{"url_path":"/sec/jva/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-01-28","source_url":"https://www.sec.gov/Archives/edgar/data/1007019/0001493152-26-004052-index.html","accession_number":"0001493152-26-004052","cik":"0001007019","ticker":"JVA","issuer_name":"COFFEE HOLDING CO INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1007019/0001493152-26-004052-index.html","primary_entity_key":"0001007019","primary_entity_name":"COFFEE HOLDING CO INC"},"word_count":6527,"has_tables":true,"body_markdown":"**ITEM\n1A. RISK FACTORS**\n\n \n\nAn\ninvestment in our common stock is subject to risks inherent in our business. Before making an investment decision, you should carefully\nconsider the risks and uncertainties described below together with all of the other information included in this Annual Report. In addition\nto the risks and uncertainties described below, other risks and uncertainties not currently known to us or that we currently deem to\nbe immaterial also may materially and adversely affect our business, financial condition and results of operations. The value or market\nprice of our common stock could decline due to any of these identified or other risks, and you could lose all of your investment.\n\n \n\n8\n\n \n\n \n\n**Risks\nRelated to our Company**\n\n \n\n**Because\nour business is highly dependent upon a single commodity, coffee, any decrease in demand for coffee could materially adversely affect\nour revenues and profitability.**\n\n \n\nOur\nbusiness is centered on essentially one commodity: coffee. Our operations have primarily focused on the following areas of the coffee\nindustry:\n\n \n\n●the\nroasting, blending, packaging and distribution of private label coffee;\n\n●the\nroasting, blending, packaging and distribution of proprietary branded coffee; and\n\n●the\nsale of wholesale specialty green coffee.\n\n \n\nDemand\nfor our products is affected by:\n\n \n\n●consumer\ntastes and preferences;\n\n●global\neconomic conditions;\n\n●demographic\ntrends; and\n\n●the\ntype, number and location of competing products.\n\n \n\nBecause\nwe rely on a single commodity, any decrease in demand for coffee would harm our business more than if we had more diversified product\nofferings and could materially adversely affect our revenues and operating results.\n\n \n\n**Adverse\nglobal conditions, including tariffs and economic uncertainty, may negatively impact our financial results.**\n\n \n\nGlobal\nconditions, dislocations in the financial markets, any negative financial impacts affecting United States corporations operating on a\nglobal basis as a result of tax reform. tariffs, or changes to existing trade agreements or tax conventions, or inflation, could adversely\nimpact our business in a number of ways, including longer sales cycles, lower prices for our products, reduced licensing renewals, customer\ndisruption or foreign currency fluctuations.\n\n \n\nIn\naddition, the global macroeconomic environment could be negatively affected by, among other things, the COVID-19 pandemic or other epidemics,\ninstability in global economic markets, increased U.S. trade tariffs and trade disputes with other countries, instability in the global\ncredit markets, supply chain weaknesses, instability in the geopolitical environment as a result of the Russian invasion of Ukraine and\nthe resulting prolonged conflict and other political tensions, and foreign governmental debt concerns. Such challenges have caused, and\nmay continue to cause, uncertainty and instability in local economies and in global financial markets.\n\n \n\n**If\nwe are unable to geographically expand our branded and private label products, our growth will be impeded which could result in reduced\nsales and profitability.**\n\n \n\nOur\nbusiness strategy emphasizes, among other things, the geographic expansion of our branded and private label products as opportunities\narise. We may not be able to implement successfully this portion of our business strategy. Our ability to implement this portion of our\nbusiness strategy is dependent on our ability to:\n\n \n\n●market\nour products on a national scale;\n\n●increase\nour brand recognition on a national scale;\n\n●enter\ninto distribution and other strategic arrangements with third party retailers; and\n\n●manage\ngrowth in administrative overhead and distribution costs likely to result from the planned\nexpansion of our distribution channels.\n\n \n\nOur\nsales and profitability may be adversely affected if we fail to successfully expand the geographic distribution of our branded and private\nlabel products. In addition, our expenses could increase and our profits could decrease as we implement our growth strategy.\n\n \n\n9\n\n \n\n \n\n**If\nour hedging policy is not effective, we may not be able to control our coffee costs, we may be forced to pay greater than market value\nfor green coffee and our profitability may be reduced.**\n\n \n\nThe\nsupply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control. We have\nused and expect to continue to use to a lesser extent short-term coffee futures and options contracts for the purpose of hedging the\neffects of changing green coffee prices. In addition, we have acquired and expect to continue to acquire to a lesser extent futures contracts\nwith longer terms, generally three to four months, for the purpose of guaranteeing an adequate supply of green coffee. Realized and unrealized\ngains or losses on options and futures contracts are reflected in our cost of sales. Gains on options and futures contracts reduce our\ncost of sales and losses on options and futures contracts increase our cost of sales.