompanying notes

F-4

Thanksgiving Coffee Company, Inc.

Statements of Operations

Years Ended December 31:

	2019			2018
Net sales	$	4,165,917		$	3,226,269
Cost of sales		2,289,736			1,859,691
Gross profit		1,876,181			1,366,578
Operating expenses
Selling and marketing		800,831			691,576
General and administrative		769,079			714,516
Total operating expenses		1,569,910			1,406,092
Operating profit (loss)		306,271			(39,514	)
Other income (expense)
Interest expense		(5,632	)		(7,284	)
Other income (expense), net		(23,592	)		11,362
Other income (expense), net		(29,224	)		4,078
Income (loss) before income taxes		277,047			(35,436	)
Income tax expense		(8,247	)		(800	)
Net income (loss)	$	268,800		$	(36,236	)
Earnings (loss) per share, basic and diluted	$	0.217		$	(0.029	)
Weighted average number of shares		1,236,744			1,236,744

See accompanying notes

F-5

 Thanksgiving Coffee Company, Inc.

Statements of Changes in Retained Earnings (Accumulated Deficit)

For the Years Ended December 31:

	2019			2018
Accumulated deficit, beginning of the year	$	(238,234	)	$	(201,998	)
Net income (loss)		268,800			(36,236	)
Retained earnings (accumulated deficit), end of year	$	30,566		$	(238,234	)

See accompanying notes

F-6

Thanksgiving Coffee Company, Inc.

Statements of Cash Flows

For the Years Ended December 31:

	2019			2018
Operating activities
Net income (loss)	$	268,800		$	(36,236	)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization		80,873			51,746
Loss on sale of property and equipment		26,570			-
(Increase) decrease in:
Accounts receivable		335			11,088
Inventory		1,450			24,400
Prepaid expenses		40,897			(32,651	)
Deposits and other assets		3,112			(1,056	)
Increase (decrease) in:
Accounts payable		(52,086	)		3,886
Accrued liabilities		(17,821	)		(2,482	)
Net cash provided by operating activities		352,130			18,695
Investing activities
Purchases of property and equipment		(46,015	)		-
Proceeds from sale of property and equipment		-			4,224
Net cash used by investing activities		(46,015	)		4,224
Financing activities
Principal payments on long-term debt and equipment financing		(48,787	)		(29,665	)
Increase (decrease) in cash		257,328			(6,746	)
Cash at beginning of year		153,646			160,392
Cash at end of year	$	410,974		$	153,646
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	5,632		$	7,284
Income taxes	$	800		$	800
Supplemental disclosure of non-cash investing and financing activities:
Equipment purchase with financing	$	12,268		$	-

See accompanying notes

F-7

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements

1. Summary of Significant Accounting Policies

Nature of Operations

Thanksgiving Coffee Company, Inc. (the “Company”, “we”, or “tcci”), a California Corporation, engages in sourcing, blending and roasting high quality green coffee beans from small scale farmer co-ops worldwide with an emphasis on sustainability and fair trade certified coffee beans. The Company operates from their headquarters on the Mendocino coast in Fort Bragg, California, where they package, market, and distribute the quality branded coffee products through retail and wholesale distribution processes in addition to an internet presence.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of year or less at the time of purchase to be cash equivalents, and maintain its cash in bank deposit accounts at high credit quality financial institutions. All interest bearing and non-interest bearing transaction accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 indefinitely. The Company periodically maintains cash balances in excess of FDIC coverage. Management considers this to be a normal business risk.

Concentration of Credit Risk

For the years ended December 31, 2019 and December 31, 2018 one customer accounted for approximately 29%, and 8%, respectively, of the Company’s revenue. The customer is a distributor of the Company’s product. The loss of this account could have an adverse impact on the Company.

As of December 31, 2019, one customer accounted for approximately 21% of the Company’s accounts receivable. As of December 31, 2018, no customers individually accounted for more than 10% of the Company’s accounts receivable.

For the years ended December 31, 2019 and December 31, 2018 one vendor accounted for approximately 39%, and 54%, respectively, of the Company’s green bean coffee purchases. See Note 8 to the financial statements “Related Party Transactions”. The loss of this vendor could have an adverse impact on the Company.

As of December 31, 2019, vendors A, B and C accounted for 23%, 12% and 8% of Company’s accounts payable, respectively. As of December 31, 2018, vendors A and B accounted for 25% and 19% of the Company’s accounts payable, respectively.

F-8

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements

1. Summary of Significant Accounting Policies (continued)

Accounts Receivable

The Company extends credit to customers in the normal course of business and performs ongoing credit evaluations of customers, maintaining allowances for potential credit losses which, when realized, have been within management’s expectations. Invoices are aged based on terms with the customer. The Company utilizes a percentage method to establish the allowance for doubtful accounts. The estimated allowance ranges from 1% to 10% of outstanding receivables based on factors pertaining to the credit risk of specific customers, historical trends and other information. Delinquent accounts are written off when it is determined that amounts are uncollectible. The allowance for doubtful accounts is based on historical information and recorded as a charge to operating expense. At December 31, 2019 and 2018 the Company’s allowance for doubtful accounts was $4,662 and $7,315, respectively.

The bad debt-write-offs for the years ended December 31, 2019, 2018 were $9,233 and $1,162, respectively.

Inventory

Inventory is reported at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method, or FIFO. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.

The Company periodically reviews its inventory for potential slow-moving or obsolete items and writes down specific items to net realizable value, as appropriate. The Company writes down inventory based on forecasted demand and obsolescence. These factors are impacted by market and economic conditions, and changes in strategic direction, and require estimates that may include uncertain elements. Actual demand may differ from forecasted demand and such differences may have a material effect on recorded inventory values. Any write-down of inventory to the lower of cost or net realizable value creates a new cost basis that subsequently would not be marked up based on changes in underlying facts and circumstances.

Property and Equipment

Property and equipment are stated at cost and depreciated or amortized over their estimated useful lives using the straight-line method. Maintenance and repair costs are charged against operations as incurred. The estimated useful lives of the assets are as follows:

	Estimated Useful Lives (in years)
Automobiles		5
Equipment and fixtures	5	-	7
Office furniture and equipment	5	-	7
Leased equipment	5	-	12
Leasehold improvements	7	-	39

F-9

Revenue Recognition

The Company recognizes revenue in accordance with the five-step model as prescribed by Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers,” 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 the goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, 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 the revenue when (or as) the entity satisfies a performance obligation.

The Company recognizes revenue once its performance obligation to the customer is completed and control of the product or service is transferred to the customer. Revenue reflects the total amount the Company receives, or expects to receive, from the customer and includes shipping costs that are billed and included in the consideration. The Company's contractual obligations to customers generally have a single point of obligation and are short term in nature. For sales through distributors, the Company recognizes revenue when the product is shipped, and title passes to the distributor. The Company's standard terms are 'FOB' shipping point, with no customer acceptance provisions. The cost of price promotions and rebates are treated as reductions of revenue. No products are sold on consignment. Credit sales are recorded as trade accounts receivable and no collateral is required. The Company has price incentive programs with its distributors to encourage product placement. The cost of price promotions and rebates are treated as reductions of revenue and revenues are presented net of sales allowances. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met. Freight charges are recognized as revenue at the time of delivery.

Leases

The Company adopted Accounting Standard Update (ASU) No. 2016-02—Leases (Topic 842), as amended, as of January 1, 2019, using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification.

In addition, The Company elected the hindsight practical expedient to determine the lease term for existing leases. In our application of hindsight, we evaluated the performance of the leased warehouse and office equipment. However, it was determined that none of the leases had renewal options.

Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of $625,826 as of January 1, 2019.

F-10

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements

1. Summary of Significant Accounting Policies (continued)

Shipping and Handling Charges

The Company reports shipping and handling fees charged to customers in Sales and marketing expense. The freight costs incurred for the years ended December 31, 2019, and 2018, were $195,505 and $161,571, respectively.

Sales Tax

States impose sales tax on certain sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the state. The Company’s accounting policy is to exclude the tax collected and remitted to the state from revenues and cost of goods sold.

Advertising

Advertising costs are expensed as incurred. The advertising costs incurred for the years ended December 31, 2019, and 2018, were $14,156 and $8,578, respectively.

Comprehensive Income

The Company has no components of other comprehensive income other than net income, and accordingly, the comprehensive income is equivalent to the net income for the years presented.

Income Taxes

The Company accounts for income taxes under the asset and liability method. As such, deferred income tax assets and liabilities are recognized for the future tax consequences of the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Uncertain Tax Positions

The Company accounts for uncertainty in income taxes, by designating a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also considers various related matters such as de-recognition, interest, penalties, and disclosures required.

The Company’s management has determined that it has no unrecognized tax benefits or liabilities to be recognized or disclosed in the financial statements. The Company accrues interest and penalties associated with uncertain tax positions as a part of operating expenses. As of December 31, 2019, and December 31, 2018, there were no accrued interest or penalties associated with uncertain tax positions.

As a result of net operating loss and credit carryforwards, the Company is subject to audit for tax years 2016 and forward for federal and California purposes.

