Coffee Holding Co Inc 10-Q for FY2025 Q2
Coffee Holding Co Inc (JVA)
About this 10-Q
Coffee Holding Co Inc filed this 10-Q on June 13, 2025, covering the quarter ended April 30, 2025 (FY2025 Q2).
Headline figures
Quarter ended April 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $23.32M
- up 22.8% from $19M a year earlier
- Net income
- $644.06K
- compared with a net loss of $21.84K a year earlier
- Diluted EPS
- $0.11
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
FOR
THE QUARTERLY PERIOD ENDED
OR
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION
FILE NUMBER:
(Exact Name of Registrant as Specified in Its Charter)
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
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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)
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Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
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 | ☐ | |
| ☒ | 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. ☐
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by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
shares of common stock, par value $ per share, are outstanding at June 11, 2025.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| April 30, 2025 | October 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net
of allowances for credit losses of $ | ||||||||
| Inventories | ||||||||
| Due from broker | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Prepaid and refundable income taxes | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Building, machinery, and equipment, net | ||||||||
| Customer
list and relationships, net of accumulated amortization of $ | ||||||||
| Trademarks and tradenames | ||||||||
| Equity method investments | ||||||||
| Right-of-use asset | ||||||||
| Deferred income tax assets, net | ||||||||
| Deposits and other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to broker | ||||||||
| Lease liabilities - current portion | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Line of credit | ||||||||
| Lease liabilities – long term | ||||||||
| Deferred compensation payable | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies (Note 9) | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred stock, par value $ per share; shares authorized; issued | ||||||||
| Common stock, par value $ per share; shares authorized, shares issued for April 30, 2025 and October 31, 2024; shares outstanding for April 30, 2025 and October 31, 2024 | ||||||||
| Additional paid in capital | ||||||||
| Retained earnings | ||||||||
| Less: common stock held in treasury, at cost; shares for April 30, 2025 and October 31, 2024 | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-1 |
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Six months ended April 30, | Three months ended April 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| NET SALES | $ | $ | $ | $ | ||||||||||||
| COST OF SALES | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling and administrative | ||||||||||||||||
| Officers’ salaries | ||||||||||||||||
| TOTAL | ||||||||||||||||
| INCOME FROM OPERATIONS | ( | ) | ||||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain(loss) from equity method investments | ||||||||||||||||
| Other income | ||||||||||||||||
| TOTAL | ( | ) | ( | ) | ( | ) | ( | |||||||||
| INCOME (LOSS) BEFORE EXPENSE FOR INCOME TAXES | ( | ) | ||||||||||||||
| Expense (benefit) for income taxes | ( | ) | ||||||||||||||
| NET INCOME (LOSS) | $ | $ | $ | $ | ( | ) | ||||||||||
| Basic and diluted earnings per share | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-2 |
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2024, AND 2025
(UNAUDITED)
| Common Stock | Treasury Stock | Additional Paid-in | Retained | Non-controlling | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Interest | Total | |||||||||||||||||||||||||
| Balance October 31, 2023 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||
| Balance January 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, April 30, 2024 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Balance October 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||
| Balance, January 31, 2025 | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||||
| Balance | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||||
| Net income | — | — | $ | $ | ||||||||||||||||||||||||||||
| Net income (loss) | — | — | $ | $ | ||||||||||||||||||||||||||||
| Balance, April 30, 2025 | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||||
| Balance | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| 2025 | 2024 | |||||||
| Six months ended April 30, | ||||||||
| 2025 | 2024 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Unrealized gain on commodities | ( | ) | ( | ) | ||||
| Amortization of right-of-use asset | ||||||||
| Deferred income taxes | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Prepaid and refundable income taxes | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Deposits and other assets | ( | ) | ( | ) | ||||
| Deferred compensation payable | ||||||||
| Accounts payable, accrued expenses | ( | ) | ( | ) | ||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of Second Empire | ( | ) | ||||||
| Cash paid for leasehold improvements | ( | ) | ||||||
| Purchases of machinery and equipment | ( | ) | ( | ) | ||||
| Proceeds from sale of investment | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from bank line of credit | ||||||||
| Principal payments on note payable | ( | ) | ||||||
| Payments on bank line of credit | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Initial recognition of operating lease right-of-use asset | $ | $ | ||||||
| Initial recognition of operating lease liabilities | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
COFFEE HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Business Activities
Coffee Holding Co., Inc. (the “Company”) conducts wholesale coffee operations, including manufacturing, roasting, packaging, marketing and distributing roasted and blended coffees for private labeled accounts and its own brands, and it sells green coffee. The Company also manufactures and sells coffee roasters. The Company’s core product, coffee, can be summarized and divided into three product categories (“product lines”) as follows:
Wholesale Green Coffee: unroasted raw beans imported from around the world and sold to large and small roasters and coffee shop operators;
Private Label Coffee: coffee roasted, blended, packaged and sold under the specifications and names of others, including supermarkets that want to have their own brand name on coffee to compete with national brands; and,
Branded Coffee: coffee roasted and blended to the Company’s own specifications and packaged and sold under the Company’s eight proprietary and licensed brand names in different segments of the market.
The Company’s private label and branded coffee sales are primarily to customers that are located throughout the United States with limited sales in Canada and certain countries in Asia. Such customers include supermarkets, wholesalers, and individually-owned and multi-unit retailers. The Company’s unprocessed green coffee, which includes over 90 specialty coffee offerings, is sold primarily to specialty gourmet roasters and to coffee shop operators in the United States with limited sales in Australia, Canada, England and China.
The Company’s wholesale green, private label, and branded coffee product categories generate revenues and cost of sales individually but incur selling, general and administrative expenses in the aggregate. There are no individual product managers and discrete financial information is not available for any of the product lines. The Company’s product portfolio is used in one business and it operates and competes in one business activity and economic environment. In addition, the three product lines share customers, manufacturing resources, sales channels, and marketing support. Thus, the Company considers the three product lines to be one single reporting segment.
Going Concern and Liquidity
The
Company’s line of credit will be due June 28, 2026 (see Note 6). The agreement requires the Company to maintain compliance with
certain financial covenants computed on a quarterly and annual basis. As of April 30, 2025, the Company is in compliance with those financial
covenants. The Company has net income for the six months ended April 30, 2025 of $
| F-5 |
COFFEE HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 2 – Basis of Presentation and Significant Accounting Policy
The Company’s fiscal year ends on October 31 of each calendar year. The accompanying interim condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as its annual consolidated financial statements for the fiscal year ended October 31, 2024. In the opinion of the Company’s management, these interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of its financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. The October 31, 2024 year-end condensed consolidated balance sheet data in this document was derived from audited consolidated financial statements. These condensed consolidated financial statements and notes included in this quarterly report on Form 10-Q does not include all disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”) and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended October 31, 2024 and notes thereto included in the Company’s fiscal 2024 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on January 31, 2025 (the “2024 10-K”). The results of operations and cash flows for the interim periods included in these condensed consolidated financial statements are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.
The condensed consolidated financial statements include the accounts of the Company, the Company’s subsidiaries, Organic Products Trading Company, LLC (“OPTCO”), Sonofresco, LLC (“SONO”), Comfort Foods, Inc, and Second Empire, LLC (“Second Empire”). All significant inter-company balances and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and comply with SEC reporting requirements.
Significant Accounting Policies
The significant accounting policies used in the preparation of these condensed consolidated financial statements are disclosed in the Company’s 2024 10-K, and there have been no changes to the Company’s significant accounting policies during the six months ended April 30, 2025.
Revenue Recognition
The Company recognizes revenue in accordance with the five-step model as prescribed by the Financial Accounting Standards Board (“FASB”) Accounting Codification (“ASC”) Topic 606 (“ASC 606”) in which the Company evaluates the transfer of promised goods or services and recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which the Company expects to be entitled to receive in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The following table presents revenues by product line for the six and three months ended April 30, 2025 and 2024:
Schedule of Revenue
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Six Months Ended April 30, | Three Months Ended April 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Green | $ | $ | $ | $ | ||||||||||||
| Packaged | ||||||||||||||||
| Totals | $ | $ | $ | $ | ||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| F-6 |
COFFEE HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Recent Accounting Pronouncements – Adopted
The Company follows the FASB Accounting Standard Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326).” This guidance requires entities to use a current expected credit loss impairment model rather than incurred losses. The Company considers factors such as credit quality, age of balances, historical experience and current and future economic conditions that may affect the Company’s expectation of collectability in determining the allowance for credit losses. The standard became effective for the Company on November 1, 2023. The adoption of this new guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting – Improving Reportable Segment Disclosures (Topic 280).” The standard is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The standard requires disclosure to include significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment’s profit or loss used by the CODM when deciding how to allocate resources. The standard also requires all annual disclosures currently required by ASC Topic 280 to be included in interim periods. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, and requires retrospective application to all prior periods presented in the financial statements. The adoption of this new guidance did not have a material impact on the Company’s consolidated financial statements, however; it did result in enhanced disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of these standards will have on it financial statements.
Recent Accounting Pronouncements – Not Yet Adopted
In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements – Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This standard affects a wide variety of Topics in the Codification. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. Early adoption is prohibited. The Company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures,” a final standard on improvements to income tax disclosures, The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted and should be applied prospectively. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
Note 3 – Business Combination
On
November 6, 2024, the Company (through its wholly-owned subsidiary, Second Empire) purchased the remaining assets of Empire Coffee Company
for $
The
Company has accounted for the Second Empire Acquisition as a business combination using the acquisition method of accounting, whereby
the total purchase price was allocated to the acquired identifiable net assets purchased in the Second Empire Acquisition based on assessments
of their respective fair values. The provisional fair value estimates of the assets acquired are subject to subsequent adjustments as
additional information is obtained during the applicable measurement period. The assets purchased consisted of equipment, accounts receivable
and inventories. The Company has determined that no portion of the purchase price is allocated to intangible assets as there were no
acquired intangibles that are considered identifiable under ASC 805. In addition, the Company determined that the acquired equipment
had no value as it was originally purchased in the mid-1990s and has been fully depreciated for a few years. Based on a fair value assessment,
all value has been attributed to tangible assets. Second Empire will operate as a
Schedule of Business Combination
| Accounts Receivable | $ | |||
| Inventory | ||||
| Equipment | ||||
| Total purchase price | $ |
The
acquired business contributed revenues of $
In
connection with this transaction, the Company entered into a
Note 4 - Inventories
Inventories at April 30, 2025 and October 31, 2024 consisted of the following:
Schedule of Inventories
| April 30, 2025 | October 31, 2024 | |||||||
| Packed coffee | $ | $ | ||||||
| Green coffee | ||||||||
| Roasters parts | ||||||||
| Packaging supplies | ||||||||
| Totals | $ | $ | ||||||
| Inventories | $ | $ | ||||||
| F-7 |
COFFEE HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 5 - Commodities Held by Broker
The Company has used, and intends to continue to use in a limited capacity, short term coffee futures and options contracts primarily for the purpose of partially hedging and minimizing the effects of changing green coffee prices and to reduce cost of sales.
The commodities held by broker represent the market value of the Company’s trading account, which consists of options and futures contracts for coffee held with a brokerage firm. The Company uses options and futures contracts, which are not designated or qualifying as hedging instruments, to partially hedge the effects of fluctuations in the price of green coffee beans. Options and futures contracts are level 1 investments recognized at fair value in the condensed consolidated financial statements with current recognition of gains and losses on such positions. The Company’s accounting for options and futures contracts may impact earnings volatility in any particular period. The Company records all open contract positions on the condensed consolidated balance sheets at fair value in the due from and due to broker line items and typically do not offset these assets and liabilities.
The Company classifies its options and future contracts as trading securities and accordingly, realized and unrealized holding gains and losses are included in the condensed consolidated statements of operations as a component of cost of sales.
The Company recorded realized and unrealized gains and losses respectively, on these contracts as follows:
Schedule of Realized and Unrealized Gains and Losses on Contracts
| 2025 | 2024 | |||||||
| Three Months Ended April 30, | ||||||||
| 2025 | 2024 | |||||||
| Gross realized gains | $ | |||||||
| Gross realized losses | ( | ) | ( | ) | ||||
| Unrealized (losses) gains | ( | ) | ||||||
| Total | ( | ) | $ | |||||
| 2025 | 2024 | |||||||
| Six Months Ended April 30, | ||||||||
| 2025 | 2024 | |||||||
| Gross realized gains | $ | |||||||
| Gross realized (losses) gains | $ | |||||||
| Gross realized losses | ( | ) | ( | ) | ||||
| Unrealized gains | ( | ) | ||||||
| Total | $ | |||||||
Note 6 - Line of Credit
On April 25, 2017, the Company and OPTCO (together with the Company, collectively referred to herein as the “Borrowers”) entered into an Amended and Restated Loan and Security Agreement (the “A&R Loan Agreement”) and Amended and Restated Loan Facility (the “A&R Loan Facility”) with Sterling National Bank (“Sterling”) (later acquired by Webster, which consolidated (i) the financing agreement between the Company and Sterling, dated February 17, 2009, as modified, and (ii) the financing agreement between the Company, as guarantor, OPTCO and Sterling, dated March 10, 2015, amongst other things.
On
March 17, 2022, the Company reached an agreement for a new loan modification agreement and credit facility which extended the maturity
date to
On
June 28, 2022, the Company reached an agreement for a new loan modification agreement and credit facility with Webster. The terms of
the new agreement, among other things: (i) provided for a new maturity date of
| F-8 |
COFFEE HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company is required to maintain certain financial covenants with respect to the A&R Loan Agreement. The Company was not in compliance with such requirements as of October 31, 2023. The Company received a waiver from the lender on May 24, 2024 for all past defaults. The A&R Loan Agreement was also modified on March 15, 2023 to, among other things: (i) provide for a requirement for subordination agreements, if necessary, (ii) change the terms of transactions with affiliates from a dollar limitation to allowable in the ordinary course of business, and (iii) establish a new covenant for a fixed charge coverage ratio.
On
June 27, 2024, the Borrowers entered into the Tenth Loan Modification Agreement with Webster which amended the A&R Loan Agreement
to, among other things: (i) provide for a new loan maturity date of
On
April 17, 2025, the Borrowers entered into the Eleventh Loan Modification Agreement with Webster which, among other things, amended the A&R Loan Agreement
to provide for a new loan maturity date of
Each
of the A&R Loan Facility and A&R Loan Agreement contains covenants, subject to certain exceptions, that place annual restrictions
on the Borrowers’ operations, including covenants relating to debt restrictions, capital expenditures, indebtedness, minimum deposit
restrictions, tangible net worth, net profit, leverage, employee loan restrictions, dividend and repurchase restrictions (common stock
and preferred stock), and restrictions on intercompany transactions. The outstanding balance on the Company’s line of credit was
$
Note 7 – Income Taxes
The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed for net operating loss carryforwards and temporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision or benefit is the tax incurred for the period plus or minus the change during the period in deferred tax assets and liabilities.
As
of April 30, 2025 and October 31, 2024, the Company did
The Company files a U.S. federal income tax return and California, Colorado, Connecticut, Florida, Idaho, Illinois, Kansas, Louisiana, Massachusetts, Michigan, Montana, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, and Virginia state tax returns.
For the three months ended April
30, 2025 and 2024, the Company recorded income tax benefit (expense) of ($
The Company presents “basic” and “diluted” earnings per common share pursuant to the provisions included in ASC Topic 260, “Earnings (loss) per Share,” and certain other financial accounting pronouncements. Basic earnings per common share is computed by dividing net income by the sum of the weighted-average number of common shares outstanding. Diluted earnings per common share is computed by dividing the net income by the weighted-average number of common shares outstanding plus the dilutive effect of common shares issuable upon exercise of potential sources of dilution.
The weighted average common shares outstanding used in the computation of basic and diluted earnings per share were for the three- and six-months ending April 30, 2025, and 2024. The Company has options outstanding which have not been included in the calculation of diluted earnings per share.
| F-9 |
COFFEE HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 9 - Commitments and Contingencies
Legal Proceedings
The Company and its subsidiaries are not involved in any pending proceedings other than ordinary routine litigation incidental to their business. Management believes none of these proceedings, if determined adversely, would have a material effect on the business or financial condition of the Company or its subsidiaries.
Note 10 – Leases
The following summarizes the Company’s operating leases as of April 30, 2025 and October 31, 2024:
Schedule of Operating Leases
| Assets | April 30, 2025 | October 31, 2024 | ||||||
| Right-of-use operating lease assets | $ | $ | ||||||
| Total lease assets | $ | $ | ||||||
| Liabilities | April 30, 2025 | October 31, 2024 | ||||||
| Current lease liability | $ | $ | ||||||
| Non-current lease liability | $ | |||||||
| Total lease liability | $ | $ | ||||||
The
amortization of the right-of-use assets for the three months ended April 30, 2025 and 2024 was $
Variable
lease payments were $
Operating
lease costs were $
The weighted-average remaining lease term and the weighted-average discount rate of the Company’s leases were as follows:
| Weighted average remaining lease term (in years) | ||||
| Weighted average discount rate | % |
Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows:
Schedule of Maturity Lease Liability
| For the Years Ending October 31,: | ||||
| Remainder of fiscal 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of operating lease liabilities | $ | |||
| F-10 |
COFFEE HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In
May 2024, the Company modified its existing lease agreement pertaining to a portion of its office facility. The Company wrote off $
In
November 2024, the Company entered into a new lease in connection with the Second Empire Acquisition. As a result, the Company recognized
a right-of-use asset and lease liability of $
Note 11 – Related Party Transactions
In
January 2005, the Company established the “Coffee Holding Co., Inc. Non-Qualified Deferred Compensation Plan.” Currently,
there is only one participant in the plan: the Company’s Chief Executive Officer. Within the plan guidelines, this employee is
deferring a portion of his current salary and bonus. The assets are held in a separate trust. The deferred compensation payable represents
the liability due to the Chief Executive Officer of the Company. The assets were $
Note 12 - Stockholders’ Equity
Treasury Stock
The Company utilizes the cost method of accounting for treasury stock. The cost of reissued shares is determined under the last-in, first-out method. The Company did not purchase any shares during the three and six months ended April 30, 2025 and the year ended October 31, 2024.
Stock Options
The Company has an incentive stock plan, the 2013 Equity Compensation Plan (the “2013 Plan”), and has granted stock options for an aggregate of shares to employees, officers and non-employee directors from the 2013 Plan with an exercise price of $. Options granted under the 2013 Plan may be incentive stock options or nonqualified stock options, as determined by the administrator at the time of grant. options were granted, forfeited or expired during the three and six months ended April 30, 2025. options were granted or expired during the year ended October 31, 2024. As of April 30, 2025, and October 31, 2024, options were exercisable.
The Company recorded stock-based compensation expense for the three and six months ended April 30, 2025 and 2024, as all stock option awards were fully vested as of the beginning of the reporting period.
Note 13 – Segment Information
ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.
The
Company’s chief operating decision maker (“CODM”) is Andrew Gordon, President, Chief Executive Officer, Chief Financial
Officer, and Director. The Company has
The coffee segment derives revenue from the sale of wholesale green coffee, private label coffee and branded coffee. Revenue for these product lines is recognized upon shipment to the customer. The CODM assesses performance for the coffee segment and decides how to allocate resources based on operating income (loss) that also is reported on statement of operations as consolidated income (loss) from operations. The measure of segment assets is reported on the condensed consolidated balance sheet as total consolidated assets.
When evaluating the Company’s performance and making key decisions regarding resource allocation the CODM reviews the following key metrics:
Schedule of Segment Information
| April 30, 2025 | April 30, 2024 | |||||||
| Statement
of operations For the three months ended | ||||||||
| April 30, 2025 | April 30, 2024 | |||||||
| Net sales | $ | $ | ||||||
| Cost of Goods Sold (1) | ( | ) | ( | ) | ||||
| Gross Profit | ||||||||
| Trading Profit (Loss) (1) | ( | ) | ||||||
| Overhead (2) | ( | ) | ( | ) | ||||
| Operating income (loss) | $ | $ | ( | ) | ||||
| April 30, 2025 | April 30, 2024 | |||||||
| Statement
of operations For the six months ended | ||||||||
| April 30, 2025 | April 30, 2024 | |||||||
| Net sales | $ | $ | ||||||
| Cost of Goods Sold (1) | ( | ) | ( | ) | ||||
| Gross Profit | ||||||||
| Trading Profit (1) | ||||||||
| Overhead (2) | ( | ) | ( | ) | ||||
| Operating income | $ | $ | ||||||
| (1) | ||
| (2) |
The CODM uses operating income (loss) to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the coffee segment or into other parts of the entity such as for acquisitions or to pay dividends. Intra-entity sales and cash transfers are eliminated in operating income (loss) used by the CODM.
Note 14 - Subsequent Events
The Company has evaluated all subsequent events through the date on which the condensed consolidated financial statements were available for use and has determined that no events need to be reported.
| F-11 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note on Forward-Looking Statements
Some of the matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and elsewhere in this quarterly report include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements upon information available to management as of the date of this Form 10-Q and management’s expectations and projections about future events, including, among other things:
| ● | our dependency on a single commodity could affect our revenues and profitability; | |
| ● | our success in expanding our market presence in new geographic regions; | |
| ● | the effectiveness of our hedging policy may impact our profitability; | |
| ● | our success in implementing our business strategy or introducing new products; | |
| ● | our ability to attract and retain customers; | |
| ● | our ability to obtain additional financing; | |
| ● | our ability to comply with the restrictive covenants we are subject to under our current financing; | |
| ● | the effects of competition from other coffee manufacturers and other beverage alternatives; | |
| ● | the impact to the operations of our Colorado facility; | |
| ● | general economic conditions and conditions which affect the market for coffee; | |
| ● | our expectations regarding, and the stability of, our supply chain, including potential shortages or interruptions in the supply or delivery of green coffee; | |
| ● | the macro global economic environment; | |
| ● | the imposition of tariffs; | |
| ● | our ability to maintain and develop our brand recognition; | |
| ● | the impact of rapid or persistent fluctuations in the price of coffee beans; | |
| ● | fluctuations in the supply of coffee beans; | |
| ● | the volatility of our common stock; and | |
| ● | other risks which we identify in future filings with the Securities and Exchange Commission (the “SEC”). |
In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate” and similar expressions (or the negative of such expressions). Any or all of our forward-looking statements in this quarterly report and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. In addition, we undertake no responsibility to update any forward-looking statement to reflect events or circumstances that occur after the date of this quarterly report.