\n\n \n\nThe\nuse of these derivative financial instruments has generally enabled us to mitigate the effect of changing prices. However, no strategy\ncan entirely eliminate pricing risks and we generally remain exposed to losses on futures contracts when prices decline significantly\nin a short period of time, and we would generally remain exposed to supply risk in the event of non-performance by the counterparties\nin any one of our physical contracts. Historically, we generally have been able to pass green coffee price increases through to customers,\nthereby maintaining our gross profits, however, we may not be able to pass price increases through to our customers in the future. Failure\nto properly design and implement an effective hedging strategy may materially adversely affect our business and operating results. If\nthe hedges that we enter do not adequately offset the risks of coffee bean price volatility or our hedging results in losses, our cost\nof sales may increase, resulting in a decrease in profitability or an increase in losses. Although we have had net gains on options and\nfutures contracts in the past, we have incurred losses on options and futures contracts during some reporting periods. In these cases,\nour cost of sales has increased, resulting in a decrease in our profitability or an increase in losses. Such losses have and could in\nthe future materially increase our cost of sales and materially decrease our profitability or increase losses and adversely affect our\nstock price.\n\n \n\n**Any\ninability to successfully implement our strategy of growth through selective acquisitions, licensing arrangements and other strategic\nalliances, including joint ventures, could materially affect our revenues and profitability.**\n\n \n\nPart\nof our growth strategy utilizes the selective acquisition of coffee companies, the selective acquisition or licensing of additional coffee\nbrands and other strategic alliances including joint ventures, presents risks that could result in increased expenditures and could materially\nadversely affect our revenues and profitability, including:\n\n \n\n●such\nacquisitions, licensing arrangements or other strategic alliances may divert our management’s\nattention from our existing operations;\n\n●we\nmay not be able to successfully integrate any acquired coffee companies or new coffee brands\ninto our existing business;\n\n●we\nmay not be able to manage the contingent risks associated with the past operations of, and\nother unanticipated problems arising in, any acquired coffee company; and\n\n●we\nmay not be able to control unanticipated costs associated with such acquisitions, licensing\narrangements or strategic alliances.\n\n \n\nIn\naddition, any such acquisitions, licensing arrangements or strategic alliances may result in:\n\n \n\n●potentially\ndilutive issuances of our equity securities;\n\n●the\nincurrence of additional debt;\n\n●restructuring\ncharges; and\n\n●the\nrecognition of significant charges for depreciation and amortization related to intangible\nassets.\n\n \n\nAs\nhas been our practice in the past, we will continuously evaluate any such acquisitions, licensing opportunities or strategic alliances\nas they arise. However, we have not reached any new agreements or arrangements with respect to any such acquisition, licensing opportunity\nor strategic alliance (other than those described herein) at this time and we may not be able to consummate any acquisitions, licensing\narrangements or strategic alliances on terms favorable to us or at all. The failure to consummate any such acquisitions, licensing arrangements\nor strategic alliances may reduce our growth and expansion. In addition, if these acquisitions, licensing opportunities or strategic\nalliances are not successful, our earnings could be materially adversely affected by increased expenses and decreased revenues.\n\n \n\n10\n\n \n\n \n\n**Our\nrevenues and profitability could be adversely affected if our joint ventures or acquisitions are not successful.**\n\n \n\nWe\nhave historically utilized joint ventures and acquisitions to grow our business and we intend to continue to seek opportunities for new\njoint ventures and acquisitions that will be complimentary to our business. While we believe that our joint ventures will be successful,\nlosses in our joint ventures or any future joint ventures would hurt our profitability. In addition, we generally will not be in a position\nto exercise sole decision-making authority regarding our joint ventures. Investments in joint ventures may, under certain circumstances,\ninvolve risks not present when a third party is not involved, including the possibility that joint venture partners might become bankrupt\nor fail to fund their share of the required capital contributions. Joint venture partners may also have business interests, strategies\nor goals that are inconsistent with our business interests, strategies or goals and may be, in cases where we have a minority interest,\nin a position to take actions contrary to our policies, strategies or objectives. Any disputes that may arise between us and our joint\nventure partners may result in litigation or arbitration that could increase our expenses and could prevent our officers and/or directors\nfrom focusing their time and effort exclusively on our business strategies. In addition, we may, in certain circumstances, be liable\nfor the actions of our third-party joint venture partners.\n\n \n\nAcquisitions\nincluding strategic investments or alliances entail numerous risks, which may include:\n\n \n\n●difficulties\nin integrating acquired operations or products, including the loss of key employees from,\nor customers of, acquired businesses;\n\n●diversion\nof management’s attention from our existing businesses;\n\n●adverse\neffects on existing business relationships with suppliers and customers;\n\n●adverse\nimpacts of margin and product cost structures different from those of our current mix of\nbusiness; and\n\n●risks\nof entering distribution channels, categories or markets in which we have limited or no prior\nexperience.\n\n \n\nOur\nfailure to successfully complete the integration of any acquired business, and any adverse consequences associated with our acquisition\nactivities, could have a material adverse effect on our business, financial condition and operating results.\n\n \n\n**The\nloss of any of our key customers, could negatively affect our revenues and decrease our earnings.**\n\n \n\nWe\nhad one customer that accounted for greater than 10% of our net sales during each of the 2025 and 2024 fiscal years, and such customer\nwas the same in both periods. We generally do not enter long-term contracts with most of our customers. Accordingly, some of our customers\ncan stop purchasing our products at any time without penalty and are free to purchase products from our competitors. The loss of, or\nreduction in sales to any of our customers to which we sell a significant amount of our products or any material adverse change in the\nfinancial condition of such customers would negatively affect our revenues and decrease our earnings.\n\n \n\n**If\nwe lose our key personnel, including Andrew Gordon and David Gordon, our revenues and profitability could suffer.**\n\n \n\nOur\nsuccess depends to a large degree upon the services of Andrew Gordon, our President, Chief Executive Officer, Chief Financial Officer\nand Treasurer, and David Gordon, our Executive Vice President – Operations and Secretary. We also depend to a large degree on the\nexpertise of our coffee roasters. We do not have employment contracts with our coffee roasters. Our ability to source and purchase a\nsufficient supply of high quality coffee beans and to roast coffee beans consistent with our quality standards could suffer if we lose\nthe services of any of these individuals. As a result, our business and operating results would be adversely affected. We may not be\nsuccessful in obtaining and retaining a replacement for either Andrew Gordon or David Gordon if they elect to stop working for us. In\naddition, we do not have key-person insurance on the lives of Andrew Gordon or David Gordon.\n\n \n\n11\n\n \n\n \n\n**Our\nindebtedness may adversely affect our ability to obtain additional funds and may increase our vulnerability to economic or business downturns.**\n\n \n\nFrom\ntime to time, we utilize borrowings under our credit facility in connection with operations. All amounts under this line of credit will\nbecome due on June 28, 2026. There is no assurance that it will be renewed. Outstanding debt could have significant negative consequences\nto the holders of our securities, including the following:\n\n \n\n●a\nportion of our cash flow from operations will be needed to pay debt service and will not\nbe available to fund future operations;\n\n●having\nincreased vulnerability to adverse general economic and coffee industry conditions;\n\n●we\nmay be vulnerable to higher interest rates because interest expense on borrowings under our\nrevolving line of credit is based on variable rates; and\n\n●we\nmay be subject to covenants that could restrict our operations.\n\n \n\nOur\nability to make payments on our indebtedness and to fund our operations depends on our ability to generate cash in the future. Our future\noperating performance is subject to market conditions and business factors that are beyond our control. If we are unable to make payments\non our debt, we may have to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our\ndebt.\n\n \n\nThere\ncan be no assurance that we will be able to extend our line of credit or complete any financing transaction in a timely manner or on\nacceptable terms or otherwise. If we are not successful to extend our line of credit or to raise additional cash, we may be forced to\nsuspend or curtail planned programs or cease operations altogether.\n\n \n\n**If\nwe fail to promote, enhance and maintain our brands, the value of our brands could decrease and our revenues and profitability could\nbe adversely affected.**\n\n \n\nWe\nbelieve that promoting and enhancing our brands is critical to our success. If our brand-building strategy is unsuccessful, these expenses\nmay never be recovered, and we may be unable to increase awareness of our brands or protect the value of our brands. If we are unable\nto achieve these goals, our revenues and ability to implement our business strategy could be adversely affected.\n\n \n\nOur\nsuccess in promoting and enhancing our brands will also depend on our ability to provide customers with high quality products and service.\nAlthough we take measures to ensure that we sell only fresh roasted coffee, we have no control over our roasted coffee products once\nthey are purchased by our customers. Accordingly, wholesale customers may store our coffee for longer periods of time or resell our coffee\nwithout our consent, in each case, potentially affecting the quality of the coffee prepared from our products. Although we believe we\nare less susceptible to quality control problems than many of our competitors because our products are processed in-house under strict\nquality control guidelines which have been in place for more than 40 years, if consumers do not perceive our products and service to\nbe of high quality, then the value of our brands may be diminished and, consequently, our operating results and ability to implement\nour business strategy may be adversely affected.\n\n \n\n**Our\nroasting methods are not proprietary, so competitors may be able to duplicate them, which could harm our competitive position. If our\ncompetitive position is weakened, our revenues and profitability could be materially adversely affected.**\n\n \n\nWe\nconsider our roasting methods essential to the flavor and richness of our roasted coffee and, therefore, essential to our brands of coffee.\nBecause we do not hold any patents for our roasting methods, it may be difficult for us to prevent competitors from copying our roasting\nmethods if such methods become known. If our competitors copy our roasting methods, the value of our coffee brands may be diminished,\nand we may lose customers to our competitors. In addition, competitors may be able to develop roasting methods that are more advanced\nthan our roasting methods, which may also harm our competitive position.\n\n \n\n12\n\n \n\n \n\nThe\nsuccess of our brand also depends in part on our intellectual property. We rely on a combination of trademarks, copyrights, service marks,\ntrade secrets and similar rights to protect our intellectual property. The success of our growth strategy depends on our continued ability\nto use our existing trademarks and service marks in order to increase brand awareness and further develop our brand in both domestic\nand international markets. If our efforts to protect our intellectual property are not adequate, or if any third party misappropriates\nor infringes on our intellectual property, the value of our brand may be harmed, which could have a material adverse effect on our business.\nWe may become engaged in litigation to protect our intellectual property, which could result in substantial costs to us as well as diversion\nof management attention.\n\n \n\n**Since\nwe rely heavily on common carriers to ship our coffee on a daily basis, any disruption in their services or increase in shipping costs\ncould adversely affect our relationship with our customers, which could result in reduced revenues, increased operating expenses, a loss\nof customers or reduced profitability.**\n\n \n\nWe\nrely on a number of common carriers to deliver coffee to our customers and to deliver coffee beans to us. We have no control over these\ncommon carriers and the services provided by them may be interrupted as a result of labor shortages, contract disputes and other factors.\nIf we experience an interruption in these services, we may be unable to ship our coffee in a timely manner, which could reduce our revenues\nand adversely affect our relationship with our customers. In addition, a delay in shipping could require us to contract with alternative,\nand possibly more expensive, common carriers and could cause orders to be cancelled or receipt of goods to be refused. Any significant\nincrease in shipping costs could lower our profit margins or force us to raise prices, which could cause our revenue and profits to suffer.\n\n \n\n**If\nthere was a significant interruption in the operation of our Colorado or New York facilities, we may not have the capacity to service\nall of our customers and we may not be able to service our customers in a timely manner, thereby reducing our revenues and earnings.**\n\n \n\nWe\nare dependent on the continued operations of our Colorado and New York coffee roasting and distribution facilities. Our operations depend\non our ability to maintain our computer and telecommunications equipment in effective working order and to protect against damage from\nfire, natural disaster, power loss, telecommunications failure or similar events. In addition, growth of our customer base may strain\nor exceed the capacity of our systems and lead to degradations in performance or systems failure. Although we continually review and\nconsider upgrades to our order fulfillment infrastructure and provide for system redundancies to limit the likelihood of systems overload\nor failure, substantial damage to our systems or a systems failure that causes interruptions for a number of days could adversely affect\nour business. Additionally, if we are unsuccessful in updating and expanding our order fulfillment infrastructure, our ability to grow\nmay be constrained. As a result, our revenues and earnings could be materially adversely affected.\n\n \n\n**There\nmay be limitations on the effectiveness of our internal controls, and a failure of our control systems to prevent error or fraud may\nmaterially harm our company.