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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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	%

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.  

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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.

 

 

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

 

 

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.

 

 

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

 

 

 

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.

 

 

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.

 

 

Thanksgiving Coffee Company, Inc.

Balance Sheets

December 31:

 

 

See accompanying notes

 

 

Thanksgiving Coffee Company, Inc.

Statements of Operations

Years Ended December 31:

 

 

See accompanying notes

 

 

 Thanksgiving Coffee Company, Inc.

Statements of Changes in Retained Earnings (Accumulated Deficit)

For the Years Ended December 31:

 

 

See accompanying notes

  

 

Thanksgiving Coffee Company, Inc.

Statements of Cash Flows

For the Years Ended December 31:

 

 

See accompanying notes

 

 

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements