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Commitments and Contingencies | 12 Months Ended
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Oct. 31, 2020
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | NOTE 9 - COMMITMENTS AND CONTINGENCIES: CLASS ACTION COMPLAINT The Company was named as a defendant in a putative class action lawsuit filed in the United States District Court for the Northern District of Illinois on or about December 21, 2020. The plaintiffs, Eileen Brodsky and Rhonda Diamond, purporting to represent a class of individuals who purchased coffee products at Aldi, Inc. (“Aldi”), a supermarket chain, generally allege that Aldi sold private label coffee products manufactured by us and by Pan American Coffee Co., LLC (“Pan American”), which falsely described the number of cups of coffee that could be made from the amount of product purchased. Aldi and Pan American are also named as defendants in the action. The complaint asserts a variety of claims under New York and California consumer protection laws, and seeks unspecified monetary damages, including disgorgement and restitution, as well as other forms of relief including class certification, declaratory and injunctive relief, attorneys’ fees, and interest. The Company believes the allegations in the complaint are wholly without merit and that the claims asserted are legally deficient, and the company intends to vigorously defend the action. As of the filing of this Form 10-K, the Company has not been served with the complaint. Therefore, the Company is unable to predict the ultimate outcome of this lawsuit. A significant customer of the Company was named as a defendant in a putative class action lawsuit filed in the United States District Court for the District of Massachusetts on or about February 2, 2021, concerning the labeling on private label coffee productions we sold to the customer. The plaintiff, David Cohen, purporting to represent a class of individuals who purchased coffee products from our customer, generally allege that the customer sold private label coffee products manufactured by the Company which falsely described the number of cups of coffee that could be made from the amount of product purchased. The Company is not named as a defendant in the action, but has agreed to indemnify the customer for the costs and expenses incurred in defending the lawsuit and for any liability the customer may suffer as a result. The complaint asserts a variety of claims under Massachusetts consumer protection laws, and seeks unspecified monetary damages as well as other forms of relief including class certification, declaratory and injunctive relief, attorneys’ fees, and interest. The Company believes the allegations in the complaint are wholly without merit and that the claims asserted are legally deficient, and intends to vigorously support the customer in defending the action. As of the filing of this Form 10-K, the Company is unable to predict the ultimate outcome of this lawsuit. OPERATING LEASES: In February 2004, the Company entered into a lease for office and warehouse space in La Junta City, Colorado. This lease, which is at a monthly rental of $8,341 beginning January 2005, expires on January 31, 2024. Operating lease costs amounted to $95,504 for the years ended October 31, 2020 and 2019. In October 2008, the Company entered into a lease for office and warehouse space in Staten Island, NY. This lease, which is at a monthly rental beginning November 2008, expires on October 31, 2023 and includes annual rent increases. Operating lease costs amounted to $175,640 and $143,171 for the years ended October 31, 2020 and 2019, respectively. The Company also uses a variety of independent, bonded commercial warehouses to store its green coffee beans. In March 2015, the Company entered into a lease for office space in Vancouver, WA. This lease, which is at a monthly rental beginning April 1, 2015, expired on March 31, 2017. The lease was extended, effective as of April 1, 2017 and expiring on March 31, 2019. The lease was extended, effective as of April 1, 2019 and expiring on March 31, 2021. Operating lease costs amounted to $41,150 and $39,960 for the years ended October 31, 2020 and 2019, respectively. In December 2016, the Company entered into a lease for office and warehouse space in Burlington, WA. This lease, which is at a monthly rental beginning December 1, 2017, expired on December 31, 2018. The lease was extended, effective January 1, 2019 and expiring on December 31, 2020. The lease was extended, effective January 1, 2021 and expiring on December 21, 2021. Operating lease costs amounted to $32,924 and $47,143 for the years ended October 31, 2020 and 2019, respectively. In April 2017, the Company entered into a lease for office and warehouse space in North Andover, MA. This lease, which is at a monthly rental beginning April 1, 2017, expires on May 31, 2028 and includes charges for common areas and utilities. Operating lease costs amounted to $235,710 and $233,754 for the years ended October 31, 2020 and 2019, respectively. In April 2018, the Company through its joint venture Generations Coffee Company, LLC entered into a lease for office and warehouse space in Madison, WI. This lease, which is at a monthly rental beginning April 1, 2018, expires on September 30, 2024 and includes charges for common areas and utilities. Operating lease costs amounted to $169,244 and $117,149 for the years ended October 31, 2020 and 2019, respectively. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we use the Company’s cost of capital based on existing debt instruments. Our material leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Total operating lease costs for the year ended October 31, 2020 was $750,172, of which, $131,730 was included within cost of goods sold and $618,442 was recorded in the selling and administrative expenses. The aggregate cash payments under these leasing agreements was $597,945 for the year ended October 31, 2020. The following summarizes the Company’s operating leases:
|  | October 31, 2020 |
Right-of-use operating lease assets |  | $ | 2,114,228 |
Current lease liability |  | $ | 484,163 |
Non-current lease liability |  | $ | 1,780,306 |
Average remaining lease term |  |  | 3.0 |
Discount rate |  |  | 4.75 | %
Maturities of lease liabilities by year for our operating leases are as follows:
2021 |  | $ | 580,788 |
2022 |  |  | 535,920 |
2023 |  |  | 531,807 |
2024 |  |  | 316,477 |
2025 |  |  | 168,288 |
Thereafter |  |  | 434,744 |
Total lease payments |  | $ | 2,568,024 |
Less: imputed interest |  |  | (303,555 | )
Present value of operating lease liabilities |  | $ | 2,264,469 |
401 (K) RETIREMENT PLAN: The Company has a 401(k) Retirement Plan, which covers all the full time employees who have completed one year of service and have reached their 21st birthday. The Company matches 100% of the aggregate salary reduction contribution up to the first 3% of compensation and 50% of aggregate contribution of the next 2% of compensation. Contributions to the plan aggregated $81,384 and $89,577 for the years ended October 31, 2020 and 2019, respectively.

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