UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
FOR
THE QUARTERLY PERIOD ENDED
OR
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION
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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
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| ☒ | Smaller reporting company | |||
| Emerging growth company |
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shares of common stock, par value $ per share, are outstanding at September 10, 2025.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| July 31, 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 | ||||||||
| Line of credit | ||||||||
| Lease liabilities - current portion | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| 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 July 31, 2025 and October 31, 2024; shares outstanding for July 31, 2025 and October 31, 2024 | ||||||||
| Additional paid in capital | ||||||||
| Retained earnings | ||||||||
| Less: common stock held in treasury, at cost; shares for July 31, 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)
| Nine months ended July 31, | Three months ended July 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| NET SALES | $ | $ | $ | $ | ||||||||||||
| COST OF SALES | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling and administrative | ||||||||||||||||
| Officers’ salaries | ||||||||||||||||
| TOTAL | ||||||||||||||||
| INCOME (LOSS) FROM OPERATIONS | ( | ) | ||||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on extinguishment of lease | ||||||||||||||||
| Other income | ||||||||||||||||
| TOTAL | ( | ) | ( | ) | ||||||||||||
| INCOME (LOSS) BEFORE EXPENSE FOR INCOME TAXES | ( | ) | ||||||||||||||
| Expense for income taxes | ||||||||||||||||
| NET INCOME (LOSS) | $ | $ | $ | ( | ) | $ | ||||||||||
| Basic and diluted earnings (loss) 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 NINE MONTHS ENDED JULY 31 2025, AND 2024
(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 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||
| Balance, July 31, 2024 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||
| Balance October 31, 2024 | ( | ) | ||||||||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||
| Balance, January 31, 2025 | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||||
| Net income | — | — | $ | $ | ||||||||||||||||||||||||||||
| Balance, April 30, 2025 | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, July 31, 2025 | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||||||
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)
| Nine Months Ended July 31, | ||||||||
| 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 | ||||||||
| Gain on extinguishment of lease liability | ( | ) | ||||||
| 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 Empire Coffee Company | ( | ) | ||||||
| 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 under bank line of credit | ( | ) | ( | ) | ||||
| Principal payments on note payable | ( | ) | ||||||
| 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 | $ | $ | ||||||
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.
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 July 31, 2025, the Company is in compliance with those financial
covenants. The Company has net income for the nine months ended July 31, 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 US GAAP 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 nine months ended July 31, 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 nine and three months ended July 31, 2025 and 2024:
| Nine Months Ended July 31, | Three Months Ended July 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Green | $ | $ | $ | $ | ||||||||||||
| Packaged | ||||||||||||||||
| Totals | $ | $ | $ | $ | ||||||||||||
| 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.
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.
| F-7 |
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.
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 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. Based on a fair value assessment, all value has been attributed to tangible
assets. Second Empire will operate as a
| Accounts Receivable | $ | |||
| Inventory | ||||
| Total purchase price | $ |
The
acquired business contributed revenues of $
In connection with this transaction, the Company entered into a four-year lease with 21 Grace Church Street Realty LLC for the existing property at 21 Grace Church Street, Port Chester, NY 10573 where Empire Coffee Company had its offices and production facility.
Note 4 - Inventories
Inventories at July 31, 2025 and October 31, 2024 consisted of the following:
| July 31, 2025 | October 31, 2024 | |||||||
| Packed coffee | $ | $ | ||||||
| Green coffee | ||||||||
| Roaster parts | ||||||||
| Packaging supplies | ||||||||
| Totals | $ | $ | ||||||
| F-8 |
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:
| Three Months Ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| Gross realized gains | $ | $ | ||||||
| Gross realized losses | ( | ) | ( | ) | ||||
| Unrealized (losses) gains | ( | ) | ||||||
| Total | $ | ( | ) | $ | ||||
| Nine Months Ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| Gross realized gains | $ | $ | ||||||
| Gross realized losses | ( |
) | ( |
) | ||||
| Unrealized (losses) gains | ( |
) | ||||||
| Total | $ | $ | ||||||
Note 6 - Line of Credit
On
June 27, 2024, the Organic Trading Products Trading Company, LLC (“OPTCO” and together with us, collectively referred to
herein as the “Borrowers”) entered into the Tenth Loan Modification Agreement with Webster Financial Corp. (“Webster”)
which amended the Amended and Restated Loan and Security Agreement (“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
| F-9 |
COFFEE HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 July 31, 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 July 31, 2025 and 2024, the Company recorded income tax expense of $
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions, including immediate expensing for domestic research expenditures. Additionally, the OBBBA allows accelerated tax deductions for qualified property. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing the impact of the OBBBA on its consolidated financial statements.
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 nine-months ending July 31, 2025, and 2024. The Company has outstanding stock options which have not been included in the calculation of diluted earnings per share because they are antidilutive.