F-11

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

1. Summary of Significant Accounting Policies (continued)

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results could differ from those estimates.

Recent Relevant Accounting Guidance Not Yet Effective

Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. The ASU is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on its financial statements and disclosures.

Credit Losses

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which requires more timely recognition of credit losses associated with financial assets. ASU 2016-13 requires financial assets (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount expected to be collected. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the effect that the new guidance will have on its financial statements and disclosures.

F-12

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

2. Accounts Receivable

Accounts receivable of the following as of December 31,

	2019			2018
Accounts receivable	$	223,116		$	226,104
Less: allowance for doubtful accounts		(4,662	)		(7,315	)
Net accounts receivable	$	218,454		$	218,789

The Company utilizes a percentage method to establish the allowance for doubtful accounts. The estimated allowance ranges from 1% to 10% of outstanding receivables based on factors pertaining to the credit risk of specific customers, historical trends and other information. Delinquent accounts are written off when it is determined that amounts are uncollectible. Bad debt expense for the years ended December 31, 2019 and 2018 was $9,233 and 1,162, respectively.

3. Inventories

Inventory consist of the following as of December 31,

	2019		2018
Coffee:
Unroasted	$	142,095	$	161,855
Roasted		35,141		34,420
Tea		1,616		1,723
Packaging, supplies and other merchandise held for sale		57,406		40,210
Total inventory	$	236,258	$	237,708

4. Properties and Equipment

Property and equipment consist of the following as of December 31,

	2019			2018
Equipment	$	488,189		$	490,430
Furniture and fixtures		151,093			148,693
Leasehold improvements		368,954			366,698
Transportation equipment		50,217			178,497
Package design		41,000			41,000
Capitalized website development costs		19,000			19,000
Property held under finances		362,280			225,864
Total property and equipment		1,480,733			1,470,182
Less: accumulated depreciation		(1,221,243	)		(1,161,533	)
Property and equipment, net	$	259,490		$	308,649

F-13

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

Property and Equipment and Right of Use Assets

Depreciation and amortization expense for the years ended December 31, 2019 and 2018 was $80,873 and $51,746, respectively.

5. Operating Leases, and Long-term Debt and Equipment Financing

ASU No. 2016-02, “Leases (Topic 842)” requires leases with durations greater than twelve months to be recognized on the balance sheet. We adopted the standard using the modified retrospective approach with an effective date as of the beginning of our fiscal year, January 1, 2019. Prior year financial statements were not recast under the new standard, and, therefore, those amounts are not presented below.

We lease a warehouse, heavy machinery, and office equipment under finance and operating leases. As of December 31, 2019, we had three operating and six equipment finances with remaining terms ranging from less than one year to five years; the majority of our equipment finances are financed through long-term debt agreements. For leases with terms greater than 12 months, we record the related asset and obligation at the present value of lease payments over the term. None of our leases include renewal options. We did not separate lease and non-lease components of contracts for any asset class.

None of our leases require us to provide a residual value guarantee. When available, we use the rate implicit in the lease to discount lease payments to present value; however, some of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

F-14

Lease Position as of December 31, 2019

The table below presents the lease-related assets and liabilities recorded on the balance sheet.

	Classification on the Balance Sheet	December 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	543,465
Equipment financing assets	Property and equipment, net		90,266
Total lease assets		$	633,731
Liabilities
Current
Operating	Current portion of operating leases	$	96,566
Equipment financing	Current portion of long-term debt and equipment financing		25,949
Noncurrent
Operating	Noncurrent operating leases		446,899
Equipment financing	Noncurrent long-term debt and equipment financing		22,096
Total lease liabilities		$	591,510
Weighted-average remaining lease term
Operating leases (in years)		4.25
Equipment financing (in years)		1.67
Weighted-average discount rate
Operating leases			2.45	%
Equipment financing			7.62	%

F-15

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

Lease Costs

The table below presents certain information related to the lease costs for finance and operating leases for the year ended December 31, 2019.

	Year Ended December 31, 2019
Equipment financing and long-term debt cost:	$	50,438
Amortization of assets	$	44,843
Interest on equipment financing and long-term debt		5,595
Operating lease cost:		108,737
Short-term lease cost		-
Variable lease cost		-
Total lease cost	$	159,175

Other Information

The table below presents supplemental cash flow information related to leases for the year ended December 31, 2019.

Cash paid for amounts included in the measurement of lease liabilities:	Year Ended December 31, 2019
Operating cash flows for operating leases	$	108,737
Operating cash flows for equipment financing and long-term debt	$	5,595
Financing cash flows for equipment financing and long-term debt	$	48,787

F-16

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet.

	Operating Leases
Period Ending December 31,
2020	$	109,969
2021		109,969
2022		109,221
2023		105,482
2024		104,342
Thereafter		43,000
Total minimum lease payments		581,983
Less: amount of lease payments representing interest		(38,518	)
Present value of future minimum lease payments		543,465
Less: current obligations under leases		(96,566	)
Long-term lease obligations	$	446,899

F-17

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

Long-term debt and equipment financing consists of the following at December 31:

	2019			2018
Hansel Ford, payable in monthly installments of $385, including interest at 0.90%, collateralized by equipment, final payment due on March 14, 2019.	$	-		$	1,154
Hansel Ford, payable in monthly installments of $385, including interest at 0.90%, collateralized by equipment, final payment due on March 14, 2019.		-			1,154
Bank of the West, payable in monthly installments of $1,465, including interest at 9.22%, collateralized by equipment, final payment due January 1, 2020.		1,454			18,058
Hansel Ford, payable in monthly installments of $806, including interest at 1.94%, collateralized by equipment, final payment due on May 3, 2020.		3,213			12,727
Bank of the West, payable in monthly installments of $787, including interest at 9.23%, collateralized by equipment, final payment due January 1, 2021.		8,974			17,188
Savings Bank of Mendocino, payable in monthly installments of $518, interest at 4.24%, collateralized by equipment, final payment due on December 28, 2021.		11,897			17,473
Pawnee Leasing, payable in monthly installments of $528, including interest at 15.18%, collateralized by equipment, final payment due May 15, 2022.		11,131			16,810
Ally Financial, payable in monthly installments of $237, including interest at 5.89%, collateralized by equipment, final payment due July 1, 2024.		11,377			-
		48,046			84,564
Less current portion of long-term debt		(25,949	)		(48,262	)
Total long-term debt	$	22,096		$	36,302

Interest expense for the years ended December 31, 2019 and 2018, was $5,595 and $7,284 respectively.

As of December 31, 2019, maturities of long-term debt and equipment financing for each of the next four years as follows:

Years Ended December 31,
Principal due in 2020	$	26,417
Principal due in 2021		12,304
Principal due in 2022		5,042
Principal due in 2023		2,657
Principal due in 2024		1,626
Total	$	48,046

F-18

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

6. Disaggregated Revenue by routes, direct and mail order

Disaggregated information of revenue recognized as follows for the years ended,

Sales by department	2019		2018
Routes-wholesale	$	1,247,336	$	1,302,860
Direct-wholesale		2,465,571		1,468,352
Mail order-retail		453,010		455,057
Total	$	4,165,917	$	3,226,269

7. Income Taxes

The provision for income taxes consist of the following for the year ended December 31:

	2019		2018
Current state provision	$	8,247	$	800
Deferred provision
Federal		-		-
State		-		-
Total deferred provision		-		-
Total provision	$	8,247	$	800

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The major temporary differences that give rise to the deferred tax assets and liabilities include depreciation, allowances for bad debt, expense accruals, state income tax deductions and net operating losses (“NOLs”).

Deferred tax assets and liabilities consist of the following as of December 31:

	2019			2018
Net operating losses	$	19,680		$	107,209
Depreciation		(18,696	)		(2,878	)
Other		24,719			16,937
Subtotal		25,703			121,268
Valuation allowance		(25,703	)		(121,268	)
Net deferred tax asset	$	-		$	-

F-19

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

7. Income Taxes (continued)

A reconciliation of the Company’s actual effective tax rate to the federal statutory tax rate of 21% is as follows for the years ended December 31, 2019, and 2018:

	2019			2018
	%			%
Federal tax (benefit), net		21.0	%		-21.0	%
State tax (benefit)		7.0	%		-8.8	%
Valuation allowance		-25.0	%		27.5	%
		3.0	%		-2.3	%

As of December 31, 2019, the Company has federal NOL carryovers of approximately $94,000. If unused, the carryovers will begin to expire in 2034.

A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s history of operating losses, lack of taxable income, and the accumulated deficit, the Company provided a full valuation allowance against its deferred tax assets resulting from the accruals and reserves along with the net operating losses carried forward. The change in the valuation allowance was $95,565 and $9,522 for the years ended December 31, 2019 and 2018, respectively.

F-20

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

8. Related Party Transactions

Long-Term Leases  

The Company leases its corporate headquarters, warehouse and waterfront facilities from Paul and Joan Katzeff (the Company’s majority shareholders). The lease is classified as an operating lease and provides for monthly rental payments of $8,600. The Company is responsible for all real estate taxes, insurance and maintenance costs related to the facilities. The Company is a guarantor on certain debt that the Company’s majority shareholders hold in connection with its corporate headquarters, warehouse and waterfront facilities. The ten-year lease term ends May 31, 2025.

