UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the Quarterly Period Ended March 31, 2017

 

OR

 

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

 

For the Transition Period From _______ To _______

 

Commission File Number: 33-96070-LA

 

THANKSGIVING COFFEE COMPANY, INC.

(Exact name of registrant as specified in its charter)

 

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

 

(707) 964-0118

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

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

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒
		Emerging growth company	☐

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act). Yes ¨ No x

 

On March 31, 2017 the registrant had 1,236,744 shares of Class A common stock, no par value per share, and _______ shares of Class B common stock, par value _______ per share, outstanding.

 

 

 

FORM 10-Q

TABLE OF CONTENTS

 

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Balance Sheets as of March 31, 2017 (unaudited) and December 31, 2016.	2
	Statements of Operations for the three months ended March 31, 2017 and March 31, 2016 (unaudited)	4
	Statements of Cash Flows for the three months ended March 31, 2017 and March 31, 2016 (unaudited)	5
	Notes to Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	15
Item 1A.	Risk Factors	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	15
Item 4.	Submission of Matters to a Vote of Security Holders	15
Item 6.	Exhibits	15
Signatures		16

 

 

PART 1. Financial Information

 

Item 1. Financial Statements

 

The financial statements included herein have been prepared by Thanksgiving Coffee Company, Inc. (the Company) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such SEC rules and regulations. In the opinion of management of the Company, the accompanying statements contain all adjustments necessary to present fairly the financial position of the Company as of March 31, 2017 and December 31, 2016, and its results of operations for the three month periods ended March 31, 2017 and 2016 and its cash flows for the three month periods ended March 31, 2017 and 2016. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and the notes thereto filed as a part of the Company’s annual report on Form 10-K.

 

 

Thanksgiving Coffee Company, Inc.

Balance Sheets

 

		March 31,				December 31,
		2017				2016
		(Unaudited)				See Note 1
Assets
Current assets
Cash		$	94,802			$	149,936
Accounts receivable, net of allowance			225,002				239,738
Inventories			341,044				279,751
Prepaid expenses			75,117				109,974
Total current assets			735,965				779,399
Property and equipment
Property and equipment			1,431,006				1,418,820
Accumulated depreciation			(1,024,095	)			(992,441	)
Total property and equipment			406,911				426,379
Other assets
Deposits and other assets			8,800				12,242
Other intangibles, net of amortization			30,402				29,728
Total other assets			39,202				41,970
Total assets		$	1,182,078			$	1,247,748

 

See accompanying notes to financial statements

 

 

Thanksgiving Coffee Company, Inc.

Balance Sheets

 

		March 31,				December 31,
		2017				2016
		(Unaudited)				See Note 1
Liabilities and shareholders’ equity
Current liabilities
Accounts payable		$	272,234			$	286,852
Accued Liabilities			47,087				67,344
Current portion of long term debt			38,004				38,004
Total current liabilities			357,325				392,200
Long term debt
Long-term debt			120,777				130,297
Less current portion of long term debt			(38,004	)			(38,004	)
Total long term debt			82,773				92,293
Total liabilities			440,098				484,493
Shareholders’ equity
Common stock, no par value, 1,960,000 shares authorized, 1,236,744 shares issued and outstanding			861,816				861,816
Additional paid in capital			24,600				24,600
Accumulated deficit			(144,430	)			(123,161	)
Total shareholders’ equity			741,986				763,255
Total liabilities and shareholders’ equity		$	1,182,084			$	1,247,748

 

See accompanying notes to financial statements

 

 

Thanksgiving Coffee Company, Inc. 

Statements of Operations

Unaudited

 

		For the Three Months Ended
		March 31,
		2017				2016
Income
Net sales		$	819,286			$	866,396
Cost of sales			454,925				533,594
Gross profit			364,361				332,802
Operating expenses
Selling, general and administrative expenses			362,658				358,418
Depreciation and amortization			22,176				20,111
Total operating expenses			384,834				378,529
Operating loss			(20,473	)			(45,727	)
Loss before income taxes			(20,473	)			(45,727	)
Income tax expense			(800	)			(800	)
Net loss		$	(21,273	)		$	(46,527	)
Loss per share (basic)		$	(0.017	)		$	(0.038	)
Loss per share (dilutive)		$	(0.017	)		$	(0.038	)
Weighted average number of shares		$	1,236,744			$	1,236,744

 

See accompanying notes to financial statements

 

 

Thanksgiving Coffee Company, Inc.

Statements of Cash Flows

Unaudited

 

		For the Three Months Ended
		March 31,
		2017				2016
Operating activities
Net loss		$	(21,273	)		$	(46,527	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation and amortization			31,654				29,281
(Increase) decrease in:
Accounts receivable			14,736				2,632
Inventories			(61,293	)			(13,652	)
Prepaid expenses			34,857				31,264
Deposits and other assets			3,442				-
Increase (decrease) in:
Accounts payable			(14,618	)			50,703
Accrued liabilities			(20,257	)			(23,252	)
Net cash provided by (used in) operating activities			(32,752	)			30,449
Investing activities
Purchases of property and equipment			(12,186	)			(44,277	)
Net cash (used in) investing activities			(12,186	)			(44,277	)
Financing activities
(Repayments) issuances of notes payable and capital leases			(10,194	)			30,413
Net cash (used in) financing activities			(10,194	)			30,413
Increase (decrease) in cash			(55,132	)			16,585
Cash at beginning of period			149,936				213,193
Cash at end of period		$	94,804			$	229,778

 

Cash paid for income taxes was $800, separately for each of the three months ending  March 31, 2017 and March 31, 2016.

 

See accompanying notes to financial statements

 

 

Thanksgiving Coffee Company, Inc. 

Notes to Financial Statements 

March 31, 2017 and December 31, 2016

 

Cash paid for income taxes was $800 for each of the three months ending March 31 2017 and 2016.

 

1.

Basis of Presentation

 

The unaudited condensed financial statements in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. We have continued to follow the accounting policies disclosed in the financial statements included in our 2016 Form 10-K filed with the Securities and Exchange Commission (SEC). It is suggested that these statements be read in conjunction with the December 31, 2016 audited financial statements and the accompanying notes on Form 10-K, as filed with the SEC.

 

The interim financial information in this Form 10-Q reflects all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of our results of operations for the interim periods. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of results to be expected for the full year.

 

Concentration of Risk

 

In the first quarter of fiscal 2017, one customer accounted for 10.9% of the Company’s revenue. The account has purchased from the Company since 2009. The account has serving locations and is a distributor of the Company’s product. A loss of this account or any other large account, or a significant reduction in sales to any of the Company’s principal customers, could have an adverse impact on the Company.

 

Income Taxes

 

The Company accounts for income taxes under the asset and liability method as prescribed by ASC 740, Accounting for Income Taxes. As such, deferred income tax assets and liabilities are recognized for the future tax consequences of the differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basses. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

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

 

Use of Estimates

 

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

 

 

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

March 31, 2017 and December 31, 2016

 

2.

Accounts Receivable

 

Accounts receivable consist of the following:

 

		3/31/2017				12/31/2016
Accounts receivable		$	230,617			$	246,616
Less: allowance for doubtful accounts			(5,615	)			(6,878	)
Net accounts receivable		$	225,002			$	239,738

 

The Company utilizes a percentage method to establish the allowance for doubtful accounts. The estimated allowance ranges from 1% to 10% of outstanding receivables based on factors pertaining to the credit risk of specific customers, historical trends and other information. Delinquent accounts are written off when it is determined that amounts are uncollectible. Bad debt expense (recovery) for the three months ended March 31, 2017 and 2016 was $(1263) and (233) respectively.

 

3.

Inventories

 

Inventories consist of the following:

 

		3/31/2017				12/31/2016
Coffee
Unroasted		$	226,222			$	168,003
Roasted			51,661				55,066
Tea			1,996				1,690
Packaging, supplies and other merchandise held for sale			61,165				54,992
Total inventories		$	341,044			$	279,751

 

4.

Property and Equipment

 

Property and equipment consist of the following:

 

		3/31/2017				12/31/2016
Equipment		$	519,125			$	506,939
Furniture and fixtures			138,715				138,715
Leasehold improvements			352,237				352,237
Transportation equipment			146,133				146,133
Pacakge design			41,000				41,000
Capitalized website development costs			19,000				19,000
Property held under capital leases			214,796				214,796
Total property and equipment			1,431,006				1,418,820
Accumulated depreciation			(1,024,095	)			(992,441	)
Property and equipment, net		$	406,911			$	426,379

 

Depreciation expense for the three months ended March 31, 2017 and 2016 was $22,176 and $20,112 respectively.

 

 

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

March 31, 2017 and December 31, 2016

 

5.

Long Term Debt (continued)

 

Capital Lease Obligations		3/31/2017				12/31/2016
Bank of the West payable in monthly installments of $787.03, including interest at 9.234% collateralized by equipment, final payment due on January 1, 2021		$	29,839			$	31,486
Bank of the West payable in monthly installments of $1,465, including interest at 9.227%, colateralized by equipment, final payment due on January 1, 2020			43,685				47,020
Hansel Ford, payable in monthly installments of $385, including interest at .90%, collateralized by equipment, final payment due on March 14, 2019.			9,157				10,290
Hansel Ford, payable in monthly installments of $385, including interest at .90%, collateralized by equipment, final payment due on March 14, 2019.			9,157				10,290
Hansel Ford, payable in monthly installments of $806.38, including interest at 1.939%, collateralized by equipment, final payment due on April 10, 2020.			28,939				31,211
		$	120,777			$	130,297
Less current portion			(38,004	)			(38,004	)
Long term portion of notes payable		$	82,773			$	92,293

 

Interest paid for the three months ended March 31, 2017 and 2016 was $1,966 and $2,277, respectively.

 

 

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

March 31, 2017 and December 31, 2016

 

As of March 31, 2017, maturities of notes payable and capital lease obligations for each of the next five years and in the aggregate were as follows:

 

Years Ending March 31,
2017		$	32,194
2018			40,534
2019			35,855
2020			12,194
		$	120,777

  

6.

Income Taxes

 

Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Company’s deferred tax assets consist of the benefit from net operating loss (NOL) carryforwards and temporary differences. The net operating loss carryforwards expire in various years through 2030. The Company’s deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the net operation loss carryforwards. Net operating loss carryforwards may be further limited by a change in company ownership and other provisions of the tax laws.

 

7.

Operating Leases

 

The Company leases some office equipment under non-cancelable operating leases with terms ranging from three to five years.

 

As of March 31, 2010, minimum annual lease payments due under these agreements for each of the next five years and in the aggregate were:

 

Years Ending March 31,
2017			8,135
2018			7,154
2019			1,754
2020			-
2021			-
		$	17,043

 

Total operating lease payments for the three months ended March 31, 2017 and 2016 was $2,278 and $1,580 respectively.

 

 

Thanksgiving Coffee Company, Inc. 

Notes to Financial Statements (continued) 

March 31, 2017 and December 31, 2016

 

8.

Long Term Leases

 

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

 

As of March 31, 2017, minimum future rental payments under non-cancelable facilities operating leases for each of the next five years and in the aggregate are as follows:

 

Years ending March 31,
2017		$	103,200
2018			103,200
2019			103,200
2020			103,200
2021			103,200
Thereafter			309,600
		$	825,600

 

9.

Related Party Transactions

 

As of March 31, 2017, the Company has green contract with three cooperatives in Nicaragua, Ethical trading and Investment Company of Nicaragua (ETICO) is the importer for the transaction. Nicolas Hoskyns, a director of the company, is the managing director of ETICO. At March 31, 2017, amounts owed to ETICO totaled $37,168. All the amounts owed are current and were paid accordance with our standard vendor payment policies. The loss of the ETICO relationship could have an adverse effect on the Company’s business in the short term. Management believes other options are available that could be utilized in the event the ETICO relationship was terminated..

 

 

ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

FORWARD LOOKING STATEMENTS

 

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. In some cases, forward-looking statements may be identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may,” 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 Thanksgiving Coffee Company, Inc. (“the Company”). Any forward-looking statements should be considered in light of various risks and uncertainties that could cause results to differ materially from expectations, estimates or forecasts expressed. These 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 beans, continuing competition within the Company’s businesses, 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 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 and tea, weather and other risks identified herein. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this Quarterly Report on Form 10-Q. The Company’s forward-looking statements should also be considered in light of its reviewed financial statements, related notes and the other financial information appearing elsewhere in this report and in its other filings with the Securities and Exchange Commission. As a result of these risks and uncertainties, the Company’s actual results may differ materially and adversely from those expressed in any forward-looking statements. The Company assumes no obligation to update any forward-looking statements.

 

SUMMARY

 

Sales of the Company have eroded over the last five years primarily due to declines in the direct distribution sales method of the Company’s business (i.e., delivery by company truck). Increased competition, customer attrition and customers roasting green beans for their own use have all had a negative impact on the Company’s sales. The Company has tried a number of strategies that have not proven effective in abating these declines. The Company has changed its method of distribution to rely less on direct distribution (with only two routes) and instead uses independent distributors or shipping direct (via UPS or other common carrier). In addition the company is trying to focus increasing our on-line sales with the main focus of promoting our award as “Roaster of the Year for 2017”, from Roast magazine. We expect a upward trend with the award announcement. The effect of these changes on the Company’s sales has been limited but has reduced distribution expenses. Because of the limited impact of these changes, as well as the increase in cost of sales and other factors noted herein, there can be no assurances that the Company will be profitable in any future period, and, as a consequence, the Company is considering various strategic alternatives.

 

The Company pays substantially more for its green beans than the market price, because of quality, organic nature of many of its lines and the fact that it uses fair-traded coffees. Green bean costs have continued to rise and have placed pressure on margins. If green bean costs do not decline or continue to rise, whether as a consequence of inclement weather in a major producing area or any other event that affects green bean pricing, and the Company cannot offset costs by raising prices, it would have a negative impact on the Company and its margins.

 

 

Results of Operations

 

Three months ended March 31, 2017 versus March 31, 2016

 

		Increase (Decrease)				Percent Change
Net Sales		$	(47,110	)			(5.4	)%
Cost of Sales			(78,669	)			(14.7	)%
Gross Margin %			31,559				9.5	%
Selling, G&A Expense			4,240				1.2	%
Depreciation And Amortization			2,065				10.3	%
Interest Expense			1,134				(100	)%
Net Income (Loss)			25,254				(54	)%

 

Net sales for the three months ended March 31, 2017 were $819,283, down 5.41%, or under $47,110 when compared with net sales of $866,397 for the same period in fiscal 2016

 

Distribution revenues (e.g., revenues generated on the Company’s own truck distribution) were down $16,814 or 5% for the three months ended March 31, 2017, when compared with distribution sales for the same period in 2016. The decline appears to be a result of slower volume at existing customers as no customers have been lost. It is also a result of lower sales to a grocery chain in California that eliminates the Company’s products when they remodel existing stores.

 

National revenues (e.g., revenues not derived by mail order and direct truck distribution) were down $22,238, or 5% for the three months ended March 31, 2017 when compared to national sales for the same period in 2016.

 

Mail order revenues (e.g., revenues generated from product sold directly to the consumer either through print media or the Internet) decreased $1,000, or 1% for the three months ended March 31, 2017 when compared to mail order sales for the same period in 2016. The decrease was attributable to a decline in the slowdown in the Company’s online store volume.

 

Cost of sales for the three months ended March 31, 2017 were $454,929, down 15%, or under $78,669 when compared with the cost of sales of $553,594 for the same period in 2016.

 

Gross margin percentage (gross profit as a percentage of net sales) for the three months ended March 31, 2017 was, up 9.49% percentage points when compared with gross margin of 9.32% for the same period in 2016. Lower costs in green bean costs in the three months ended 2017 resulted in increase in gross margins.

 

Selling, general and administrative expenses were $362,658 for the three months ended March 31, 2017, a increase of 1.2%or over $4,2409 when compared with the selling, general and administrative expenses of $358,418 for the same period in 2016. The increase was a result of a $5,000 in health insurance expense, a $4,000 increase in data in computer repairs..

 

Depreciation and amortization expenses for the three months ended March 31, 2017 were $22,176, a 10.3% increase, or nearly $2,065 when compared to depreciation expense of $20,112 for the same period in 2016.

 

Interest expense for the three months ended March 31, 2017 was (0), a 100% decrease or over compared with interest expense of (1733) for the same period in 2016.

 

As a result of the foregoing factors, the Company had a net loss of $21,273 for the three months ended March 31, 2017, compared to a loss of $46,527 for the same period in 2016.

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of March 31, 2017, the Company had working capital of $378,640 versus working capital of $387,199 as of December 31, 2016. The decrease in working capital is due primarily to the decrease in cash, accounts receivable, inventory and prepaid expenses.