**\n\n \n\nWe\nare required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by our management on, among other things, the effectiveness\nof our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management\nin our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control\nover financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements\nwill not be prevented or detected on a timely basis.\n\n \n\nEffective\ninternal control over financial reporting is necessary for us to provide reliable and timely financial reports and, together with adequate\ndisclosure controls and procedures, are designed to reasonably detect and prevent fraud. Any failure to implement required new or improved\ncontrols, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. Undetected material\nweaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the\nexpense of remediation.\n\n \n\n13\n\n \n\n \n\nMoreover,\nwe do not expect that disclosure controls or internal control over financial reporting will prevent all error and all fraud. A control\nsystem, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s\nobjectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits\nof controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of\ncontrols can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Failure of our control\nsystems to detect or prevent error or fraud could materially adversely impact us.\n\n \n\n**The\nfailure of our suppliers or customers to adhere to the quality standards that we set for our products could lead to investigations, litigation,\nwrite-offs, recalls or boycotts of our products, which could damage our reputation and our brand, increase our costs, and otherwise adversely\naffect our business. Unfavorable allegations, government investigations and legal actions surrounding our products and/or our business\ncould harm our reputation, impair our ability to grow or sustain our business, and adversely affect our business, financial condition\nand operating results.**\n\n \n\nWe\ndo not control the operations of our suppliers or customers, and we cannot guarantee that our suppliers or customers will comply with\napplicable laws and regulations or operate in a legal, ethical and responsible manner. Additionally, it is possible that we may not be\nable to identify noncompliance by our suppliers or customers notwithstanding any precautionary measures we implement. Violation of applicable\nlaws and regulations by our suppliers or customers, or their failure to operate in a legal, ethical or responsible manner, could expose\nus to legal risks, cause us to violate laws and regulations and reduce demand for our products if, as a result of such violation or failure,\nwe attract negative publicity. In addition, the failure of our suppliers and customers to adhere to the quality standards that we set\nfor our products could lead to government investigations, litigation, write-offs and recalls, which could damage our reputation and our\nbrand, increase our costs, and otherwise adversely affect our business.\n\n \n\nWe\nrely on our reputation for offering great value, superior service and a broad assortment of high-quality, safe products. If we become\nsubject to unfavorable allegations, government investigations or legal actions involving our products or us, such circumstances could\nharm our reputation and our brand and adversely affect our business, financial condition and operating results. If this negative impact\nis significant, our ability to grow or sustain our business could be jeopardized.\n\n \n\nNegative\npublicity surrounding product matters, including publicity about other retailers, may harm our reputation and affect the demand for our\nproducts. In addition, if more stringent laws or regulations are adopted in the future, we may have difficulty complying with the new\nrequirements imposed by such laws and regulations, and in turn, our business, financial condition, and operating results could be adversely\naffected. Moreover, regardless of whether any such changes are adopted, we may become subject to claims or governmental investigations\nalleging violations of applicable laws and regulations. Any such matter may subject us to fines, penalties, and/or litigation. Any one\nof these results could negatively affect our business, financial condition, and operating results and impair our ability to grow or sustain\nour business.\n\n \n\n**Risks\nRelated to the Coffee Industry**\n\n \n\n**Increases\nin the cost of high quality Arabica or Robusta coffee beans could reduce our gross margin and profit.**\n\n \n\nGreen\ncoffee is our largest single cost of sales. Coffee is a traded commodity and, in general, its price can fluctuate depending on:\n\n \n\n●outside\nspeculative influences such as indexed and algorithmic commodity funds;\n\n●weather\npatterns in coffee-producing countries;\n\n●economic\nand political conditions affecting coffee-producing countries, including acts of terrorism\nin such countries;\n\n●foreign\ncurrency fluctuations;\n\n●disruptions\nin our supply chain; and\n\n●trade\nregulations and restrictions (like tariffs) between coffee-producing countries and the United\nStates.