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Coffee Holding Co., Inc. Reports Results for Three and Nine Months Ended July 31, 2017 and Announces Stock Repurchase Program

STATEN ISLAND, NY, Sep 13, 2017 (Marketwired via COMTEX) --

STATEN ISLAND, NY--(Marketwired - Sep 13, 2017) -  Coffee Holding Co., Inc. (NASDAQ: JVA) (the "Company") today announced its operating results for the three and nine months ended July 31, 2017:

Net sales totaled $17,979,068 for the three months ended July 31, 2017, an increase of $624,535, or 3.6% from $17,354,533 for the three months ended July 31, 2016. The increase in net sales reflects our gain of approximately $4,000,000 in sales of both branded and private label coffee to both new and existing customers, partially offset by reduced wholesale transactions with our largest wholesale green coffee customer of approximately $3,400,000.

Cost of sales for the three months ended July 31, 2017 was $14,903,594, or 82.9% of net sales, as compared to $14,203,343, or 81.9% of net sales, for the three months July 31, 2016. 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 in cost of sales reflects the change in the product mix due to our reduced wholesale transactions with our largest wholesale green coffee customer.

Gross profit for the three months ended July 31 2017 was $3,075,474, a decrease of $75,716 from $3,151,190 for the three months ended July 31, 2016. Gross profit as a percentage of net sales decreased to 17.1% for the three months ended July 31, 2017 from 18.1% for the three months ended July 31, 2016. Although we experienced improved margins on our wholesale and roasted business during the quarter, the decrease in gross profits was due in part to the purchase price paid for our acquisition of Comfort Foods, Inc., or CFI.

Total operating expenses increased by $1,027,420 to $2,895,643 for the three months ended July 31, 2017 from $1,868,223 for the three months ended July 31, 2016. The quarter ended July 31, 2017 included approximately $208,409 of selling and administrative expenses from our subsidiary Sonofresco, LLC, or SONO, and approximately $444,530 of selling and administrative expenses from our subsidiary CFI which were not fully included in the July 31, 2016 numbers since the SONO transaction was completed in late June 2016 and the CFI transaction occurred in 2017. Also, we incurred increases in shipping expenses of $175,481, salary expense of $42,169 and medical insurance expense of $22,946. These increases were the result of our reinvestment in our growth and expansion strategy.

The Company had net income of $32,800 or $0.01 per share basic and diluted, for the three months ended July 31, 2017 compared to net income of $755,518, or $0.12 per share basic and diluted for the three months ended July 31, 2016. The decrease in net income was due primarily to the reasons described above.

Additionally, the Company's Board of Directors has approved a share repurchase program pursuant to which the Company may repurchase up to $2 million in value of its outstanding common stock, par value, $0.001 per share, from time to time on the open market and in privately negotiated transactions subject to market conditions, share price and other factors (the "Share Repurchase Program"). The Company intends to fund the Share Repurchase Program with available cash and from future cash flow from operations.

The timing and amount of any shares repurchased will be determined based on the Company's evaluation of market conditions and other factors and the program may be discontinued or suspended at any time. Repurchases will be made in accordance with the rules and regulations promulgated by the Securities and Exchange Commission and certain other legal requirements to which the Company may be subject. Repurchases may be made, in part, under a Rule 10b5-1 plan, which allows stock repurchases when the Company might otherwise be precluded from doing so.

"We are pleased to report to our shareholders a sales increase during our third fiscal quarter of 2017. Our revenue grew by approximately 3.5% to approximately $18 million compared to approximately $17.4 million for the same period in 2016. This revenue figure includes a decrease in sales of approximately $3.4 million during the quarter to our former largest wholesale green coffee customer demonstrating that we have successfully offset all of the lost revenue from one customer by increasing our sales of branded, private label and green coffee sales to existing and new customers.

Sales of our flagship brand, Café Caribe, continue to improve, especially in the Texas market as our customer base in the region continues to grow along with the increased number of stores which now carry our brand. Sales of our private label grew by nearly 100% during the quarter from our last fiscal quarter. Sales of green coffee to our smaller, regional roaster clientele remained steady, reflecting the continuing sales growth of higher end, 100% Arabica micro brewed specialty beverages favored by the millennial coffee drinking demographic.

