GlobeNewswire Inc | Sep 14, 2020 09:50AM EDT

September 14, 2020

STATEN ISLAND, New York, Sept. 14, 2020 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. (Nasdaq: JVA) (the Company) today re-circulated its operating results for the three months and nine months ended July 31, 2020 which the Company originally announced on September 11, 2020:

Net sales Net sales totaled $17,344,009 for the three months ended July 31, 2020, a decrease of $4,250,276, or 19.7%, from $21,594,285 for the three months ended July 31, 2019. Net sales totaled $56,725,386 for the nine months ended July 31, 2020, a decrease of $9,219,197, or 14%, from $65,944,583 for the nine months ended July 31, 2019. The decrease in net sales was due to the COVID-19 pandemic which caused many of the Companys green coffee customers who service the restaurant and food service industry to either close or suspend their business operations during the period resulting in lost revenues from that segment of the Companys customer base.

Cost of sales Cost of sales for the three months ended July 31, 2020 was $13,517,482, or 77.9% of net sales, as compared to $17,465,685, or 80.9% of net sales, for the three months July 31, 2019. Cost of sales for the nine months ended July 31, 2020 was $45,287,198, or 79.8% of net sales, as compared to $53,705,272, or 81.4% of net sales, for the nine months July 31, 2019. The decrease in cost of sales was due to the Companys decreased sales partially offset by its favorable green coffee position.

Gross profit Gross profit for the three months ended July 31, 2020 amounted to $3,826,527, or 22.1% of net sales, as compared to $4,128,600, or 19.1% of net sales, for the three months ended July 31, 2019. Gross profit for the nine months ended July 31, 2020 amounted to $11,438,188, or 20.2% of net sales, as compared to $12,239,311, or 18.6% of net sales, for the nine months ended July 31, 2019. The increase in gross profits as a percentage of sales is attributable to a change in the Companys product mix where it sold a higher percentage of branded and private label roasted coffee.

Total operating expenses Total operating expenses decreased by $619,127 to $3,252,235 for the three months ended July 31, 2020 from $3,871,362 for the three months ended July 31, 2019. Total operating expenses decreased by $853,598 to $10,530,647 for the nine months ended July 31, 2020 from $11,384,245 for the nine months ended July 31, 2019. The Companys efforts to control costs through the elimination of redundancy in its operations and the elimination of certain unnecessary variable costs were the primary reasons for this decrease.

The Company had a net income of $391,324, or $0.07 per share basic and diluted, for the three months ended July 31, 2020 compared to net income of $111,494, or $0.02 per share basic and diluted for the three months ended July 31, 2019. The Company had net income of $289,994, or $0.05 per share basic and diluted, for the nine months ended July 31, 2020 compared to net income of $187,741, or $0.03 per share basic and diluted for the nine months ended July 31, 2019. The increase in net income was due primarily to the reasons described above.

Im pleased to report our second consecutive profitable quarter, as we earned $.07 per share despite a 19.7% decline in sales as the impact of the COVID-19 pandemic continues to negatively impact sales of green coffee. Unlike last quarter, sales of our roasted private label products were unable to offset the lower sales of green coffee. Unfortunately, the surge in overall industry supermarket sales of coffee seen from March through June of this year, which saw overall industry coffee sales throughout the market spike by 8.1% year over year, did not continue into the summer months, stated Andrew Gordon, President and CEO of Coffee Holding Company. However, heading into the September through November period, which have traditionally been our strongest months from a sales perspective, I expect to see a buying surge from our supermarket customers, for both private label and branded products, as our customers inventory stockpiles have likely been reduced to pre-pandemic levels.

In addition, as most states begin to ease restrictions on commercial and recreational activities, I believe we may begin to see increases in sales of green coffee, as our customers begin to reopen their restaurants, cafes and food service operations, stated Mr. Gordon.

Also, during this quarter, coffee prices recovered from their bear market levels below $1.00 per pound, and have subsequently traded to one year highs. We expect this to be a tailwind for us once our sales of green coffee normalize at these higher market levels and we will be able to sell from the favorable inventory position we acquired during the first half of 2020. We have also paid down our bank line by almost 50% during the quarter ended July 31, 2020, as we reduced inventory and were able to generate free cash from our profits, added Mr. Gordon. Further, this quarter we continued to have the negative, but non-cash, impact on our profits resulting from our previously established employee option plan. The effect this quarter was $189,769, or an impact on earnings of $.03 per share.