Overview
We are an integrated wholesale coffee roaster and dealer primarily in the United States and one of the few coffee companies that offers a broad array of coffee products across the entire spectrum of consumer tastes, preferences and price points. As a result, we believe that we are well-positioned to increase our profitability and endure potential coffee price volatility throughout varying cycles of the coffee market and economic conditions.
| 1 |
Our operations have primarily focused on the following areas of the coffee industry:
| ● | the sale of wholesale specialty green coffee; | |
| ● | the roasting, blending, packaging and sale of private label coffee; | |
| ● | the roasting, blending, packaging and sale of our eight brands of coffee; and | |
| ● | sales of our tabletop coffee roasting equipment. |
Our operating results are affected by a number of factors including:
| ● | the level of marketing and pricing competition from existing or new competitors in the coffee industry; | |
| ● | our ability to retain existing customers and attract new customers; | |
| ● | our hedging policy; | |
| ● | fluctuations in purchase prices and supply of green coffee and in the selling prices of our products; and | |
| ● | our ability to manage inventory and fulfillment operations and maintain gross margins. |
Our net sales are driven primarily by the success of our sales and marketing efforts and our ability to retain existing customers and attract new customers. For this reason, we have made, and will continue to evaluate, strategic decisions to acquire and invest in measures that are expected to increase net sales.
Our sales are affected by the price of green coffee. We purchase our green coffee from dealers located primarily within the United States. The dealers supply us with coffee beans from many countries, including Colombia, Mexico, Kenya, Indonesia, Brazil and Uganda. The supply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control. For example, in Brazil, which produces approximately 40% of the world’s green coffee, the coffee crops are historically susceptible to frost in June and July and drought in September, October and November. However, because we purchase coffee from a number of countries and are able to freely substitute one country’s coffee for another in our products, price fluctuations in one country generally have not had a material impact on the price we pay for coffee. Accordingly, price fluctuations in one country generally have not had a material effect on our results of operations, liquidity and capital resources. Historically, because we generally have been able to pass green coffee price increases through to customers, increased prices of green coffee generally result in increased net sales, irrespective of sales volume.
The supply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control. Historically, we have used, and intend to continue to use in a limited capacity, short-term coffee futures and options contracts primarily for the purpose of partially hedging the effects of changing green coffee prices. In addition, we acquired, and expect to continue to acquire, futures contracts with longer terms, generally three to four months, primarily for the purpose of guaranteeing an adequate supply of green coffee. Realized and unrealized gains or losses on options and futures contracts are reflected in our cost of sales. Gains on options and futures contracts reduce our cost of sales and losses on options and futures contracts increase our cost of sales. The use of these derivative financial instruments has generally enabled us to mitigate the effect of changing prices. We believe that, in normal economic times, our hedging policies remain a vital element to our business model not only in controlling our cost of sales, but also giving us the flexibility to obtain the inventory necessary to continue to grow our sales while trying to minimize margin compression during a time of historically high coffee prices.
However, no strategy can entirely eliminate pricing risks and we generally remain exposed to losses on futures contracts when prices decline significantly in a short period of time, and we would generally remain exposed to supply risk in the event of non-performance by the counterparties to any of our futures contracts. Although we have had net gains on options and futures contracts in the past, we have incurred significant losses on options and futures contracts during some recent reporting periods. In these cases, our cost of sales has increased, resulting in a decrease in our profitability or increase our losses. Such losses have and could in the future materially increase our cost of sales and materially decrease our profitability and adversely affect our stock price. If our 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 for green coffee and our profitability may be reduced. Failure to properly design and implement an effective hedging strategy may materially adversely affect our business and operating results. If the hedges that we enter do not adequately offset the risks of coffee bean price volatility or our hedges result in losses, our cost of sales may increase, resulting in a decrease in profitability or increased losses. As previously announced, as a result of the volatile nature of the commodities markets, we have and are continuing to scale back our use of hedging and short-term trading of coffee futures and options contracts, and intend to continue to use these practices in a limited capacity going forward.
On November 6, 2024, Second Empire, a wholly owned subsidiary of the Company, entered into a Secured Creditor Sale Agreement with Bridge Business Credit, LLC (“Seller”). The sale was a Uniform Commercial Code (“UCC”) Chapter 9 sale to purchase equipment, accounts receivable and inventory of Empire Coffee Company, Inc. (“Empire Coffee Company”).
Critical Accounting Policies and Estimates
There have been no changes to our critical accounting policies during the three and six months ended April 30, 2025. Critical accounting policies and the significant estimates in accordance with such policies are regularly discussed with our Audit Committee. Those policies are discussed under “Critical Accounting Policies and Estimates” in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our consolidated financial statements and notes thereto, each in our 2024 10-K.
| 2 |
Three Months Ended April 30, 2025 Compared to the Three Months Ended April 30, 2024
Net Sales. Net sales totaled $23,320,061 for the three months ended April 30, 2025, an increase of $4,324,148, or 23%, from $18,995,913 for the three months ended April 30, 2024. The increase in net sales was due to increased sales of our private label and Cafe Caribe and Cafe Supremo products brands to our wholesale and retail customers.