\n\n \n\n14\n\n \n\n \n\nIf\nthe cost of wholesale green coffee increases due to any of these factors, our margins could decrease and our profitability could suffer\naccordingly. It is expected that coffee prices will remain volatile in the coming years. Although we have historically attempted to raise\nthe selling prices of our products in response to increases in the price of wholesale green coffee, when wholesale green coffee prices\nincrease rapidly or to significantly higher than normal levels, we are not always able to pass the price increases through to our customers\non a timely basis, if at all, which adversely affects our operating margins and cash flow. We may not be able to recover any future increases\nin the cost of wholesale green coffee. Even if we are able to recover future increases, our operating margins and results of operations\nmay still be materially and adversely affected by time delays in the implementation of price increases.\n\n \n\n**Uncertainty\nover global tariffs, or the financial impact of tariffs, may negatively affect our results.**\n\n \n\nOur\nbusiness is impacted by international or cross-border trade, including the import and export of products and goods into and out of the\nUnited States and trade tensions among nations. For example, U.S. domestic and global tariff frameworks have increased our costs of producing\ngoods and resulted in additional risks to our supply chain. More tariff changes are also possible. We have developed strategies to mitigate,\nin part, previously implemented and, in some cases, proposed tariff increases, but there is no assurance we will be able to continue\nto mitigate the materially adverse impact of tariff increases on our financial and operating results. Further, uncertainties about future\ntariff changes could result in mitigation actions undertaken by us that could prove to be detrimental to our business and our relationships\nwith our customers and suppliers. The scope of the tariffs and the rates at which they are implemented may continue to fluctuate and\nchange in an unpredictable manner that further complicates our ability to implement mitigation actions.\n\n \n\n**Disruptions\nin the supply of green coffee could result in a deterioration of our relationship with our customers, decreased revenues or could impair\nour ability to grow our business.**\n\n \n\nGreen\ncoffee is a commodity and its supply is subject to volatility beyond our control. Supply is affected by many factors in the coffee growing\ncountries including weather, pest damage, economic conditions, acts of terrorism, as well as efforts by coffee growers to expand or form\ncartels or associations. In addition, the political situation in many of the Arabica coffee growing regions, including Africa, Indonesia,\nand Central and South America, can be unstable, and such instability could affect our ability to purchase coffee from those regions.\nIf Arabica coffee beans from a region become unavailable or prohibitively expensive, we could be forced to discontinue particular coffee\ntypes and blends or substitute coffee beans from other regions in our blends. Frequent substitutions and changes in our coffee product\nlines could lead to cost increases, customer alienation and fluctuations in our gross margins.\n\n \n\nSome\nof the Arabica coffee beans of the quality we purchase do not trade directly on the commodity markets. Rather, we purchase the high-end\nArabica coffee beans that we use on a negotiated basis. We depend on our relationships with coffee brokers, exporters and growers for\nthe supply of our primary raw material, high quality Arabica coffee beans. If any of our relationships with coffee brokers, exporters\nor growers deteriorate, we may be unable to procure a sufficient quantity of high quality coffee beans at prices acceptable to us or\nat all. In such case, we may not be able to fulfill the demand of our existing customers, supply new retail stores or expand other channels\nof distribution. A raw material shortage could result in a deterioration of our relationship with our customers, decreased revenues or\ncould impair our ability to expand our business.\n\n \n\n**Increases\nin shipping costs, long lead times, supply shortages, and supply changes could disrupt our supply chain and factors such as wage rate\nincreases and inflation can have a material adverse effect on our business, financial condition, and operating results.**\n\n \n\nWe\nmay experience supply delays and shortages due to a variety of macroeconomic factors, including disruptions on the global supply chain.\nWe have been able to make alternative delivery arrangements for limited quantities of goods, at increased cost.\n\n \n\n15\n\n \n\n \n\nWhile\nwe have not yet experienced material shortages in supply as a result of these disruptions and our alternative delivery arrangements,\nif they were to be prolonged or expanded in scope, there could be resulting supply shortages that could impact our ability to deliver\nour products to our customers. Accordingly, such supply shortages and delivery limitations could have a material adverse effect on our\nbusiness, financial condition, results of operations, and cash flows.\n\n \n\nFurthermore,\nincreases in compensation, wage pressure, and other expenses for our employees and the employees of our suppliers, may adversely affect\nour profitability. These cost increases may be the result of inflationary pressures that could further reduce our sales or profitability.