As our increased efforts in key areas of our business are now reflected in our revenues, I believe we have turned the page on our previous declines in revenue caused by the reduced sales to our former largest green coffee customer.

Once the integration of our most recent acquisition, Comfort Foods, Inc. in North Andover, Massachusetts, is completed, we expect to return to a profitable position as our overall gross margins continue to improve in conjunction with the changes in our overall sales mix, due in part to our efforts to replace our lower margin business with increased sales of our roasted product offerings.

Lastly, as we believe the public market is not reflecting the true value of our company, we have decided to initiate a share repurchase program whereby we may repurchase up to $2 million of our outstanding shares in the open market. Going forward, our focus will continue to be on growing our revenues over the next several years."

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 Company's 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.

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 Company's outlook on future margin performance and its share repurchase program. 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 management's 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, 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 Company's 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.

                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                       
COFFEE HOLDING CO., INC.                                                                                                                                                                                                                                      
CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                                                                      
JULY 31, 2017 AND OCTOBER 31, 2016                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                        July 31, 2017         October 31, 2016     
                                                                                                                                                                                                                                        (Unaudited)                           
- ASSETS -                                                                                                                                                                                                                                                                        
CURRENT ASSETS:                                                                                                                                                                                                                                                              
                                Cash                                                                                                                                                                                                                                       $      2,687,724      $        3,227,981   
                                Accounts receivable, net of allowances of $144,000 for 2017 and 2016                                                                                                                                                                                      10,418,086         13,517,892  
                                Inventories                                                                                                                                                                                                                                         15,663,719         14,276,290  
                                Prepaid green coffee                                                                                                                                                                                                                                      280,254            435,577     
                                Prepaid expenses and other current assets                                                                                                                                                                                                                 621,877            535,456     
                                Prepaid and refundable income taxes                                                                                                                                                                                                                       797,939            481,977     
                                Due from broker                                                                                                                                                                                                                                         778,556            134,722     
                                Deferred income tax asset                                                                                                                                                                                                                                 -                  81,545      
TOTAL CURRENT ASSETS                                                                                                                                                                                                                                         31,248,155         32,691,440  
                                                                                                                                                                                                                                                               
Machinery and equipment, at cost, net of accumulated depreciation of $5,377,379 and $4,819,828 for 2017 and 2016, respectively                                                                                                                                                                 2,526,486          2,269,863   
Customer list and relationships, net of accumulated amortization of $64,625 and $50,250 for the periods ended July 31, 2017 and 2016, respectively                                                                                                                                             375,375            219,750     
Trademarks                                                                                                                                                                                                                                         180,000            180,000     
Goodwill                                                                                                                                                                                                                                         2,377,407          1,017,905   
Equity method investments                                                                                                                                                                                                                                         95,528             95,598      
Deposits and other assets                                                                                                                                                                                                                                         535,750            549,337     
                                                                               TOTAL ASSETS                                                                                                                                                                                        $      37,338,701     $        37,023,893  
                                                                                                                                                                                                                                                               
- LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY -                                                                                                                                                                                                                                                   
CURRENT LIABILITIES:                                                                                                                                                                                                                                                              
                                Accounts payable and accrued expenses                                                                                                                                                                                                                   $      3,254,991      $        4,062,573   
                                Line of credit                                                                                                                                                                                                                                         7,406,325          6,958,375   
                                Deferred income tax liabilities                                                                                                                                                                                                                           60,785             -           
                                Income taxes payable                                                                                                                                                                                                                                      -                  1,050       
TOTAL CURRENT LIABILITIES                                                                                                                                                                                                                                         10,722,101         11,021,998  
                                                                                                                                                                                                                                                               