In September 2020, the Company deferred rent payments for its corporate headquarters totaling $17,200 for the months of July and August 2020. As the rental lease was entered into with the majority shareholder, terms of repayment have not been agreed upon as of the date of these financial statements but will be determined upon the improvement of economic conditions.

As of December 31, 2019, minimum future rental payments under non-cancelable facilities operating leases for each of the next five years and in the aggregate are as follows:

Years Ended December 31,
2020	$	103,200
2021		103,200
2022		103,200
2023		103,200
2024		103,200
Thereafter		43,000
Total of long-term lease	$	559,000

Contracts

The Company negotiates green bean purchase contracts from three cooperatives in Nicaragua. Ethical Trading and Investment Company of Nicaragua (“ETICO”) is the importer for the transaction. Nicholas Hoskyns, a Director of the Company, is the managing director at ETICO. At December 31, 2019, amounts owed to ETICO totaled $37,333. All amounts owed were current and were paid in accordance with our standard vendor payment policies. At December 31, 2018 there was $53,327 payable to ETICO for coffee purchases. The loss of the ETICO relationship could have an adverse effect on the Company’s business in the short term. Management believes other options are available that could be utilized in the event the ETICO relationship was terminated.

F-21

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

December 31, 2019 and December 31, 2018

9. Business Segment

The Company operates in one reportable segment. All revenues are derived and all long-lived assets are held in the U.S.

10. Subsequent Events

During the first quarter of 2020, government offices throughout the United States and around the world issued shelter in place orders due to the global outbreak of the COVID-19 virus. On March 27, 2020, the President of the United States signed into law the Families First Coronavirus Response Act and two phases of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act which are intended to provide emergency assistance to individuals and business affected by COVID-19. The CARES Act includes a small business stimulus program, Paycheck Protection Program (“PPP”), which is intended to provide loans to qualified businesses to guarantee eight weeks of payroll and other identified costs which may be eligible for partial or full forgiveness.

In April 2020, the Company successfully secured a $189,228 Small Business Association (“SBA”) loan under the Payroll Protection Program to secure payroll expenses for otherwise furloughed employees impacted by government imposed shelter in place orders. Per the terms of the loan, the full amount may be forgiven as long as loan proceeds are used to cover payroll costs and other specified non-payroll costs (provided any non-payroll costs do not exceed 40% of the forgiven amount) over a 24-week period after the loan is made; and employee and compensation levels are maintained. In the event the Company is required to repay the loan, all payments are deferred for 10 months with accrued interest over this period. Amounts outstanding under the loan bear a fixed interest rate of 1.00% per annum with a maturity date of 2 years from commencement date. The Company has not yet applied for loan forgiveness.

In April 2020, the Company executed a $25,000 non-interest bearing loan with a maturity date of April 16, 2021 with Savings Bank of Mendocino County. 

F-22

EX-31.1

Exhibit 31.1

CERTIFICATION REQUIRED BY RULE 13a-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Paul Katzeff, certify that:

1. I have reviewed this annual report on Form 10-K of Thanksgiving Coffee Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2020	/s/ Paul Katzeff
	Paul Katzeff
	Chief Executive Officer and Chairman of the Board

EX-31.2

Exhibit 31.2

CERTIFICATION REQUIRED BY RULE 13a-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

CERTIFICATION OF CHIEF OPERATING OFFICER

I, Joan Katzeff, certify that:

1. I have reviewed this annual report on Form 10-K of Thanksgiving Coffee Company, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 26, 2020	/s/ Joan Katzeff
	Joan Katzeff
	Chief Operating Officer, Secretary and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Consolidated annual report on Form 10-K of Thanksgiving Coffee Company, Inc. (the “Company”) for the period ended December 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Paul Katzeff, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)       The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Paul Katzeff

Paul Katzeff

Chairman and Chief Executive Officer

Date: October 26, 2020

A signed original of this written statement has been provided to and will be retained by Thanksgiving Coffee Company, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Consolidated annual report on Form 10-K of Thanksgiving Coffee Company, Inc. (the “Company”) for the period ended December 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Joan Katzeff, Chief Operating Officer, Secretary and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)       The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joan Katzeff

Joan Katzeff

Chief Operating Officer, Secretary and Treasurer

Date: October 26, 2020

A signed original of this written statement has been provided to and will be retained by Costco Wholesale Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Jun. 30, 2019
Document Information [Line Items]
Entity Registrant Name	THANKSGIVING COFFEE CO INC
Entity Central Index Key	0000949852
Trading Symbol	tcci
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)	1,236,744
Entity Public Float		$ 0
Entity Shell Company	false
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Title of 12(b) Security	Common Stock, no par value

XML

Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Current assets
Cash	$ 410,974	$ 153,646
Accounts receivable, net of allowance	218,454	218,789
Inventory	236,258	237,708
Prepaid expenses	49,534	90,431
Total current assets	915,220	700,574
Deposits and other assets	1,056	4,168
Total assets	1,719,231	1,013,391
Current liabilities
Accounts payable	165,743	217,828
Accrued liabilities	44,996	62,817
Current portion of operating lease liabilities	96,566
Current portion of long-term debt and equipment financing	25,949	48,262
Total current liabilities	333,254	328,907
Noncurrent long-term debt and equipment financing	22,096	36,302
Noncurrent operating lease liabilities	446,899
Total liabilities	802,249	365,209
Stockholders’ equity
Common stock, no par value, 1,960,000 shared authorized, 1,236,744 shares issued and outstanding	861,816	861,816
Additional paid in capital	24,600	24,600
Retained earnings (accumulated deficit)	30,566	(238,234)
Total stockholders’ equity	916,982	648,182
Total liabilities and stockholders’ equity	1,719,231	1,013,391
All Property and Equipment, Excluding Right of Use [Member]
Current assets
Property and equipment, net	259,490	308,649
Right of Use [Member]
Current assets
Right of use leased assets	$ 543,465

XML

Balance Sheets (Parentheticals) - $ / shares $ / shares in Thousands	Dec. 31, 2019	Dec. 31, 2018
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	1,960,000	1,960,000
Common stock, shares issued (in shares)	1,236,744	1,236,744
Common stock, shares outstanding (in shares)	1,236,744	1,236,744

XML

Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenue	$ 4,165,917	$ 3,226,269
Cost of sales	2,289,736	1,859,691
Gross profit	1,876,181	1,366,578
Operating expenses
Selling and marketing	800,831	691,576
General and administrative	769,079	714,516
Total operating expenses	1,569,910	1,406,092
Operating profit (loss)	306,271	(39,514)
Other income (expense)
Interest expense	(5,595)	(7,284)
Other income (expense), net	(23,592)	11,362
Other income (expense), net	(29,224)	4,078
Income (loss) before income taxes	277,047	(35,436)
Income tax expense	(8,247)	(800)
Net income (loss)	$ 268,800	$ (36,236)
Earnings (loss) per share, basic and diluted (in dollars per share)	$ 0.217	$ (0.029)
Weighted average number of shares (in shares)	1,236,744	1,236,744

XML

Statements of Changes in Retained Earnings (Accumulated Deficit)	USD ($)
Accumulated deficit, beginning of the year at Dec. 31, 2017	$ (201,998)
Net income (loss)	(36,236)
Retained earnings (accumulated deficit), end of year at Dec. 31, 2018	(238,234)
Net income (loss)	268,800
Retained earnings (accumulated deficit), end of year at Dec. 31, 2019	$ 30,566

XML

Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Operating activities
Net income (loss)	$ 268,800	$ (36,236)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Depreciation and amortization	80,873	51,746
Loss on sale of property and equipment	26,570
(Increase) decrease in:
Accounts receivable	335	11,088
Inventory	1,450	24,400
Prepaid expenses	40,897	(32,651)
Deposits and other assets	3,112	(1,056)
Increase (decrease) in:
Accounts payable	(52,086)	3,886
Accrued liabilities	(17,821)	(2,482)
Net cash provided by operating activities	352,130	18,695
Investing activities
Purchases of property and equipment	(46,015)
Proceeds from sale of property and equipment		4,224
Net cash used by investing activities	(46,015)	4,224
Financing activities
Principal payments on long-term debt and equipment financing	(48,787)	(29,665)
Increase (decrease) in cash	257,328	(6,746)
Cash at beginning of year	153,646	160,392
Cash at end of year	410,974	153,646
Supplemental disclosure of cash flow information:
Interest	5,632	7,284
Income taxes	800	800
Supplemental disclosure of non-cash investing and financing activities:
Equipment purchase with financing	$ 12,268

XML

Note 1 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

1. Summary of Significant Accounting Policies

Nature of Operations

Thanksgiving Coffee Company, Inc. (the “Company”, “we”, or “tcci”), a California Corporation, engages in sourcing, blending and roasting high quality green coffee beans from small scale farmer co-ops worldwide with an emphasis on sustainability and fair trade certified coffee beans. The Company operates from their headquarters on the Mendocino coast in Fort Bragg, California, where they package, market, and distribute the quality branded coffee products through retail and wholesale distribution processes in addition to an internet presence.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of year or less at the time of purchase to be cash equivalents, and maintain its cash in bank deposit accounts at high credit quality financial institutions. All interest bearing and non-interest bearing transaction accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to

$250,000

indefinitely. The Company periodically maintains cash balances in excess of FDIC coverage. Management considers this to be a normal business risk.