Lastly, in keeping pace with the times, both myself and my brother, our VP of Operations, will be taking pay cuts of between 5% to 15%, to become effective at the start of our fiscal year 2021. These pay cuts will ensure and promote continued equality within our organization as well as act as a direct cost reduction strategy which will offset any additional sales slowdown due to COVID-19, concluded Mr. Gordon.About Coffee Holding

Coffee Holding Co., Inc. is a leading integrated wholesale coffee roaster and dealer 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. Coffee Holding has been a family-operated business for three generations and has remained profitable through varying cycles in the coffee industry and the economy. The Companys private label and branded coffee products are sold throughout the United States, Canada and abroad to supermarkets, wholesalers, and individually owned and multi-unit retail customers.

Forward looking statements

Any statements that are not historical facts contained in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the Companys outlook on the revenue growth at Steep N Brew and Comfort Foods. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. We have based these forward-looking statements upon information available to management as of the date of this release and managements expectations and projections about certain future events. It is possible that the assumptions made by management for purposes of such statements may not materialize. Such statements may involve risks and uncertainties, including but not limited to those relating to product demand, pricing, market acceptance, hedging activities, the effect of economic conditions, the effect of the COVID-19 pandemic, intellectual property rights, the outcome of competitive products, risks in product development, the results of financing efforts, the ability to complete transactions and other factors discussed from time to time in the Companys Securities and Exchange Commission filings. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made.

Company ContactCoffee Holding Co., Inc. Andrew Gordon President& CEO 718-832-0800

COFFEE HOLDING CO., INC. CONDENSED CONSOLIDATED BALANCE SHEETSJULY 31, 2020 AND OCTOBER 31, 2019

July 31, October 31, 2020 2019 (Unaudited) - ASSETS - CURRENT ASSETS: Cash $ 2,192,778 $ 2,402,556 Accounts receivable, net of allowances of 6,833,826 9,421,427 $144,000 for 2020 and 2019Inventories 18,541,976 18,841,225 Due from broker 456,110 101,031 Prepaid expenses and other current assets 708,189 587,626 Prepaid and refundable income taxes 231,776 385,934 TOTAL CURRENT ASSETS 28,964,655 31,739,799 Machinery and equipment, at cost, net ofaccumulated depreciation of $7,449,842 and 2,314,434 2,413,533 $6,931,913 for 2020 and 2019, respectivelyCustomer list and relationships, net ofaccumulated amortization of $183,691 and 501,309 533,373 $151,627 for 2020 and 2019, respectivelyTrademarks and tradenames 1,488,000 1,488,000 Non-compete, net of accumulated amortizationof $44,550 and $29,700 for 2020 and 2019, 54,450 69,300 respectivelyGoodwill 2,488,785 2,488,785 Equity method investments 81,469 86,008 Deferred income tax asset 487,500 480,473 Right of use asset 2,186,882 Deposits and other assets 312,609 387,453 TOTAL ASSETS $ 38,880,093 $ 39,686,724 - LIABILITIES AND STOCKHOLDERS? EQUITY - CURRENT LIABILITIES: Accounts payable and accrued expenses $ 2,906,586 $ 4,344,015 Line of credit 7,167,740 Note payable ? current portion 2,220 - Paycheck Protection Program loan 634,400 Lease liability ? current portion 464,517 - Income taxes payable 317 100 TOTAL CURRENT LIABILITIES 4,008,040 11,511,855 Deferred income tax liabilities 952,732 872,232 Line of credit ? long term 3,796,822 - Deferred rent payable 193,461 Lease liability 1,883,681 - Note payable ? long term 21,377 - Deferred compensation payable 303,609 378,453 TOTAL LIABILITIES 10,966,261 12,956,001 Commitments and Contingencies STOCKHOLDERS? EQUITY: Coffee Holding Co., Inc. stockholders? equity:Preferred stock, par value $.001 per share; - - 10,000,000 shares authorized; none issuedCommon stock, par value $.001 per share;30,000,000 shares authorized, 6,494,680 6,494 6,494 shares issued; 5,569,349 shares outstandingfor 2020 and 2019, respectivelyAdditional paid-in capital 17,259,683 16,580,974 Retained earnings 13,600,163 13,310,169 Less: Treasury stock, 925,331 common shares, (4,633,560 ) (4,633,560 )at cost for 2020 and 2019, respectivelyTotal Coffee Holding Co., Inc. Stockholders? 26,232,780 25,264,077 EquityNoncontrolling interest 1,681,052 1,466,646 TOTAL EQUITY 27,913,832 26,730,723 TOTAL LIABILITIES AND STOCKHOLDERS? EQUITY $ 38,880,093 $ 39,686,724