Cost of Sales. Cost of sales for the three months ended April 30, 2025 was $18,901,189, or 81.1% of net sales, as compared to $15,291,933, or 80.5% of net sales, for the three months ended April 30, 2024, an increase of $3,609,256. Cost of sales consists primarily of the cost of green coffee and packaging materials. The increase in cost of sales relates to the increase in net sales of our private label and branded products to both wholesale and retail customers.
Gross Profit. Gross profit for the three months ended April 30, 2025 amounted to $4,418,872 or 18.9% of net sales, as compared to $3,703,980 or 19.5% of net sales, for the three months ended April 30, 2024. The increase in gross profits on a percentage and dollar basis was attributable to the factors listed above.
Operating Expenses. Total operating expenses decreased by $240,373 to $3,530,257 for the three months ended April 30, 2025 from $3,770,630 for the three months ended April 30, 2024. Selling and administrative expenses decreased by $342,595 and officers’ salaries increased by $102,222. The decrease in selling and administrative expenses was due to lower payroll costs and professional fees.
Other Income (Expense). Other income for the three months ended April 30, 2025 was $17,487, a decrease of $15,336 from other income of $32,823 for the three months ended April 30, 2024. The change was attributable to a decrease in interest expense of $55,701.
Income Taxes. Our expense for income taxes for the three months ended April 30, 2025 totaled $227,073 compared to our benefit of $77,632 for the three months ended April 30, 2024. The change was primarily attributable to the difference in the income for the quarter ended April 30, 2025, versus the loss in the quarter ended April 30, 2024.
Net Income (Loss). We had net income of $644,055, or $0.11 per share basic and diluted, for the three months ended April 30, 2025, compared to a net loss of $21,841, or $0.00 per share basic and diluted, for the three months ended April 30, 2024.
Six Months Ended April 30, 2025, Compared to the Six Months Ended April 30, 2024
Net Sales. Net sales totaled $44,625,346 for the six months ended April 30, 2025, an increase of $6,089,031, or 16%, from $38,536,315 for the six months ended April 30, 2024. The increase in net sales was due to increased sales of our private label and Cafe Caribe and Cafe Supremo products brands to our wholesale and retail customers.
Cost of Sales. Cost of sales for the six months ended April 30, 2025 was $34,474,548, or 77.3% of net sales, as compared to $31,352,036, or 81.4% of net sales, for the six months ended April 30, 2024. Cost of sales consists primarily of the cost of green coffee and packaging materials and realized and unrealized gains or losses on hedging activity. This increase in gross margin was due to favorable green coffee prices that were initiated during the six months ended April 30, 2025, for our roasted coffee customers and the cost of goods sold was favorably impacted by improved inventory management, along with increased prices to both our wholesale and retail customers, reflecting higher market conditions. Additionally, net sales increased due to higher sales of our private label and branded products to both wholesale and retail customers.
Gross Profit. Gross profit for the six months ended April 30, 2025 amounted to $10,150,798 or 22.8% of net sales, as compared to $7,184,279 or 18.6% of net sales, for the six months ended April 30, 2024. The increase in gross profits on a percentage basis was attributable to the factors listed above.
Operating Expenses. Total operating expenses increased by $1,037,134 to $7,671,152 for the six months ended April 30, 2025 from $6,634,018 for the six months ended April 30, 2024. Selling and administrative expenses increased by $896,956 and officers’ salaries increased by $140,178. Operating expenses increased for the six months ended April 30, 2025 compared to the six months ended April 30, 2024 primarily due to the acquisition of Second Empire adding approximately $1.3 to operating expenses for the six months ended.
Other Income (Expense). Other expense for the six months ended April 30, 2025 was $49,170, a decrease of $107,203 from $156,373 for the six months ended April 30, 2024. The decrease was attributable to a decrease in interest income of $34,390 and a decrease in our interest expense of $141,564, during the six months ended April 30, 2024.
Income Taxes. Our expense for income taxes for the six months ended April 30, 2025 totaled $633,165 compared to an expense of $64,705 for the six months ended April 30, 2024. The change was primarily attributable to the difference in the income for the six months ended April 30, 2025 versus the income in the six months ended April 30, 2024.
Net (Loss) Income. We had net income of $1,797,311 or $0.31 per share basic and diluted, for the six months ended April 30, 2025 compared to net income of $329,183, or $0.06 per share basic and diluted for the six months ended April 30, 2024. The increase in net income was due primarily to the reasons described above.
Liquidity, Capital Resources and Going Concern
As of April 30, 2025, we had working capital of $25,831,578, which represented a $965,841 increase from our working capital of $21,526,983 as of October 31, 2024. Our working capital increased primarily due to the $1,509,920 increase in inventory, a $1,221,965 increase in due from broker, and a $779,055 increase in accounts receivable offset by a $3,000,000 increase on the line of credit.
On April 25, 2017, we and one of our subsidiaries, Organic Products Trading Company, LLC (“OPTCO” and together with us, collectively referred to herein as the “Borrowers”) entered into an Amended and Restated Loan and Security Agreement (the “A&R Loan Agreement”) and Amended and Restated Loan Facility (the “A&R Loan Facility”) with Sterling National Bank (“Sterling”), which was later acquired by Webster Financial Corp. (“Webster”), which consolidated (i) the financing agreement between us and Sterling, dated February 17, 2009, as modified, and (ii) the financing agreement between us, as guarantor, OPTCO and Sterling, dated March 10, 2015, amongst other things.
On March 17, 2022, we reached an agreement for a new loan modification agreement and credit facility which extended the maturity date to June 29, 2022. The facility was then approved for a two-year extension. All other terms of the A&R Loan Agreement and A&R Loan Facility remained the same.