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.
| F-10 |
COFFEE HOLDING CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 10 – Leases
The following summarizes the Company’s operating leases as of July 31, 2025 and October 31, 2024:
| July 31, 2025 | October 31, 2024 | |||||||
| Assets | ||||||||
| Right-of-use operating lease assets | $ | $ | ||||||
| Total lease assets | $ | $ | ||||||
| July 31, 2025 | October 31, 2024 | |||||||
| Liabilities | ||||||||
| Current lease liability | $ | $ | ||||||
| Non-current lease liability | $ | |||||||
| Total lease liability | $ | $ | ||||||
The
amortization of the right-of-use assets for the three months ended July 31, 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:
| 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-11 |
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 nine months ended July 31, 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 nine months ended July 31, 2025. options were granted or expired during the year ended October 31, 2024. As of July 31, 2025, and October 31, 2024, options were exercisable.
The Company recorded stock-based compensation expense for the three and nine months ended July 31, 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.
| F-12 |
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:
| Statement of operations For the three months ended | ||||||||
| July 31, 2025 | July 31, 2024 | |||||||
| Net sales | $ | $ | ||||||
| Cost of Goods Sold (1) | ( | ) | ( | ) | ||||
| Gross Profit | ||||||||
| Trading Profit (Loss) (1) | ( | ) | ||||||
| Overhead (2) | ( | ) | ( | ) | ||||
| Operating (loss) income | $ | ( | ) | $ | ||||
| Statement of operations For the nine months ended | ||||||||
| July 31, 2025 | July 31, 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-13 |
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 nine months ended July 31, 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 July 31, 2025 Compared to the Three Months Ended July 31, 2024
Net Sales. Net sales totaled $23,910,514 for the three months ended July 31, 2025, an increase of $5,097,352, or 27%, from $18,813,162 for the three months ended July 31, 2024. The increase in net sales was due to increased sales of our private label, Cafe Caribe, Cafe Supremo brands, and green coffee beans to our wholesale and retail customers.
Cost of Sales. Cost of sales for the three months ended July 31, 2025 was $20,997,777, or 87.8% of net sales, as compared to $14,887,098, or 79.1% of net sales, for the three months ended July 31, 2024, an increase of $6,110,679. Cost of sales consists primarily of the cost of green coffee and packaging materials. The increase in cost of sales was driven by higher tariffs on imported coffee as well as a net trading loss of approximately $770,000 or 14 cents a share, related to coffee futures and options contracts, which are recorded in cost of sales in accordance with our accounting policy for commodities held by broker (see Note 5). In addition, the increase reflects higher net sales of our private label, branded products, and green wholesale coffee across both wholesale and retail channels.
Gross Profit. Gross profit for the three months ended July 31, 2025 amounted to $2,912,737 or 12.2% of net sales, as compared to $3,926,064 or 20.9% of net sales, for the three months ended July 31, 2024. The decrease in gross profits on a percentage and dollar basis was attributable to the factors listed above.
Operating Expenses. Total operating expenses increased by $801,687 to $4,007,888 for the three months ended July 31, 2025 from $3,206,201 for the three months ended July 31, 2024. The increase in selling and administrative expenses was primarily due to the acquisition of Empire Coffee Company.
Other Income (Expense). Other expense for the three months ended July 31, 2025 was $92,683, a decrease of $258,865 from other income of $166,182 for the three months ended July 31, 2024. The change was mainly attributable to a decrease in gain on extinguishment of lease of $210,567.
Income Taxes. Our expense for income taxes for the three months ended July 31, 2025 was $17,584 compared to our expense of $259,249 for the three months ended July 31, 2024. The change was primarily attributable to the difference in the income for the quarter ended July 31, 2024, versus the loss in the quarter ended July 31, 2025.
Net Income (Loss). We had net loss of $1,205,413, or ($0.21) per share basic and diluted, for the three months ended July 31, 2025, compared to a net income of $626,796, or $0.11 per share basic and diluted, for the three months ended July 31, 2024. The decrease in profitability was primarily due to higher cost of sales, which included the impact of tariffs on imported coffee and a net trading loss on coffee-related futures and options contracts (see Note 5), as well as increased operating expenses.
| 3 |
Nine Months Ended July 31, 2025, Compared to the Nine Months Ended July 31, 2024
Net Sales. Net sales totaled $68,535,860 for the nine months ended July 31, 2025, an increase of $11,186,383, or 20%, from $57,349,477 for the nine months ended July 31, 2024. The increase in net sales compared to the prior period was primarily attributable to higher sales of our private-label brands, Café Caribe and Café Supremo, as well as increased sales of green coffee beans to both wholesale and retail customers.
Cost of Sales. Cost of sales for the nine months ended July 31, 2025, was $55,253,979, or 80.6% of net sales, as compared to $46,239,134, or 80.6% of net sales, for the nine months ended July 31, 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. The increase of $9,014,845 was primarily attributable to higher sales volumes of our private label and branded products, as well as the impact of tariffs on imported coffee. In addition, cost of sales reflects the effect of our futures and options trading activity, which resulted in a net gain of approximately $687,000 for the nine-month period ended July 31, 2025, that was recognized in cost of sales in accordance with our accounting policy for commodities held by broker (see Note 5).