Concentration of Credit Risk

For the years ended

December 31, 2019

and

December 31, 2018

one

customer accounted for approximately

29%,

and

8%,

respectively, of the Company's revenue. The customer is a distributor of the Company's product. The loss of this account could have an adverse impact on the Company.

As of

December 31, 2019,

one

customer accounted for approximately

21%

of the Company's accounts receivable. As of

December 31, 2018,

no

customers individually accounted for more than

10%

of the Company's accounts receivable.

For the years ended

December 31, 2019

and

December 31, 2018

one

vendor accounted for approximately

39%,

and

54%,

respectively, of the Company's green bean coffee purchases. See Note

8

to the financial statements “Related Party Transactions”. The loss of this vendor could have an adverse impact on the Company.

As of

December 31, 2019,

vendors A, B and C accounted for

23%,

12%

and

8%

of Company's accounts payable, respectively. As of

December 31, 2018,

vendors A and B accounted for

25%

and

19%

of the Company's accounts payable, respectively.

Accounts Receivable

The Company extends credit to customers in the normal course of business and performs ongoing credit evaluations of customers, maintaining allowances for potential credit losses which, when realized, have been within management's expectations. Invoices are aged based on terms with the customer. The Company utilizes a percentage method to establish the allowance for doubtful accounts. The estimated allowance ranges from

1%

to

10%

of outstanding receivables based on factors pertaining to the credit risk of specific customers, historical trends and other information. Delinquent accounts are written off when it is determined that amounts are uncollectible. The allowance for doubtful accounts is based on historical information and recorded as a charge to operating expense. At

December 31, 2019

and

2018

the Company's allowance for doubtful accounts was

$4,662

and

$7,315,

respectively.

The bad debt-write-offs for the years ended

December 31, 2019,

2018

were

$9,233

and

$1,162,

respectively.

Inventory

Inventory is reported at the lower of cost or net realizable value. Cost is determined using the

first

-in,

first

-out method, or FIFO. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.

The Company periodically reviews its inventory for potential slow-moving or obsolete items and writes down specific items to net realizable value, as appropriate. The Company writes down inventory based on forecasted demand and obsolescence. These factors are impacted by market and economic conditions, and changes in strategic direction, and require estimates that

may

include uncertain elements. Actual demand

may

differ from forecasted demand and such differences

may

have a material effect on recorded inventory values. Any write-down of inventory to the lower of cost or net realizable value creates a new cost basis that subsequently would

not

be marked up based on changes in underlying facts and circumstances.

Property and Equipment

Property and equipment are stated at cost and depreciated or amortized over their estimated useful lives using the straight-line method. Maintenance and repair costs are charged against operations as incurred. The estimated useful lives of the assets are as follows:

	Estimated Useful Lives (in years)
Automobiles		5
Equipment and fixtures	5	-	7
Office furniture and equipment	5	-	7
Leased equipment	5	-	12
Leasehold improvements	7	-	39

Revenue Recognition

The Company recognizes revenue in accordance with the

five

-step model as prescribed by Accounting Standards Codification (ASC)

606,

“Revenue from Contracts with Customers,” 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 the goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC

606,

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

The Company recognizes revenue once its performance obligation to the customer is completed and control of the product or service is transferred to the customer. Revenue reflects the total amount the Company receives, or expects to receive, from the customer and includes shipping costs that are billed and included in the consideration. The Company's contractual obligations to customers generally have a single point of obligation and are short term in nature. For sales through distributors, the Company recognizes revenue when the product is shipped, and title passes to the distributor. The Company's standard terms are 'FOB' shipping point, with

no

customer acceptance provisions. The cost of price promotions and rebates are treated as reductions of revenue.

No

products are sold on consignment. Credit sales are recorded as trade accounts receivable and

no

collateral is required. The Company has price incentive programs with its distributors to encourage product placement. The cost of price promotions and rebates are treated as reductions of revenue and revenues are presented net of sales allowances. If the conditions for revenue recognition are

not

met, the Company defers the revenue until all conditions are met. Freight charges are recognized as revenue at the time of delivery.

Leases

The Company adopted Accounting Standard Update (ASU)

No.

2016

-

02—Leases

(Topic

842

), as amended, as of

January 1, 2019,

using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification.

In addition, The Company elected the hindsight practical expedient to determine the lease term for existing leases. In our application of hindsight, we evaluated the performance of the leased warehouse and office equipment. However, it was determined that

none

of the leases had renewal options.

Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of

$625,826

as of

January 1, 2019.

Shipping and Handling Charges

The Company reports shipping and handling fees charged to customers in Sales and marketing expense. The freight costs incurred for the years ended

December 31, 2019,

and

2018,

were

$195,505

and

$161,571,

respectively.

Sales Tax

States impose sales tax on certain sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the state. The Company's accounting policy is to exclude the tax collected and remitted to the state from revenues and cost of goods sold.

Advertising

Advertising costs are expensed as incurred. The advertising costs incurred for the years ended

December 31, 2019,

and

2018,

were

$14,156

and

$8,578,

respectively.

Comprehensive Income

The Company has

no

components of other comprehensive income other than net income, and accordingly, the comprehensive income is equivalent to the net income for the years presented.

Income Taxes

The Company accounts for income taxes under the asset and liability method. As such, deferred income tax assets and liabilities are recognized for the future tax consequences of the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Uncertain Tax Positions

The Company accounts for uncertainty in income taxes, by designating a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also considers various related matters such as de-recognition, interest, penalties, and disclosures required.

The Company's management has determined that it has

no

unrecognized tax benefits or liabilities to be recognized or disclosed in the financial statements. The Company accrues interest and penalties associated with uncertain tax positions as a part of operating expenses. As of

December 31, 2019,

and

December 31, 2018,

there were

no

accrued interest or penalties associated with uncertain tax positions.

As a result of net operating loss and credit carryforwards, the Company is subject to audit for tax years

2016

and forward for federal and California purposes.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results could differ from those estimates.

Recent Relevant Accounting Guidance

Not

Yet Effective

Income Taxes

In

December 2019,

the FASB issued ASU

2019

-

12,

Income Taxes (Topic

740

): Simplifying the Accounting for Income Taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. The ASU is effective for fiscal years beginning after

December 15, 2020.

Early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on its financial statements and disclosures.

Credit Losses

In

June 2016,

the FASB issued ASU

2016

-

13,

Measurement of Credit Losses on Financial Instruments

, which requires more timely recognition of credit losses associated with financial assets. ASU

2016

-

13

requires financial assets (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount expected to be collected. ASU

2016

-

13

is effective for fiscal years beginning after

December 15, 2022,

including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after

December 15, 2022,

including interim periods within those fiscal years. The Company is currently evaluating the effect that the new guidance will have on its financial statements and disclosures.

XML

Note 2 - Accounts Receivable

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

2. Accounts Receivable

Accounts receivable of the following as of

December 31,

	2019			2018
Accounts receivable	$	223,116		$	226,104
Less: allowance for doubtful accounts		(4,662	)		(7,315	)
Net accounts receivable	$	218,454		$	218,789

The Company utilizes a percentage method to establish the allowance for doubtful accounts. The estimated allowance ranges from

1%

to

10%

of outstanding receivables based on factors pertaining to the credit risk of specific customers, historical trends and other information. Delinquent accounts are written off when it is determined that amounts are uncollectible. Bad debt expense for the years ended

December 31, 2019

and

2018

was

$9,233

and

1,162,

respectively.

XML

Note 3 - Inventories

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Inventory Disclosure [Text Block]

3 . Inventor ies

Inventory consist of the following as of

December 31,

	2019		2 018
Coffee:
Unroasted	$	142,095	$	161,855
Roasted		35,141		34,420
Tea		1,616		1,723
Packaging, supplies and other merchandise held for sale		57,406		40,210
Total inventory	$	236,258	$	237,708

XML

Note 4 - Properties and Equipment

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

4 . Propert ies and Equipment

Property and equipment consist of the following as of

December 31,

	2019			2018
Equipment	$	488,189		$	490,430
Furniture and fixtures		151,093			148,693
Leasehold improvements		368,954			366,698
Transportation equipment		50,217			178,497
Package design		41,000			41,000
Capitalized website development costs		19,000			19,000
Property held under finances		362,280			225,864
Total property and equipment		1,480,733			1,470,182
Less: accumulated depreciation		(1,221,243	)		(1,161,533	)
Property and equipment, net	$	259,490		$	308,649

Property and Equipment and Right of Use Assets

Depreciation and amortization expense for the years ended

December 31, 2019

and

2018

was

$80,873

and

$51,746,

respectively.