On June 28, 2022, we reached an agreement for a new loan modification agreement and credit facility with Webster. The terms of the new agreement, among other things: (i) provided for a new maturity date of June 30, 2024, and (ii) changed the interest rate per annum to SOFR plus 1.75% (with such interest rate not to be lower than 3.50%). All other terms of the A&R Loan Agreement and A&R Loan Facility remained the same.
| 3 |
On March 15, 2023, the A&R Loan Agreement was also modified to, among other things: (i) provide for a requirement for subordination agreements, if necessary, (ii) change the terms of transactions with affiliates from a dollar limitation to allowable in the ordinary course of business, and (iii) establish a new covenant for a fixed charge coverage ratio. As further explained in Note 6 to the unaudited condensed consolidated financial statements, we are required to maintain certain financial covenants with respect to our line of credit agreement. We were not in compliance with these requirements as of October 31, 2023. We have since received a waiver from the lender on May 24, 2024 and are in compliance with all requirements.
On June 27, 2024, the Borrowers entered into the Tenth Loan Modification Agreement with Webster which amended the A&R Loan Agreement to, among other things: (i) provide for a new loan maturity date of June 29, 2025, (ii) provide that the applicable margin requirement for any revolving loan outstanding under the A&R Loan Agreement to 2.25%, (iii) provide that the maximum facility amount shall be $10,000,000 and (iv) to adjust certain definitions and terms related to the borrowing base and leverage ratios applicable to the A&R Loan Agreement.
On April 17, 2025, the Borrowers entered into the Eleventh Loan Modification Agreement with Webster which (i) amended the A&R Loan Agreement to provide for a new loan maturity date of June 28, 2026 and (ii) provided limited consent for the Company to declare dividends to shareholders for its fiscal year ending October 31, 2025.
Each of the A&R Loan Facility and A&R Loan Agreement contains covenants, subject to certain exceptions, that place annual restrictions on the Borrowers’ operations, including covenants relating to debt restrictions, capital expenditures, indebtedness, minimum deposit restrictions, tangible net worth, net profit, leverage, employee loan restrictions, dividend and repurchase restrictions (common stock and preferred stock), and restrictions on intercompany transactions. The outstanding balance on our line of credit was $3,000,000 and $0 as of April 30, 2025 and October 31, 2024, respectively.
For the six months ended April 30, 2025, our operating activities used cash of $1,555,954 as compared to the six months ended April 30, 2024 when operating activities provided cash of $3,390,694. The decrease in cash flow from operations was primarily due to the increase in inventory from October 31, 2024 to April 30, 2025. Non-cash charges, including depreciation and amortization, unrealized gain on commodities, amortization of right-of-use assets, and deferred income taxes, resulted in cash used of $603,581 for the six months ended April 30, 2025 compared to non-cash charges provided of $24,165 for the six months ended April 30, 2024.
For the six months ended April 30, 2025, our investing activities used cash of $992,907 as compared to the six months ended April 30, 2024 when net cash provided in investing activities was $2,925,927. The decrease in our cash provided by investing activities was due to the proceeds from the sale of an investment of $3,150,000 during the three months ended April 30, 2024.
For the six months ended April 30, 2025, our financing activities provided net cash of $3,000,000 compared to net cash used in financing activities of $6,622,909 for the six months ended April 30, 2024. The change in cash flow from financing activities for the six months ended April 30, 2025 was primarily due to our credit line activity.
We expect to fund our operations, including paying our liabilities, funding capital expenditures and making required payments on our indebtedness, through at least the next twelve months from the date these condensed consolidated financial statements are issued, with cash provided by operating activities and the use of our credit facility. In addition, an increase in eligible accounts receivable and inventory would permit us to make additional borrowings under our line of credit.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
| 4 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management, which includes our President, Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, our President, Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to the existence of material weaknesses in our internal control over financial reporting.
Material Weakness Over Financial Reporting
We determined that our controls were inadequate to prevent and detect misstatements of quantities of inventory at one of our subsidiaries. Accordingly, management has determined that this control deficiency constituted a material weakness.
We determined that there were inappropriate system access controls over the financial reporting system. These controls were not designed to prevent or detect unauthorized changes to source information or implement an appropriate level of segregation of duties. Accordingly, management has determined that this control deficiency constituted a material weakness.
We determined that we lacked adequate controls with respect to identifying and accounting for material contracts. This was evidenced by our failure to properly identify and account for a material lease amendment. Accordingly, management has determined that this was a control deficiency that constituted a material weakness.
We determined that we lacked adequate controls with respect to physical custody of certain hardware, electronic and hard copy records of Generations Coffee and its component operation known as Steep and Brew following the Company relocation or vacating of certain premises used in the operations of that business unit. Accordingly, management has determined that this is a control deficiency that constituted a material weakness.
We concluded that we lacked adequate controls with respect to the preparation and review of journal entries and account reconciliations during the year-end financial statement closing process. Accordingly, management has determined that this control deficiency constituted a material weakness.
We concluded, after discussion with management, that our financial statements inaccurately accounted for certain intercompany eliminations in our consolidated statements of operations for the fiscal year ended October 31, 2020. As a result, we determined that there was an overstatement of net sales and cost of sales in the consolidated statement of operations of approximately $8.3 million in our financial statements during the fiscal year ended October 31, 2020, which required a restatement of the previously issued financial statements for the fiscal year ended October 31, 2020. This was due to inadequate design and implementation of controls to evaluate and monitor the presentation and compliance with accounting principles generally accepted in the United States of America related to the statement of operations. Accordingly, management has determined that this control deficiency constituted a material weakness.
We concluded that we lacked adequate controls with respect to recording year end accruals for vendor liabilities and properly calculating required loan covenants. Accordingly, management has determined that this control deficiency constituted a material weakness.