Gross Profit. Gross profit for the nine months ended July 31, 2025 amounted to $13,281,881 or 19.4% of net sales, as compared to $11,110,343 or 19.4% of net sales, for the nine months ended July 31, 2024. The increase in gross profit was primarily attributable to higher sales volumes of our private-label and branded products, as well as green coffee beans, partially offset by the impact of tariffs on imported coffee. Gross profit also reflects the effect of our coffee futures and options trading activity, which resulted in a net gain of approximately $687,000 for the nine-month period ended July 31, 2025 that was recognized in cost of sales (see Note 5).
Operating Expenses. Total operating expenses increased by $2,057,167 to $11,897,386 for the nine months ended July 31, 2025, from $9,840,219 for the nine months ended July 31, 2024. The year-over-year increase reflects the impact of the Second Empire Acquisition, which added approximately $2.2 million to operating expenses during the nine-month period.
Other Income (Expense). Other expense for the nine months ended July 31, 2025 was $141,848, a decrease of $151,657 from other income of $9,809 for the nine months ended July 31, 2024. The decrease was mainly attributable to a decrease in gain on extinguishment of lease of $210,538 and offset by decrease in our interest expense of $93,522, during the nine months ended July 31, 2024.
Income Taxes. Our expense for income taxes for the nine months ended July 31, 2025 totaled $650,749 compared to an expense of $323,954 for the nine months ended July 31, 2024. The change was primarily attributable to the difference in the income for the nine months ended July 31, 2025 versus the income in the nine months ended July 31, 2024.
Net (Loss) Income. We had net income of $591,898 or $0.10 per share basic and diluted, for the nine months ended July 31, 2025 compared to net income of $955,979, or $0.17 per share basic and diluted for the nine months ended July 31, 2024. The decrease in net income was primarily due to higher operating expenses associated with the Second Empire Acquisition, the impact of tariffs on imported coffee, and unrealized trading losses during the third quarter (see Note 5).
Liquidity, Capital Resources and Going Concern
As of July 31, 2025, we had working capital of $20,979,529, a decrease of $547,454 compared to $21,526,983 as of October 31, 2024. The decrease in working capital was primarily attributable to a $2,339,316 increase in accounts payable and accrued expenses, a $6,250,000 increase in borrowings under our line of credit, and a $1,115,244 increase in due to broker. The decrease was partially offset by a $5,979,428 increase in inventory, a $2,978,120 increase in due from broker, and a $717,207 increase in accounts receivable.
| 4 |
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 $6,250,000 and $0 as of July 31, 2025 and October 31, 2024, respectively.
For the nine months ended July 31, 2025, operating activities used cash of $5,396,716, compared to cash provided by operating activities of $5,209,235 for the nine months ended July 31, 2024. The decrease in operating cash flow was primarily attributable to an increase in inventory between October 31, 2024 and July 31, 2025. The increase in inventory was primarily due to higher purchasing activity to support our anticipated sales growth. Non-cash charges, including depreciation and amortization, unrealized gains and losses on commodities, amortization of right-of-use assets, and deferred income taxes, resulted in cash used of $1,102,564 in the nine months ended July 31, 2025, compared to cash used of $159,890 in the prior-year period.
For the nine months ended July 31, 2025, investing activities used cash of $1,254,535, compared to cash provided of $2,879,320 in the nine months ended July 31, 2024. The year-over-year change primarily reflects proceeds of $3,150,000 from the sale of an investment in the prior-year period, which did not recur in fiscal 2025.
For the nine months ended July 31, 2025, financing activities provided net cash of $6,250,000, compared to net cash used of $7,724,374 in the nine months ended July 31, 2024. The change was primarily due to increased borrowings under our line of credit in the current year.
We expect to fund our operations, including working capital needs, capital expenditures, and required debt service, for at least the next twelve months from the date these condensed consolidated financial statements are issued, through a combination of cash provided by operating activities and availability under 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.
| 5 |
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 nine months ended July 31, 2025 in conformity with U.S. GAAP for interim financial information and in accordance with the rules and regulations of the SEC.
| 6 |
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 July 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 7 |
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 and in Item 1A. “Risk Factors” in our Report on Form 10-Q for the quarter ending April 30, 2025, filed on June 13, 2025 (the “Second Quarter 10-Q”). There have been no material changes to our risk factors since the Second Quarter 10-Q.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
(a) None.
(b) None.
(c)
During the fiscal quarter ended July 31, 2025, no director or “officer” (as defined in Rule 16a-1(f) under the Exchange Act)
of the Company
| 8 |
ITEM 6. EXHIBITS
Exhibit Number |
Description | |
| 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
| 9 |
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: September 12, 2025 | By: | /s/ Andrew Gordon |
| Name: | Andrew Gordon | |
| Title: | President, Chief Executive Officer and Chief Financial Officer | |
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