 

Net cash used in operating activities was ($32,752) for the three months ended March 31, 2017 compared to net cash provided by operating activities of $30,449 during the same period in 2016. The decrease in net cash provided by operating activities in the three months of 2017 was the result of increases in inventory in the amount of $47,641 and decreases in accounts payable in the amount of $65,321.

 

Cash used in investing activities was( $12,186) for the three months ended March 31, 2017 compared to ($44,277) used in the same period in 2016. Capital additions for the first three months of 2017 were $12,186 for new fixtures for addition of two new Safeway stores.

 

Net cash used in financing activities for the three months ended March 31, 2017 was ($10,194) compared to net cash used in financing activities of $30,413 during the same period in 2016. The cash used by financing activities was a result of paying existing debt.

 

At March 31, 2017, the Company had total borrowings of $120,777.

 

For long-term debt, see Note 7 of the Notes to Financial Statements. For operating leases, see Note 9 of the Notes to Financial Statements. For real estate leases, see Note 10 and Note 11 of the Notes to Financial Statements.

 

		Payments Due By Period
Contractual Obligations		Total				Less than One year				1-3 years				4-5 years				After 5 years
Debt		$	120,777			$	38,004			$	70,579			$	12,194			$	-
Operating Leases			17,043				8,135				7,154				1,754				-
Real Estate Leases			825,600				103,200				206,400				206,400				309,600
Total Cash Obligations		$	963,420			$	149,339			$	276,979			$	220,348			$	309,600

 

The Company is dependent on successfully executing its business plan to achieve profitable operations, obtaining additional sources of borrowings (including normal trade credit) and securing favorable financing arrangements (including lease financing) to finance its working capital needs. There can be no assurance that the Company will be successful in this regard. If the Company is not able to meet its credit obligations the stability of the Company’s business would be in question.

 

RELATED PARTY TRANSACTIONS

 

From time to time, the Company enters into various transactions with its majority shareholders, Paul and Joan Katzeff. See note “11 — Related Party Transactions” in the Notes to the Financial Statements.

 

SEASONALITY AND OTHER FACTORS AFFECTING PERFORMANCE

 

The Company’s business is seasonal in nature. The seasonal availability of green bean coffee in the first two quarters of the year and increased sales in the last quarter historically creates a high use of cash and a build up in inventories in the first two quarters, with a corresponding decrease in inventory and increase in cash in the last quarter. Because of the seasonality of the Company’s business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year. Furthermore, past seasonal patterns are not necessarily indicative of future results.

 

 

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 preceding that might result in a claim for such indemnification.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company’s stock is generally illiquid and there have been few trades in recent years. There have been three trades in the Company’s Common Stock since 1999. In June 2004, 750 shares were traded at $4.50 per share. In December 2005, 400 shares were traded at $2.00 per share.

 

ITEM 4. CONTROLS AND PROCEDURES

 

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 March 31, 2017. Based on that evaluation, the Company’s management, including the Chief Executive Officer, the President r concluded that the Company’s disclosure controls and procedures were effective. There have been no changes in the Company’s Disclosure controls over financial reporting during the first quarter of 2017 that have materially affected or are reasonably likely to affect the Company’s internal controls over financial reporting.

 

 

Part II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

- None -

 

ITEM 1A. RISK Factors

 

We have concerns regarding the current economic situation. The United States and the global economy is experiencing severe instability in the commercial and investment banking systems which is likely to continue to have far-reaching effects on the economic activity in the country for and indeterminable period. The long-term impact on the United States economy and the Company’s operating activities and ability to raise capital cannot be predicted at this time, but may be substantial.

 

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 we have obtained all material licenses that are required for the operation of our business. We are not aware of any environmental regulations that have or that we believe will have a material adverse effect on our operations.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

- None -

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

- None -

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

- None -

 

ITEM 5. OTHER INFORMATION

 

- None -

 

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

 

a.

Exhibits

 

	31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
	31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (President)
	31.3	Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)
	32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
	32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (President).
	32.3	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).

 

b.

No reports filed on Form 8-K

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, The Registrant has duly caused this Quarterly Report to be signed on it behalf by the undersigned, thereunto duly authorized.

 

THANKSGIVING COFFEE COMPANY, INC.

 

Name		Title		Date
/s/ Paul Katzeff		Chief Executive Officer		May 19, 2017
Paul Katzeff
/s/ Joan Katzeff		President		May 19, 2017
Joan Katzeff

 

 

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