Notwithstanding such material weaknesses, we believe the financial information presented herein is materially correct and fairly presents the financial position and operating results for the three and six months ended April 30, 2025 in conformity with U.S. generally accepted accounting principles for interim financial information and in accordance with the rules and regulations of the SEC.
| 5 |
Remediation Plan for the Material Weaknesses
As previously disclosed in Item 9A of our 2024 10-K, management has identified material weaknesses as of that date. A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. To remediate the material weaknesses identified above, we have hired third-party consultants to assist with financial reporting and are initiating controls and procedures in order to:
| ● | educate control owners concerning the principles and requirements of each control, with a focus on those related to user access to our financial reporting systems impacting financial reporting; | |
| ● | develop and maintain documentation to promote knowledge transfer upon personnel and function changes; | |
| ● | develop enhanced controls and reviews related to our financial reporting systems; | |
| ● | perform an in-depth analysis of who should have access to perform key functions within our financial reporting system that impact financial reporting and redesign aspects of the system to better allow the access rights to be implemented; | |
| ● | perform a cross-reference analysis on a quarterly basis; and | |
| ● | implement additional levels of internal review of financial statements and any adjustments made thereto. |
The material weaknesses identified above will not be considered remediated until our remediation efforts have been fully implemented and we have concluded that these controls are operating effectively.
Management does not expect that our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.
Management will seek to remediate such deficiencies over the coming quarters.
Changes in Internal Control over Financial Reporting
Other than the changes intended to remediate the material weaknesses as discussed above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended April 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 6 |
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our 2024 10-K. There have been no material changes to our risk factors since the 2024 10-K.
Changes in U.S. trade policies, including the imposition of tariffs, may adversely impact our business, financial condition, and results of operations.
The Trump Administration implemented new tariffs on goods imported into the U.S., including coffee, which has introduced uncertainty to our business and will increase the cost of our products sourced outside of the U.S. The extent and duration of increased tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, and availability and cost of alternative sources of supply.
As a result of these dynamics, we may find it difficult to predict the impact on our business of these and future changes to the trading relationships between the U.S. and other countries or the impact on our business of new laws or regulations adopted by the U.S. or other countries.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
(a) None.
(b) None.
(c)
During the fiscal quarter ended April 30, 2025, no director or “officer” (as defined in Rule 16a-1(f) under the Exchange
Act) of the Company
| 7 |
ITEM 6. EXHIBITS
Exhibit Number |
Description | |
| 10.1 | Eleventh Loan Modification Agreement and Limited Consent, dated April 17, 2025, by and among Coffee Holding Co., Inc., Organic Products Trading Company LLC and Webster Bank, National Association. | |
| 31.1 | Principal Executive Officer and Principal Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |
| 32.1 | Principal Executive Officer and Principal Financial Officer’s Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |
| 101.INS | Inline XBRL Instance Document * | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document * | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document * | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document * | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document * | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document * | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Filed herewith
** Furnished herewith
| 8 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized.
| Coffee Holding Co., Inc. | ||
| Date: June 13, 2025 | By: | /s/ Andrew Gordon |
| Name: | Andrew Gordon | |
| Title: | President, Chief Executive Officer and Chief Financial Officer | |
| 9 |
Exhibit 10.1
IN WITNESS WHEREOF, this Modification is executed as of the date first above written.
| BORROWERS: | ||
| ORGANIC PRODUCTS TRADING COMPANY LLC | ||
| By: | /s/ Andrew Gordon | |
| Name: | Andrew Gordon | |
| Title: | Manager | |
| COFFEE HOLDING CO., INC. | ||
| By: | /s/ Andrew Gordon | |
| Name: | Andrew Gordon | |
| Title: | President/CEO | |
| BANK/LENDER | ||
| WEBSTER BANK, NATIONAL ASSOCIATION | ||
| By: | /s/ Jason C. Rosenberg | |
| Name: | Jason C. Rosenberg | |
| Title: | Director | |
Agreed and acknowledged:
SONOFRESCO, LLC, Guarantor
| By: | /s/ Andrew Gordon | |
| Name: | Andrew Gordon | |
| Title: | Manager |
COMFORT FOODS, INC., Guarantor
| By: | /s/ Andrew Gordon | |
| Name: | Andrew Gordon | |
| Title: | Manager |
Validity Guarantors:
| By: | /s/ Andrew Gordon | |
| Andrew Gordon |
| By: | /s/ David Gordon | |
| David Gordon |
Exhibit 31.1
CERTIFICATION
I, Andrew Gordon, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the period ended April 30, 2025 of Coffee Holding Co., Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: June 13, 2025 | By: | /s/ Andrew Gordon |
| Andrew Gordon | ||
| President, Chief Executive Officer, Chief Financial Officer and Treasurer (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) |
Exhibit 32.1
STATEMENT FURNISHED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350
The undersigned, Andrew Gordon, is the President, Chief Executive Officer and Chief Financial Officer of Coffee Holding Co., Inc. (the “Company”).
This statement is being furnished in connection with the filing by the Company of the Company’s Quarterly Report on Form 10-Q for the period ended April 30, 2025 (the “Report”).
By execution of this statement, I certify that:
| (A) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and | |
| (B) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report. |
This statement is authorized to be attached as an exhibit to the Report so that this statement will accompany the Report at such time as the Report is filed with the Securities and Exchange Commission, pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, 18 U.S.C. Section 1350. It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended.
A signed original of this written statement required by Section 906 has been provided to Coffee Holding Co., Inc. and will be retained by Coffee Holding Co., Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
| Date: June 13, 2025 | By: | /s/ Andrew Gordon |
| Andrew Gordon | ||
| President, Chief Executive Officer, Chief Financial Officer and Treasurer (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) |