\nIncreases in other operating costs, including changes in energy prices and lease and utility costs, may increase our cost of products\nsold or selling, general, and administrative expenses. Our competitive price model and pricing pressures in the industry may inhibit\nour ability to reflect these increased costs in the prices of our products, in which case such increased costs could have a material\nadverse effect on our business, financial condition, and results of operations.\n\n \n\n**Increased\nsevere weather patterns may increase commodity costs, damage our facilities and disrupt our production capabilities and supply chain.**\n\n \n\nThere\nis increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other\ngreenhouse gases in the atmosphere have caused and will continue to cause significant changes in weather patterns around the globe and\nan increase in the frequency and severity of extreme weather events. Major weather phenomena are dramatically affecting coffee growing\ncountries. The wet and dry seasons are becoming unpredictable in timing and duration, causing improper development of the coffee cherries.\nDecreased agricultural productivity in certain regions as a result of changing weather patterns may affect the quality, limit the availability\nor increase the cost of key agricultural commodities, which are important ingredients for our business. Increased frequency or duration\nof extreme weather conditions could damage our facilities, impair production capabilities, disrupt our supply chain or impact demand\nfor our products. As a result, the effects of climate change could have a long-term adverse impact on our business and results of operations.\n\n \n\n**The\ncoffee industry is highly competitive and if we cannot compete successfully, we may lose our customers or experience reduced sales and\nprofitability.**\n\n \n\nThe\ncoffee markets in which we do business are highly competitive and competition in these markets could become increasingly more intense\ndue to the increasing popularity and growth of the coffee industry. The industry in which we compete is particularly sensitive to price\npressure, as well as quality, reputation and viability for wholesale and brand loyalty for retail. To the extent that one or more of\nour competitors becomes more successful with respect to any key competitive factor, our ability to attract and retain customers could\nbe materially adversely affected. Our private label and branded coffee products compete with other manufacturers of private label coffee\nand branded coffees. These competitors, such as Kraft Foods, Inc. (owner of the Maxwell House brand), and J.M. Smucker Co. (owner of\nthe Folgers and Café Bustelo brands), have much greater financial, marketing, distribution, management and other resources than\nwe do for marketing, promotions and geographic and market expansion. In addition, there are a growing number of specialty coffee companies\nwho provide specialty green coffee and roasted coffee for retail sale. If we are unable to compete successfully against existing and\nnew competitors, we may lose our customers or experience reduced sales and profitability.\n\n \n\n**Besides\ncoffee, we face exposure to other commodity cost fluctuations, which could impair our profitability.**\n\n \n\nIn\naddition to the increase in coffee costs, we are exposed to cost fluctuation in other commodities, including, in particular, steel, natural\ngas and gasoline. In addition, an increase in the cost of fuel could indirectly lead to higher electricity costs, transportation costs\nand other commodity costs. Much like coffee costs, the costs of these commodities depend on various factors beyond our control, including\neconomic and political conditions, foreign currency fluctuations, and global weather patterns. To the extent we are unable to pass along\nsuch costs to our customers through price increases, our margins and profitability will decrease.\n\n \n\n16\n\n \n\n \n\n**Adverse\npublic or medical opinion about caffeine may harm our business.**\n\n \n\nCoffee\ncontains caffeine and other active compounds, the health effects of some of which are not fully understood. A number of research studies\nconclude or suggest that excessive consumption of caffeine may lead to increased heart rate, nausea and vomiting, restlessness and anxiety,\ndepression, headaches, tremors, sleeplessness and other adverse health effects. An unfavorable report on the health effects of caffeine\nor other compounds present in coffee could significantly reduce the demand for coffee, which could harm our business and reduce our sales\nand profits. In addition, we could become subject to litigation relating to the existence of such compounds in our coffee; litigation\nthat could be costly and could divert management attention.\n\n \n\n**Risks\nRelated to our Common Stock**\n\n \n\n**Our\noperating results may fluctuate significantly, which makes our results of operations difficult to predict and could cause our results\nof operations to fall short of expectations.**\n\n \n\nOur\noperating results may fluctuate from quarter to quarter and year to year as a result of a number of factors, many of which are outside\nof our control. These fluctuations could be caused by a number of factors including:\n\n \n\n●fluctuations\nin purchase prices and supply of green coffee;\n\n●fluctuations\nin the selling prices of our products;\n\n●the\nlevel of marketing and pricing competition from existing or new competitors in the coffee\nindustry;\n\n●the\nsuccess of our hedging strategy;\n\n●our\nability to retain existing customers and attract new customers; and\n\n●our\nability to manage inventory and fulfillment operations and maintain gross margins.