COFFEE HOLDING CO., INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSNINE AND THREE MONTHS ENDED JULY 31, 2020 AND 2019(Unaudited)

Nine Months Ended Three Months Ended July 31, July 31, 2020 2019 2020 2019 NET SALES $ 56,725,386 $ 65,944,583 $ 17,344,009 $ 21,594,285 COST OF SALES(including $4.5and $5.9million ofrelated partycosts for thenine monthsended July 31,2020 and 2019, 45,287,198 53,705,272 13,517,482 17,465,685 respectively.Including $1.5and $1.8million for thethree monthsended July 31,2020 and 2019,respectively.) GROSS PROFIT 11,438,188 12,239,311 3,826,527 4,128,600 OPERATING EXPENSES:Selling and 10,032,993 10,853,495 3,081,985 3,701,112 administrativeOfficers? 497,654 530,750 170,250 170,250 salariesTOTAL 10,530,647 11,384,245 3,252,235 3,871,362 INCOME (LOSS) 907,541 855,066 574,292 257,238 FROM OPERATIONS OTHER INCOME (EXPENSE)Interest income 2,944 8,903 247 3,548 Loss fromequity method (4,539 ) (2,691 ) (1,547 ) (2,613 )investmentInterest (150,742 ) (195,493 ) (45,283 ) (64,625 )expenseTOTAL (152,337 ) (189,281 ) (46,583 ) (63,690 ) INCOME BEFOREPROVISION FORINCOME TAXESAND 755,204 665,785 527,709 193,548 NON-CONTROLLINGINTEREST INSUBSIDIARY Provision for 250,804 115,543 161,454 34,413 income taxes NET INCOMEBEFORENON-CONTROLLING 504,400 550,242 366,255 159,135 INTEREST INSUBSIDIARYLess: Net(income) lossattributable to (214,406 ) (362,501 ) 25,069 (47,641 )thenon-controllinginterest NET INCOMEATTRIBUTABLE TO $ 289,994 $ 187,741 $ 391,324 $ 111,494 COFFEE HOLDINGCO., INC. Basic anddiluted $ .05 $ .03 $ .07 $ .02 earnings pershare Weightedaverage common sharesoutstanding:Basic and 5,569,349 5,569,349 5,569,349 5,569,349 diluted

COFFEE HOLDING CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSNINE MONTHS ENDED JULY 31, 2020 AND 2019(Unaudited)

2020 2019 OPERATING ACTIVITIES: Net income $ 504,400 $ 550,242 Adjustments to reconcile net income tonet cash provided by operating activities:Depreciation and amortization 564,843 547,483 Stock-based compensation 678,709 228,868 Unrealized (gain) loss on commodities (355,079 ) 74,658 Loss on equity method investments 4,539 2,691 Deferred rent - (36,151 )Amortization of right to use asset 325,140 - Deferred income taxes 73,473 (43,988 )Changes in operating assets and liabilities:Accounts receivable 2,587,601 1,421,655 Inventories 299,249 (2,431,050 )Prepaid expenses and other current (120,563 ) (107,498 )assetsPrepaid and refundable income taxes 154,158 94,567 Accounts payable and accrued expenses (1,437,428 ) (1,206,027 )Change in lease liability (357,286 ) - Deposits and other assets (5,885 )Income taxes payable 217 (1,305 )Net cash provided by (used in) 2,921,973 (911,740 )operating activities INVESTING ACTIVITIES: Purchases of machinery and equipment (392,023 ) (568,235 )Net cash used in investing activities (392,023 ) (568,235 ) FINANCING ACTIVITIES: Advances under bank line of credit 1,141,132 7,626 Proceeds from PPP loan 634,400 Principal payment on note payable (3,210 ) (70,255 )Principal payments under bank line of (4,512,050 ) (500,000 )creditNet cash used in financing activities (2,739,728 ) (562,629 ) NET DECREASE IN CASH (209,778 ) (2,042,604 ) CASH, BEGINNING OF PERIOD 2,402,556 4,611,384 CASH, END OF PERIOD $ 2,192,778 $ 2,568,780

2020 2019 SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: Interest paid $ 159,484 $ 197,216 Income taxes paid $ 22,956 $ 66,269 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Initial recognition of operating lease $ 2,512,022 right of use assetInitial recognition of operating lease $ 2,705,484 liabilities Machinery and equipment acquired through $ 26,807 financing