Deferred income tax liabilities                                                                                                                                                                                                                                         203,600            167,470     
Deferred rent payable                                                                                                                                                                                                                                         238,088            231,216     
Deferred compensation payable                                                                                                                                                                                                                                         509,170            489,668     
TOTAL LIABILITIES                                                                                                                                                                                                                                         11,672,959         11,910,352  
Redeemable common stock:                                                                                                                                                                                                                                                              
                                Common stock subject to possible redemption, at $200,004; 38,364 shares issued and outstanding at redemption value as of July 31, 2017 and October 31, 2016                                                                                               200,004            200,004     
STOCKHOLDERS' EQUITY:                                                                                                                                                                                                                                                              
                                Coffee Holding Co., Inc. stockholders' equity:                                                                                                                                                                                                                                 
                                                                               Preferred stock, par value $.001 per share; 10,000,000 shares authorized; no shares issued and outstanding                                                                                            -                  -           
                                                                               Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,494,680 shares issued; 5,821,554 and 5,824,938 shares outstanding as of July 31 2017 and October 31, 2016, respectively      6,456              6,456       
                                                                               Additional paid-in capital                                                                                                                                                                            15,904,109         15,904,109  
                                                                               Retained earnings                                                                                                                                                                                     12,288,547         11,878,228  
                                                                               Less: Treasury stock, 634,762 and 631,378 common shares, at cost as of July 31, 2017 and October 31, 2016, respectively                                                                               (3,265,419 )            (3,249,590 )
                                                                                                                                                                           Total Coffee Holding Co., Inc. Stockholders' Equity                                                  25,133,697         24,539,203  
                                Noncontrolling interest                                                                                                                                                                                                                                   532,045            374,334     
                                                                                                                                                                           TOTAL EQUITY                                                                                         25,665,742         24,913,537  
TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                          $      37,338,701     $        37,023,893  
                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                               
COFFEE HOLDING CO., INC.                                                                                                                                                                                                                                      
CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                                                                                                                                                                                                                      
THREE AND NINE MONTHS ENDED JULY 31, 2017 AND 2016                                                                                                                                                                                                                                      
(Unaudited)                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                     Nine Months Ended                                     Three Months Ended                                 
                                                                                                                                                                                                                                               July 31,                                                        July 31,
                                                                                                                                                                                                                                     2017                  2016                  2017                  2016               
NET SALES                                                                                                                                                                                                                                 $      55,398,538     $      61,566,868     $      17,979,068     $      17,354,533  
                                                                                                                                                                                                                                                                                  
COST OF SALES (including $4.8 and $7.4 million of related party costs for the nine months ended July 31, 2017 and 2016, respectively. Including $2.6 and $1.9 million for the three months ended July 31, 2017 and 2016, respectively.)     46,469,896       52,455,081       14,903,594       14,203,343  
                                                                                                                                                                                                                                                                                  
GROSS PROFIT                                                                                                                                                                                                                                8,928,642        9,111,787        3,075,474        3,151,190   
                                                                                                                                                                                                                                                                                  
OPERATING EXPENSES:                                                                                                                                                                                                                                                                    
                                                                         Selling and administrative                                                                                                                                    7,517,062        5,170,915        2,716,393        1,704,373   
                                                                         Officers' salaries                                                                                                                                            527,090          491,550          179,250          163,850     
                                                                                                                                                  TOTAL                                                                           8,044,152        5,662,465        2,895,643        1,868,223   
                                                                                                                                                                                                                                                                                  
INCOME FROM OPERATIONS                                                                                                                                                                                                                      884,490          3,449,322        179,831          1,282,967   
                                                                                                                                                                                                                                                                                  
OTHER INCOME (EXPENSE)                                                                                                                                                                                                                                                                 
                                                                         Interest income                                                                                                                                               29,381           30,889           5,993            9,890       
                                                                         Loss from equity method investment                                                                                                                            (71        )          (1,049     )          (322       )          (805       )
                                                                         Interest expense                                                                                                                                              (192,317   )          (116,114   )          (68,079    )          (42,671    )
                                                                                                                                                  TOTAL                                                                           (163,007   )          (86,304    )          (62,408    )          (33,586    )
                                                                                                                                                                                                                                                                                  
INCOME BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY                                                                                                                                                         721,483          3,363,018        117,423          1,249,381   
                                                                                                                                                                                                                                                                                  
                                                                         Provision for income taxes                                                                                                                                    153,453          1,236,319        23,911           448,399     
                                                                                                                                                                                                                                                                                  