XML

Note 5 - Operating Leases, and Long-term Debt and Equipment Financing

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Finance Lease and Operating Lease Disclosure [Text Block]

5 . Operating Leases , and Long-term Debt and Equipment Financing

ASU

No.

2016

-

02,

“Leases (Topic

842

)” requires leases with durations greater than

twelve

months to be recognized on the balance sheet. We adopted the standard using the modified retrospective approach with an effective date as of the beginning of our fiscal year,

January 1, 2019.

Prior year financial statements were

not

recast under the new standard, and, therefore, those amounts are

not

presented below.

We lease a warehouse, heavy machinery, and office equipment under finance and operating leases. As of

December 31, 2019,

we had

three

operating and

six

equipment finances with remaining terms ranging from less than

one

year to

five

years; the majority of our equipment finances are financed through long-term debt agreements. For leases with terms greater than

12

months, we record the related asset and obligation at the present value of lease payments over the term.

None

of our leases include renewal options. We did

not

separate lease and non-lease components of contracts for any asset class.

None

of our leases require us to provide a residual value guarantee. When available, we use the rate implicit in the lease to discount lease payments to present value; however, some of our leases do

not

provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Lease Position as of

December

3

1

,

2019

The table below presents the lease-related assets and liabilities recorded on the balance sheet.

	Classification on the Balance Sheet	December 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	543,465
Equipment financing assets	Property and equipment, net		90,266
Total lease assets		$	633,731
Liabilities
Current
Operating	Current portion of operating leases	$	96,566
Equipment financing	Current portion of long-term debt and equipment financing		25,949
Noncurrent
Operating	Noncurrent operating leases		446,899
Equipment financing	Noncurrent long-term debt and equipment financing		22,096
Total lease liabilities		$	591,510
Weighted-average remaining lease term
Operating leases (in years)		4.25
Equipment financing (in years)		1.67
Weighted-average discount rate
Operating leases			2.45	%
Equipment financing			7.62	%

Lease Costs

The table below presents certain information related to the lease costs for finance and operating leases for the year ended

December 31, 2019.

	Year Ended December 31, 2019
Equipment financing and long-term debtcost :	$	50,438
Amortization of assets	$	44,843
Interest on equipment financing and long-term debt		5,595
Operating lease cost:		108,737
Short-term lease cost		-
Variable lease cost		-
Total lease cost	$	159,175

Other Information

The table below presents supplemental cash flow information related to leases for the year ended

December 31, 2019.

Cash paid for amounts included in the measurement of lease liabilities:	Year Ended December 31, 2019
Operating cash flows for operating leases	$	108,737
Operating cash flows for equipment financing and long-term debt	$	5,595
Financing cash flows forequipment financing and long-term debt	$	48,787

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the

first

five

years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet.

	Operating Leases
Period Ending December 31,
2020	$	109,969
2021		109,969
2022		109,221
2023		105,482
2024		104,342
Thereafter		43,000
Total minimum lease payments		581,983
Less: amount of lease payments representing interest		(38,518	)
Present value of future minimum lease payments		543,465
Less: current obligations under leases		(96,566	)
Long-term lease obligations	$	446,899

Long-term debt and equipment financing consists of the following at

December 31:

	2019			2018
Hansel Ford, payable in monthly installments of $385, including interest at 0.90%, collateralized by equipment, final payment due on March 14, 2019.	$	-		$	1,154
Hansel Ford, payable in monthly installments of $385, including interest at 0.90%, collateralized by equipment, final payment due on March 14, 2019.		-			1,154
Bank of the West, payable in monthly installments of $1,465, including interest at 9.22%, collateralized by equipment, final payment due January 1, 2020.		1,454			18,058
Hansel Ford, payable in monthly installments of $806, including interest at 1.94%, collateralized by equipment, final payment due on May 3, 2020.		3,213			12,727
Bank of the West, payable in monthly installments of $787, including interest at 9.23%, collateralized by equipment, final payment due January 1, 2021.		8,974			17,188
Savings Bank of Mendocino, payable in monthly installments of $518, interest at 4.24%, collateralized by equipment, final payment due on December 28, 2021.		11,897			17,473
Pawnee Leasing, payable in monthly installments of $528, including interest at 15.18%, collateralized by equipment, final payment due May 15, 2022.		11,131			16,810
Ally Financial, payable in monthly installments of $237, including interest at 5.89%, collateralized by equipment, final payment due July 1, 2024.		11,377			-
		48,046			84,564
Less current portion of long-term debt		(25,949	)		(48,262	)
Total long-term debt	$	22,096		$	36,302

Interest expense for the years ended

December 31, 2019

and

2018,

was

$5,595

and

$7,284

respectively.

As of

December 31, 2019,

maturities of long-term debt and equipment financing for each of the next

four

years as follows:

Years Ended December 31,
Principal due in 2020	$	26,417
Principal due in 2021		12,304
Principal due in 2022		5,042
Principal due in 2023		2,657
Principal due in 2024		1,626
Total	$	48,046

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Note 6 - Disaggregated Revenue by Routes, Direct and Mail Order

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

6 . Disaggregated Revenue by routes, direct and mail order

Disaggregated information of revenue recognized as follows for the years ended,

Sales by department	2019		2018
Routes-wholesale	$	1,247,336	$	1,302,860
Direct-wholesale		2,465,571		1,468,352
Mail order-retail		453,010		455,057
Total	$	4,165,917	$	3,226,269

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Note 7 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

7 . Income Taxes

The provision for income taxes consist of the following for the year ended

December 31:

	201 9		201 8
Current state provision	$	8,247	$	800
Deferred provision
Federal		-		-
State		-		-
Total deferred provision		-		-
Total provision	$	8,247	$	800

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The major temporary differences that give rise to the deferred tax assets and liabilities include depreciation, allowances for bad debt, expense accruals, state income tax deductions and net operating losses (“NOLs”).

Deferred tax assets and liabilities consist of the following as of

December 31:

	201 9			201 8
Net operating losses	$	19,680		$	107,209
Depreciation		(18,696	)		(2,878	)
Other		24,719			16,937
Subtotal		25,703			121,268
Valuation allowance		(25,703	)		(121,268	)
Net deferred tax asset	$	-		$	-

A reconciliation of the Company's actual effective tax rate to the federal statutory tax rate of

21%

is as follows for the years ended

December 31, 2019,

and

2018:

	201 9			201 8
	%			%
Federal tax (benefit), net		21.0	%		-21.0	%
State tax (benefit)		7.0	%		-8.8	%
Valuation allowance		-25.0	%		27.5	%
		3.0	%		-2.3	%

As of

December 31, 2019,

the Company has federal NOL carryovers of approximately

$94,000.

If unused, the carryovers will begin to expire in

2034.

A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than

not

that sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company's history of operating losses, lack of taxable income, and the accumulated deficit, the Company provided a full valuation allowance against its deferred tax assets resulting from the accruals and reserves along with the net operating losses carried forward. The change in the valuation allowance was

$95,565

and

$9,522

for the years ended

December 31, 2019

and

2018,

respectively.

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Note 8 - Related Party Transactions

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

8.

 Related Party Transactions

Long

-

Term Leases  

The Company leases its corporate headquarters, warehouse and waterfront facilities from Paul and Joan Katzeff (the Company's majority shareholders). The lease is classified as an operating lease and provides for monthly rental payments of

$8,600.

The Company is responsible for all real estate taxes, insurance and maintenance costs related to the facilities. The Company is a guarantor on certain debt that the Company's majority shareholders hold in connection with its corporate headquarters, warehouse and waterfront facilities. The

ten

-year lease term ends

May 31, 2025.

In

September 2020,

the Company deferred rent payments for its corporate headquarters totaling

$17,200

for the months of

July

and

August 2020.

As the rental lease was entered into with the majority shareholder, terms of repayment have

not

been agreed upon as of the date of these financial statements but will be determined upon the improvement of economic conditions.

As of

December 31, 2019,

minimum future rental payments under non-cancelable facilities operating leases for each of the next

five

years and in the aggregate are as follows:

Years Ended December 31,
2020	$	103,200
2021		103,200
2022		103,200
2023		103,200
2024		103,200
Thereafter		43,000
Total of long-term lease	$	559,000

Contracts

The Company negotiates green bean purchase contracts from

three

cooperatives in Nicaragua. Ethical Trading and Investment Company of Nicaragua (“ETICO”) is the importer for the transaction. Nicholas Hoskyns, a Director of the Company, is the managing director at ETICO. At

December 31, 2019,

amounts owed to ETICO totaled

$37,333.

All amounts owed were current and were paid in accordance with our standard vendor payment policies. At

December 31, 2018

there was

$53,327

payable to ETICO for coffee purchases. The loss of the ETICO relationship could have an adverse effect on the Company's business in the short term. Management believes other options are available that could be utilized in the event the ETICO relationship was terminated.

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Note 9 - Business Segment

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

9 . Business Segment

The Company operates in

one

reportable segment. All revenues are derived and all long-lived assets are held in the U.S.