\n\n \n\nAs\na result of the foregoing, period-to-period comparisons of our operating results may not necessarily be meaningful and those comparisons\nshould not be relied upon as indicators of future performance. Accordingly, our operating results in future quarters may be below market\nexpectations. In this event, the price of our common stock may decline.\n\n \n\n**The\nGordon family has the ability to influence action requiring stockholder approval.**\n\n \n\nMembers\nof the Gordon family, including Andrew Gordon, our President, Chief Executive Officer, Chief Financial Officer and Treasurer, and David\nGordon, our Executive Vice President and Secretary, own, in the aggregate, approximately 23.1% of our outstanding shares of common stock.\nAs a result, the Gordon family is able to influence the actions that require stockholder approval, including:\n\n \n\n●the\nelection of our directors;\n\n●the\namendment of our charter documents; and\n\n●the\napproval of mergers, sales of assets or other corporate transactions or matters submitted\nfor stockholder approval.\n\n \n\nAs\na result, our other stockholders may have reduced influence over matters submitted for stockholder approval. In addition, the Gordon\nfamily’s influence could preclude any unsolicited acquisition of us and consequently materially adversely affect the price of our\ncommon stock.\n\n \n\n**The\nmarket price of our common stock has been volatile over the year and may continue to be volatile.**\n\n \n\nThe\nmarket price and trading volume of our common stock has been volatile over the past year, and it may continue to be volatile. Over the\npast fiscal year, our common stock has traded as low as $2.75 and as high as $9.93 per share. We cannot predict the price at which our\ncommon stock will trade in the future, and the price of our common stock may decline. The price at which our common stock trades may\nfluctuate significantly and may be influenced by many factors, including our financial results, developments generally affecting the\ncoffee industry, general economic, industry and market conditions, the depth and liquidity of the market for our common stock, fluctuations\nin coffee prices, investor perceptions of our business, reports by industry analysts, negative announcements by our customers, competitors\nor suppliers regarding their own performances, and the impact of other “Risk Factors” discussed in this Annual Report.\n\n \n\n17\n\n \n\n \n\n**Provisions\nin our articles of incorporation, bylaws and of Nevada law have anti-takeover effects that could prevent a change in control that could\nbe beneficial to our stockholders, which could depress the market price of shares of our common stock.**\n\n \n\nOur\narticles of incorporation, bylaws and Nevada corporate law contain provisions that could delay, defer or prevent a change in control\nof us or our management that could be beneficial to our stockholders. These provisions could also discourage proxy contests and make\nit more difficult for our stockholders to elect directors and take other corporate actions. These provisions might also discourage a\npotential acquisition proposal or tender offer, even if the acquisition proposal or tender offer is at a price above the then-current\nmarket price for shares of our common stock. These provisions:\n\n \n\n●provide\nthat directors may only be removed upon a vote of at least eighty percent of the shares outstanding;\n\n●establish\nadvance notice requirements for nominating directors and proposing matters to be voted on\nby stockholders at stockholder meetings;\n\n●limit\nthe right of our stockholders to call a special meeting of stockholders;\n\n●authorize\nour board of directors to issue preferred stock and to determine the rights and preferences\nof those shares, which would be senior to our common stock, without prior stockholder approval;\n\n●require\namendments to our articles of incorporation to be approved by the holders of at least eighty\npercent of our outstanding shares of common stock;\n\n●a\nclassified board of directors with three-year staggered terms, which may delay the ability\nof stockholders to change the membership of a majority of our board of directors; and\n\n●provide\na prohibition on stockholder action by written consent, thereby only permitting stockholder\naction to be taken at an annual or special meeting of our stockholders.\n\n \n\nWe\nare also subject to certain anti-takeover provisions under Nevada law. Under Nevada law, a corporation may not, in general, engage in\na business combination with any “interested stockholder” for two (2) years after the date the person first became an interested\nstockholder, unless the combination meets all of the requirements of our articles of incorporation and (i) the purchase of shares by\nthe interested stockholder is approved by our board of directors before that date or (ii) the combination is approved by our board of\ndirectors and, at or after that time, the combination is approved at an annual or special meeting of our stockholders, and not by written\nconsent, by the affirmative vote of the holders of stock representing at least sixty percent (60%) of our outstanding voting power not\nbeneficially owned by the interested stockholder or the affiliates or associates of the interested stockholder."}