Business Context and Reporting Period
This Form 8-K is filed by Coffee Holding Co., Inc. on March 10, 2006, reporting events occurring in mid-March 2006. The filing primarily announces the formation of a new joint venture and references the announcement of first-quarter earnings ended January 31, 2006.
Key Financial Metrics
The filing text does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures. It references a press release (Exhibit 99.1) containing Q1 2006 earnings results, but the numerical data is not included in the body of this report.
Regarding the new joint venture, Coffee Holding Co., Inc. will contribute $250,000 in cash and roasting equipment. The venture operates on a 50/50 profit-sharing basis between the two partners.
Material Changes
- Joint Venture Formation: On March 10, 2006, the company formed "Café La Rica, LLC" with Coffee Bean Trading-Roasting LLC.
- Operational Expansion: The joint venture will engage in roasting, packaging, and selling coffee products from a new location in Miami, Florida.
- Ownership Structure: Coffee Holding and Coffee Bean Trading-Roasting each own 50% of the joint venture.
- Supply Chain Role: Coffee Holding is designated as the exclusive supplier of coffee inventory for the joint venture.
Outlook, Risks, and Contingencies
Management Commentary and Agreements:
- Profit Distribution: Profits are divided evenly within 90 days of the joint venture's fiscal year-end (October 31).
- Service Agreements: Coffee Holding will provide administrative, payroll, and employee benefit services to the joint venture and will be reimbursed via an expense-sharing agreement.
- Trademark Licensing: The joint venture received royalty-free licenses to use the "Café Caribe" trademark (from Coffee Holding) in Florida and the "Café La Rica" trademark (from Coffee Bean Trading-Roasting) in the United States.
Risks and Termination:
- The joint venture may be terminated by mutual agreement, upon a non-cured breach of the operating agreement, in the event of bankruptcy by either party, or if disputes cannot be resolved.
- Upon termination, assets are returned to the contributing party first, with remaining assets distributed proportionally to membership interests.
Investor Verification Checklist
- Review Exhibit 99.1 for the specific Q1 2006 revenue and earnings figures referenced but not detailed in this filing.
- Verify the operational status and capital requirements of the new Miami, Florida roasting facility.
- Confirm the terms of the expense-sharing agreement to understand the reimbursement timeline for administrative services.
- Assess the financial stability of the joint venture partner, Coffee Bean Trading-Roasting LLC, given the shared risk structure.