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Note 10 - Subsequent Events

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

1 0 . Subsequent Events

During the

first

quarter of

2020,

government offices throughout the United States and around the world issued shelter in place orders due to the global outbreak of the COVID-

19

virus. On

March 27, 2020,

the President of the United States signed into law the Families First Coronavirus Response Act and

two

phases of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act which are intended to provide emergency assistance to individuals and business affected by COVID-

19.

The CARES Act includes a small business stimulus program, Paycheck Protection Program (“PPP”), which is intended to provide loans to qualified businesses to guarantee

eight

weeks of payroll and other identified costs which

may

be eligible for partial or full forgiveness.

In

April 2020,

the Company successfully secured a

$189,228

Small Business Association (“SBA”) loan under the Payroll Protection Program to secure payroll expenses for otherwise furloughed employees impacted by government imposed shelter in place orders. Per the terms of the loan, the full amount

may

be forgiven as long as loan proceeds are used to cover payroll costs and other specified non-payroll costs (provided any non-payroll costs do

not

exceed

40%

of the forgiven amount) over a

24

-week period after the loan is made; and employee and compensation levels are maintained. In the event the Company is required to repay the loan, all payments are deferred for

10

months with accrued interest over this period. Amounts outstanding under the loan bear a fixed interest rate of

1.00%

per annum with a maturity date of

2

years from commencement date. The Company has

not

yet applied for loan forgiveness.

In

April 2020,

the Company executed a

$25,000

non-interest bearing loan with a maturity date of

April 16, 2021

with Savings Bank of Mendocino County. 

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of year or less at the time of purchase to be cash equivalents, and maintain its cash in bank deposit accounts at high credit quality financial institutions. All interest bearing and non-interest bearing transaction accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to

$250,000

indefinitely. The Company periodically maintains cash balances in excess of FDIC coverage. Management considers this to be a normal business risk.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

For the years ended

December 31, 2019

and

December 31, 2018

one

customer accounted for approximately

29%,

and

8%,

respectively, of the Company's revenue. The customer is a distributor of the Company's product. The loss of this account could have an adverse impact on the Company.

As of

December 31, 2019,

one

customer accounted for approximately

21%

of the Company's accounts receivable. As of

December 31, 2018,

no

customers individually accounted for more than

10%

of the Company's accounts receivable.

For the years ended

December 31, 2019

and

December 31, 2018

one

vendor accounted for approximately

39%,

and

54%,

respectively, of the Company's green bean coffee purchases. See Note

8

to the financial statements “Related Party Transactions”. The loss of this vendor could have an adverse impact on the Company.

As of

December 31, 2019,

vendors A, B and C accounted for

23%,

12%

and

8%

of Company's accounts payable, respectively. As of

December 31, 2018,

vendors A and B accounted for

25%

and

19%

of the Company's accounts payable, respectively.

Receivable [Policy Text Block]

Accounts Receivable

The Company extends credit to customers in the normal course of business and performs ongoing credit evaluations of customers, maintaining allowances for potential credit losses which, when realized, have been within management's expectations. Invoices are aged based on terms with the customer. The Company utilizes a percentage method to establish the allowance for doubtful accounts. The estimated allowance ranges from

1%

to

10%

of outstanding receivables based on factors pertaining to the credit risk of specific customers, historical trends and other information. Delinquent accounts are written off when it is determined that amounts are uncollectible. The allowance for doubtful accounts is based on historical information and recorded as a charge to operating expense. At

December 31, 2019

and

2018

the Company's allowance for doubtful accounts was

$4,662

and

$7,315,

respectively.

The bad debt-write-offs for the years ended

December 31, 2019,

2018

were

$9,233

and

$1,162,

respectively.

Inventory, Policy [Policy Text Block]

Inventory

Inventory is reported at the lower of cost or net realizable value. Cost is determined using the

first

-in,

first

-out method, or FIFO. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.

The Company periodically reviews its inventory for potential slow-moving or obsolete items and writes down specific items to net realizable value, as appropriate. The Company writes down inventory based on forecasted demand and obsolescence. These factors are impacted by market and economic conditions, and changes in strategic direction, and require estimates that

may

include uncertain elements. Actual demand

may

differ from forecasted demand and such differences

may

have a material effect on recorded inventory values. Any write-down of inventory to the lower of cost or net realizable value creates a new cost basis that subsequently would

not

be marked up based on changes in underlying facts and circumstances.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at cost and depreciated or amortized over their estimated useful lives using the straight-line method. Maintenance and repair costs are charged against operations as incurred. The estimated useful lives of the assets are as follows:

	Estimated Useful Lives (in years)
Automobiles		5
Equipment and fixtures	5	-	7
Office furniture and equipment	5	-	7
Leased equipment	5	-	12
Leasehold improvements	7	-	39

Revenue [Policy Text Block]

Revenue Recognition

The Company recognizes revenue in accordance with the

five

-step model as prescribed by Accounting Standards Codification (ASC)

606,

“Revenue from Contracts with Customers,” 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 the goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC

606,

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

The Company recognizes revenue once its performance obligation to the customer is completed and control of the product or service is transferred to the customer. Revenue reflects the total amount the Company receives, or expects to receive, from the customer and includes shipping costs that are billed and included in the consideration. The Company's contractual obligations to customers generally have a single point of obligation and are short term in nature. For sales through distributors, the Company recognizes revenue when the product is shipped, and title passes to the distributor. The Company's standard terms are 'FOB' shipping point, with

no

customer acceptance provisions. The cost of price promotions and rebates are treated as reductions of revenue.

No

products are sold on consignment. Credit sales are recorded as trade accounts receivable and

no

collateral is required. The Company has price incentive programs with its distributors to encourage product placement. The cost of price promotions and rebates are treated as reductions of revenue and revenues are presented net of sales allowances. If the conditions for revenue recognition are

not

met, the Company defers the revenue until all conditions are met. Freight charges are recognized as revenue at the time of delivery.

Lessee, Leases [Policy Text Block]

Leases

The Company adopted Accounting Standard Update (ASU)

No.

2016

-

02—Leases

(Topic

842

), as amended, as of

January 1, 2019,

using the modified retrospective approach. The modified retrospective approach provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification.

In addition, The Company elected the hindsight practical expedient to determine the lease term for existing leases. In our application of hindsight, we evaluated the performance of the leased warehouse and office equipment. However, it was determined that

none

of the leases had renewal options.

Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of

$625,826

as of

January 1, 2019.

Shipping and Handling Charges, Policy [Policy Text Block]

Shipping and Handling Charges

The Company reports shipping and handling fees charged to customers in Sales and marketing expense. The freight costs incurred for the years ended

December 31, 2019,

and

2018,

were

$195,505

and

$161,571,

respectively.

Sales Tax [Policy Text Block]

Sales Tax

States impose sales tax on certain sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the state. The Company's accounting policy is to exclude the tax collected and remitted to the state from revenues and cost of goods sold.

Advertising Cost [Policy Text Block]

Advertising

Advertising costs are expensed as incurred. The advertising costs incurred for the years ended

December 31, 2019,

and

2018,

were

$14,156

and

$8,578,

respectively.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income

The Company has

no

components of other comprehensive income other than net income, and accordingly, the comprehensive income is equivalent to the net income for the years presented.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes under the asset and liability method. As such, deferred income tax assets and liabilities are recognized for the future tax consequences of the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Income Tax Uncertainties, Policy [Policy Text Block]

Uncertain Tax Positions

The Company accounts for uncertainty in income taxes, by designating a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also considers various related matters such as de-recognition, interest, penalties, and disclosures required.

The Company's management has determined that it has

no

unrecognized tax benefits or liabilities to be recognized or disclosed in the financial statements. The Company accrues interest and penalties associated with uncertain tax positions as a part of operating expenses. As of

December 31, 2019,

and

December 31, 2018,

there were

no

accrued interest or penalties associated with uncertain tax positions.

As a result of net operating loss and credit carryforwards, the Company is subject to audit for tax years

2016

and forward for federal and California purposes.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results could differ from those estimates.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Relevant Accounting Guidance

Not

Yet Effective

Income Taxes

In

December 2019,

the FASB issued ASU

2019

-

12,

Income Taxes (Topic

740

): Simplifying the Accounting for Income Taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. The ASU is effective for fiscal years beginning after

December 15, 2020.

Early adoption is permitted. The Company is currently evaluating the effect that the new guidance will have on its financial statements and disclosures.

Credit Losses

In

June 2016,

the FASB issued ASU

2016

-

13,

Measurement of Credit Losses on Financial Instruments

, which requires more timely recognition of credit losses associated with financial assets. ASU

2016

-

13

requires financial assets (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount expected to be collected. ASU

2016

-

13

is effective for fiscal years beginning after

December 15, 2022,

including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after

December 15, 2022,

including interim periods within those fiscal years. The Company is currently evaluating the effect that the new guidance will have on its financial statements and disclosures.

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Note 1 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Property Plant And Equipment, Estimate Useful Life [Table Text Block]

	Estimated Useful Lives (in years)
Automobiles		5
Equipment and fixtures	5	-	7
Office furniture and equipment	5	-	7
Leased equipment	5	-	12
Leasehold improvements	7	-	39

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Note 2 - Accounts Receivable (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	2019			2018
Accounts receivable	$	223,116		$	226,104
Less: allowance for doubtful accounts		(4,662	)		(7,315	)
Net accounts receivable	$	218,454		$	218,789

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Note 3 - Inventories (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	2019		2 018
Coffee:
Unroasted	$	142,095	$	161,855
Roasted		35,141		34,420
Tea		1,616		1,723
Packaging, supplies and other merchandise held for sale		57,406		40,210
Total inventory	$	236,258	$	237,708

XML

Note 4 - Properties and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	2019			2018
Equipment	$	488,189		$	490,430
Furniture and fixtures		151,093			148,693
Leasehold improvements		368,954			366,698
Transportation equipment		50,217			178,497
Package design		41,000			41,000
Capitalized website development costs		19,000			19,000
Property held under finances		362,280			225,864
Total property and equipment		1,480,733			1,470,182
Less: accumulated depreciation		(1,221,243	)		(1,161,533	)
Property and equipment, net	$	259,490		$	308,649

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Note 5 - Operating Leases, and Long-term Debt and Equipment Financing (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Lease-related Assets and Liabilities [Table Text Block]

	Classification on the Balance Sheet	December 31, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	543,465
Equipment financing assets	Property and equipment, net		90,266
Total lease assets		$	633,731
Liabilities
Current
Operating	Current portion of operating leases	$	96,566
Equipment financing	Current portion of long-term debt and equipment financing		25,949
Noncurrent
Operating	Noncurrent operating leases		446,899
Equipment financing	Noncurrent long-term debt and equipment financing		22,096
Total lease liabilities		$	591,510
Weighted-average remaining lease term
Operating leases (in years)		4.25
Equipment financing (in years)		1.67
Weighted-average discount rate
Operating leases			2.45	%
Equipment financing			7.62	%

Lease, Cost [Table Text Block]

	Year Ended December 31, 2019
Equipment financing and long-term debtcost :	$	50,438
Amortization of assets	$	44,843
Interest on equipment financing and long-term debt		5,595
Operating lease cost:		108,737
Short-term lease cost		-
Variable lease cost		-
Total lease cost	$	159,175

Finance Lease and Operating Lease, Other Information [Table Text Block]

Cash paid for amounts included in the measurement of lease liabilities:	Year Ended December 31, 2019
Operating cash flows for operating leases	$	108,737
Operating cash flows for equipment financing and long-term debt	$	5,595
Financing cash flows forequipment financing and long-term debt	$	48,787

Finance and Operating Lease, Liability, Maturity [Table Text Block]

	Operating Leases
Period Ending December 31,
2020	$	109,969
2021		109,969
2022		109,221
2023		105,482
2024		104,342
Thereafter		43,000
Total minimum lease payments		581,983
Less: amount of lease payments representing interest		(38,518	)
Present value of future minimum lease payments		543,465
Less: current obligations under leases		(96,566	)
Long-term lease obligations	$	446,899

Schedule of Long-term Debt Instruments [Table Text Block]

	2019			2018
Hansel Ford, payable in monthly installments of $385, including interest at 0.90%, collateralized by equipment, final payment due on March 14, 2019.	$	-		$	1,154
Hansel Ford, payable in monthly installments of $385, including interest at 0.90%, collateralized by equipment, final payment due on March 14, 2019.		-			1,154
Bank of the West, payable in monthly installments of $1,465, including interest at 9.22%, collateralized by equipment, final payment due January 1, 2020.		1,454			18,058
Hansel Ford, payable in monthly installments of $806, including interest at 1.94%, collateralized by equipment, final payment due on May 3, 2020.		3,213			12,727
Bank of the West, payable in monthly installments of $787, including interest at 9.23%, collateralized by equipment, final payment due January 1, 2021.		8,974			17,188
Savings Bank of Mendocino, payable in monthly installments of $518, interest at 4.24%, collateralized by equipment, final payment due on December 28, 2021.		11,897			17,473
Pawnee Leasing, payable in monthly installments of $528, including interest at 15.18%, collateralized by equipment, final payment due May 15, 2022.		11,131			16,810
Ally Financial, payable in monthly installments of $237, including interest at 5.89%, collateralized by equipment, final payment due July 1, 2024.		11,377			-
		48,046			84,564
Less current portion of long-term debt		(25,949	)		(48,262	)
Total long-term debt	$	22,096		$	36,302

Schedule of Maturities of Long-term Debt [Table Text Block]

Years Ended December 31,
Principal due in 2020	$	26,417
Principal due in 2021		12,304
Principal due in 2022		5,042
Principal due in 2023		2,657
Principal due in 2024		1,626
Total	$	48,046

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Note 6 - Disaggregated Revenue by Routes, Direct and Mail Order (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

Sales by department	2019		2018
Routes-wholesale	$	1,247,336	$	1,302,860
Direct-wholesale		2,465,571		1,468,352
Mail order-retail		453,010		455,057
Total	$	4,165,917	$	3,226,269

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Note 7 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	201 9		201 8
Current state provision	$	8,247	$	800
Deferred provision
Federal		-		-
State		-		-
Total deferred provision		-		-
Total provision	$	8,247	$	800

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	201 9			201 8
Net operating losses	$	19,680		$	107,209
Depreciation		(18,696	)		(2,878	)
Other		24,719			16,937
Subtotal		25,703			121,268
Valuation allowance		(25,703	)		(121,268	)
Net deferred tax asset	$	-		$	-

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	201 9			201 8
	%			%
Federal tax (benefit), net		21.0	%		-21.0	%
State tax (benefit)		7.0	%		-8.8	%
Valuation allowance		-25.0	%		27.5	%
		3.0	%		-2.3	%

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Note 8 - Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Years Ended December 31,
2020	$	103,200
2021		103,200
2022		103,200
2023		103,200
2024		103,200
Thereafter		43,000
Total of long-term lease	$	559,000

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Note 1 - Summary of Significant Accounting Policies (Details Textual)	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jan. 01, 2019 USD ($)
Cash, FDIC Insured Amount	$ 250,000
Accounts Receivable, Allowance for Credit Loss, Ending Balance	4,662	$ 7,315	$ 4,662
Accounts Receivable, Allowance for Credit Loss, Writeoff	9,233	1,162
Operating Lease, Right-of-Use Asset	543,465
Freight Costs, Incurred During the Period	195,505	161,571
Advertising Expense	14,156	8,578
Unrecognized Tax Benefits, Ending Balance	0
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total	0	$ 0
Operating Lease, Liability, Total	$ 543,465
California Franchise Tax Board [Member]
Open Tax Year	2016 2017 2018 2019 2020
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset			625,826
Operating Lease, Liability, Total			$ 625,826
Minimum [Member]
Allowance for Doubtful Accounts Receivable, Percent	1.00%
Maximum [Member]
Allowance for Doubtful Accounts Receivable, Percent	10.00%
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers	1	1
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | One Customer [Member]
Concentration Risk, Percentage	29.00%	8.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member]
Number of Major Customers	1	0
Customer Concentration Risk [Member] | Accounts Receivable [Member] | One Customer [Member]
Concentration Risk, Percentage	21.00%
Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member]
Concentration Risk, Percentage	39.00%	54.00%
Number of Vendors	1	1
Vendor A [Member] | Account Payable [Member]
Concentration Risk, Percentage	23.00%
Vendor A [Member] | Accounts Payable [Member]
Concentration Risk, Percentage		25.00%
Vendor B [Member] | Account Payable [Member]
Concentration Risk, Percentage	12.00%
Vendor B [Member] | Accounts Payable [Member]
Concentration Risk, Percentage		19.00%
Vendor C [Member] | Account Payable [Member]
Concentration Risk, Percentage	8.00%

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Note 1 - Summary of Significant Accounting Policies - Estimated Useful Lives of Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2019
Automobiles [Member]
Estimated useful lives (Year)	5 years
Equipment [Member] | Minimum [Member]
Estimated useful lives (Year)	5 years
Equipment [Member] | Maximum [Member]
Estimated useful lives (Year)	7 years
Office Equipment [Member] | Minimum [Member]
Estimated useful lives (Year)	5 years
Office Equipment [Member] | Maximum [Member]
Estimated useful lives (Year)	7 years
Equipment Leased to Other Party [Member] | Minimum [Member]
Estimated useful lives (Year)	5 years
Equipment Leased to Other Party [Member] | Maximum [Member]
Estimated useful lives (Year)	12 years
Leasehold Improvements [Member] | Minimum [Member]
Estimated useful lives (Year)	7 years
Leasehold Improvements [Member] | Maximum [Member]
Estimated useful lives (Year)	39 years

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Note 2 - Accounts Receivable (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Accounts Receivable, Allowance for Credit Loss, Writeoff	$ 9,233	$ 1,162
Minimum [Member]
Allowance for Doubtful Accounts Receivable, Percent	1.00%
Maximum [Member]
Allowance for Doubtful Accounts Receivable, Percent	10.00%

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Note 2 - Accounts Receivable - Summary of Accounts Receivable (Details) - USD ($)	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Accounts receivable	$ 223,116		$ 226,104
Less: allowance for doubtful accounts	(4,662)	$ (4,662)	(7,315)
Net accounts receivable	$ 218,454		$ 218,789

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Note 3 - Inventories - Summary of Inventories (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Inventory	$ 236,258	$ 237,708
Coffee, Unroasted [Member]
Inventory	142,095	161,855
Coffee, Roasted [Member]
Inventory	35,141	34,420
Tea [Member]
Inventory	1,616	1,723
Packaging, Supplies and Other Merchandise Held for Sale [Member]
Inventory	$ 57,406	$ 40,210

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Note 4 - Properties and Equipment (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Depreciation, Total	$ 80,873	$ 51,746

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Note 4 - Properties and Equipment - Summary of Property and Equipment (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Less: accumulated depreciation	$ (1,221,243)	$ (1,161,533)
Equipment [Member]
Property and equipment	488,189	490,430
Furniture and Fixtures [Member]
Property and equipment	151,093	148,693
Leasehold Improvements [Member]
Property and equipment	368,954	366,698
Transportation Equipment [Member]
Property and equipment	50,217	178,497
Package Design [Member]
Property and equipment	41,000	41,000
Capitalized Website Development Costs [Member]
Property and equipment	19,000	19,000
Property Held Under Finance Leases [Member]
Property and equipment	362,280	225,864
All Property and Equipment, Excluding Right of Use [Member]
Property and equipment	1,480,733	1,470,182
Property and equipment, net	$ 259,490	$ 308,649

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Note 5 - Operating Leases, and Long-term Debt and Equipment Financing (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Interest Expense, Total	$ 5,595	$ 7,284

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Note 5 - Operating Leases, and Long-term Debt and Equipment Financing - Lease-related Assets and Liabilities (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Operating lease assets	$ 543,465
Equipment financing assets	90,266
Total lease assets	633,731
Operating	96,566
Current portion of long-term debt and equipment financing	25,949	48,262
Operating	446,899
Noncurrent long-term debt and equipment financing	22,096	$ 36,302
Total lease liabilities	$ 591,510
Operating leases (in years) (Year)	4 years 91 days
Equipment financing (in years) (Year)	1 year 244 days
Operating leases	2.45%
Equipment financing	7.62%

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Note 5 - Operating Leases, and Long-term Debt and Equipment Financing - Lease Cost (Details)	12 Months Ended
	Dec. 31, 2019 USD ($)
Equipment financing and long-term debt cost:	$ 50,438
Amortization of assets	44,843
Interest on equipment financing and long-term debt	5,595
Operating lease cost:	108,737
Short-term lease cost
Variable lease cost
Total lease cost	$ 159,175

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Note 5 - Operating Leases, and Long-term Debt and Equipment Financing - Other Information (Details)	12 Months Ended
	Dec. 31, 2019 USD ($)
Operating cash flows for operating leases	$ 108,737
Operating cash flows for equipment financing and long-term debt	5,595
Financing cash flows for equipment financing and long-term debt	$ 48,787

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Note 5 - Operating Leases, and Long-term Debt and Equipment Financing - Undiscounted Cash Flows (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
2020	$ 109,969
2021	109,969
2022	109,221
2023	105,482
2024	104,342
Thereafter	43,000
Total minimum lease payments, operating lease	581,983
Less: amount of lease payments representing interest, operating lease	(38,518)
Present value of future minimum lease payments, operating lease	543,465
Less: current obligations under leases, operating lease	(96,566)
Operating	$ 446,899

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Note 5 -Operating Leases, and Long-term Debt and Equipment Financing - Summary of Long Term Debt (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Long-term debt	$ 48,046	$ 84,564
Less current portion of long-term debt	(25,949)	(48,262)
Noncurrent long-term debt and equipment financing	22,096	36,302
First Hansel Ford due on March 14, 2019 [Member]
Long-term debt		1,154
Second Hansel Ford due on March 14, 2019 [Member]
Long-term debt		1,154
Bank of the West due on January 1, 2020 [Member]
Long-term debt	1,454	18,058
Hansel Ford due on May 3, 2020 [Member]
Long-term debt	3,213	12,727
Bank of the West due on January 1, 2021 [Member]
Long-term debt	8,974	17,188
Savings Bank of Mendocino due on December 28, 2021 [Member]
Long-term debt	11,897	17,473
Pawnee Leasing due on May 15, 2022 [Member]
Long-term debt	11,131	16,810
Ally Financial due on July 1, 2024 [Member]
Long-term debt	$ 11,377

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Note 5 -Operating Leases, and Long-term Debt and Equipment Financing - Summary of Long Term Debt (Details) (Parentheticals) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
First Hansel Ford due on March 14, 2019 [Member]
Monthly installment	$ 385	$ 385
Interest rate	0.90%	0.90%
Maturity date	Mar. 14, 2019	Mar. 14, 2019
Second Hansel Ford due on March 14, 2019 [Member]
Monthly installment		$ 385
Interest rate		0.90%
Maturity date	Mar. 14, 2019	Mar. 14, 2019
Bank of the West due on January 1, 2020 [Member]
Monthly installment	$ 1,465	$ 1,465
Interest rate	9.22%	9.22%
Maturity date	Jan. 01, 2020	Jan. 01, 2020
Hansel Ford due on May 3, 2020 [Member]
Monthly installment	$ 806	$ 806
Interest rate	1.94%	1.94%
Maturity date	May 03, 2020	May 03, 2020
Bank of the West due on January 1, 2021 [Member]
Monthly installment	$ 787	$ 787
Interest rate	9.23%	9.23%
Maturity date	Jan. 01, 2021	Jan. 01, 2021
Savings Bank of Mendocino due on December 28, 2021 [Member]
Monthly installment	$ 518	$ 518
Interest rate	4.24%	4.24%
Maturity date	Dec. 28, 2021	Dec. 28, 2021
Pawnee Leasing due on May 15, 2022 [Member]
Monthly installment	$ 528	$ 528
Interest rate	15.18%	15.18%
Maturity date	May 15, 2022	May 15, 2022
Ally Financial due on July 1, 2024 [Member]
Monthly installment	$ 237
Interest rate	5.89%
Maturity date	Jul. 01, 2024	Jul. 01, 2024

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Note 5 - Operating Leases, and Long-term Debt and Equipment Financing - Maturities of Notes Payable and Capital Lease Obligations (Details)	Dec. 31, 2019 USD ($)
Principal due in 2020	$ 26,417
Principal due in 2021	12,304
Principal due in 2022	5,042
Principal due in 2023	2,657
Principal due in 2024	1,626
Total	$ 48,046

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Note 6 - Disaggregated Revenue by Routes, Direct and Mail Order - Disaggregation of Revenue (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenue	$ 4,165,917	$ 3,226,269
Routes-wholesale [Member]
Revenue	1,247,336	1,302,860
Direct-wholesale [Member]
Revenue	2,465,571	1,468,352
Mailorder-retail [Member]
Revenue	$ 453,010	$ 455,057

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Note 7 - Income Taxes (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%
Operating Loss Carryforwards, Total	$ 94,000
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount	$ 95,565	$ 9,522

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Note 7 - Income Taxes - Income Tax Provision (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Current state provision	$ 8,247	$ 800
Deferred provision
Federal
State
Total deferred provision
Total provision	$ 8,247	$ 800

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Note 7 - Income Taxes - Deferred Assets and Liabilities (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Net operating losses	$ 19,680	$ 107,209
Depreciation	(18,696)	(2,878)
Other	24,719	16,937
Subtotal	25,703	121,268
Valuation allowance	(25,703)	(121,268)
Net deferred tax asset

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Note 7 - Income Taxes - Effective Income Tax rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Federal tax (benefit), net	21.00%	21.00%
State tax (benefit)	7.00%	(8.80%)
Valuation allowance	(25.00%)	27.50%
Effective Income Tax Rate Reconciliation, Percent, Total	3.00%	(2.30%)

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Note 8 - Related Party Transactions (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Sep. 30, 2020	Dec. 31, 2018
Operating Leases, Monthly Rental Payment	$ 8,600
Lessee, Operating Lease, Term of Contract (Year)	10 years
ETICO [Member]
Due to Related Parties, Current, Total	$ 37,333		$ 53,327
Subsequent Event [Member]
Accrued Rent		$ 17,200

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Note 8 - Related Party Transactions - Minimum Future Rental Payments Under Non-cancelable Leases (Details)	Dec. 31, 2019 USD ($)
2020	$ 103,200
2021	103,200
2022	103,200
2023	103,200
2024	103,200
Thereafter	43,000
Total of long-term lease	$ 559,000

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Note 9 - Business Segment (Details Textual)	12 Months Ended
	Dec. 31, 2019
Number of Reportable Segments	1

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Note 10 - Subsequent Events (Details Textual) - Subsequent Event [Member]	1 Months Ended
	Apr. 30, 2020 USD ($)
SBA CARES Act Paycheck Protection Program [Member]
Proceeds from Issuance of Long-term Debt, Total	$ 189,228
Non-interest Bearing Emergency COVID-19 Commercial Loan [Member]
Proceeds from Issuance of Long-term Debt, Total	$ 25,000