NET INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY                                                                                                                                                                                    568,030          2,126,699        93,512           800,982     
                                                                         Less: Net income attributable to the non-controlling interest                                                                                                 (157,711   )          (100,811   )          (60,712    )          (45,464    )
                                                                                                                                                                                                                                                                                  
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC.                                                                                                                                                                                       $      410,319        $      2,025,888      $      32,800         $      755,518     
                                                                                                                                                                                                                                                                                  
Basic and diluted earnings per share                                                                                                                                                                                                      $      .07            $      .33            $      .01            $      .12         
                                                                                                                                                                                                                                                                                  
Weighted average common shares outstanding:                                                                                                                                                                                                                                            
                                                                         Basic and diluted                                                                                                                                             5,861,777        6,117,610        5,859,918        6,056,420   
                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                  
COFFEE HOLDING CO., INC.                                                                                                                                       
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                                
NINE MONTHS ENDED JULY 31, 2017 AND 2016                                                                                                                       
(Unaudited)                                                                                                                                                    
                                                                                                                                                          
                                                                                                  2017                  2016               
OPERATING ACTIVITIES:                                                                                                       
             Net income                                                                           $      568,030        $      2,126,699   
             Adjustments to reconcile net income to net cash provided by operating activities:                         
                                                 Depreciation and amortization                 573,447          425,977     
                                                 Unrealized (gain) on commodities              (643,834   )          (591,566   )
                                                 Loss on equity method investments             70               1,049       
                                                 Deferred rent                                 6,872            6,872       
                                                 Deferred income taxes                         178,460          890,750     
             Changes in operating assets and liabilities:                                                              
                                                 Accounts receivable                           3,684,724        (4,766,640 )
                                                 Inventories                                   (270,523   )          1,432,701   
                                                 Prepaid expenses and other current assets     (53,740    )          (262,707   )
                                                 Prepaid green coffee                          155,323          58,310      
                                                 Prepaid and refundable income taxes           (315,962   )          931,250     
                                                 Accounts payable and accrued expenses         (1,434,462 )          (1,554,385 )
                                                 Deposits and other assets                     59,640           31,558      
                                                 Income taxes payable                          (1,050     )          925         
Net cash provided by (used in) operating activities                                                      2,506,995        (1,269,207 )
                                                                                                                       
INVESTING ACTIVITIES:                                                                                                       
             Purchase of business net of cash acquired                                              (2,893,275 )          (856,904   )
             Purchases of machinery and equipment                                                   (586,098   )          (661,591   )
Net cash used in investing activities                                                                    (3,479,373 )          (1,518,495 )
                                                                                                                       
FINANCING ACTIVITIES:                                                                                                       
             Advances under bank line of credit                                                     4,512,950        5,204,254   
             Payment of dividend                                                                    -                (100,000   )
             Purchase of treasury stock                                                             (15,829    )          (839,927   )
             Principal payments under bank line of credit                                           (4,065,000 )          (3,500,000 )
Net cash provided by financing activities                                                                432,121          764,327     
                                                                                                                       
NET DECREASE IN CASH                                                                                     (540,257   )          (2,023,375 )
                                                                                                                       
CASH, BEGINNING OF PERIOD                                                                                3,227,981        3,853,816   
                                                                                                                       
CASH, END OF PERIOD                                                                                    $      2,687,724      $      1,830,441   
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:                                                                                  
             Interest paid                                                                        $      189,933        $      111,060     
             Income taxes paid                                                                    $      281,538        $      26,582      
                                                                                                                  
                                                                                                                  
                                                                                                                  
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 2017 AND 2016
(Unaudited)
 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                                                                  
                               On February 23, 2017 Coffee Holding Co., Inc. acquired the assets of Comfort Foods, Inc.:            
                                                                                                                                    
Accounts receivable                                                                                                                $         584,918
Inventory                                                                                                                               1,116,906
Equipment                                                                                                                               229,597
Prepaid expenses                                                                                                                        32,681
Customer lists                                                                                                                          170,000
Goodwill                                                                                                                                1,359,502
Other asset                                                                                                                             26,551
                                                                                                                                    
Less: liabilities                                                                                                                       626,880
                                                                                                                                    
                               Net cash paid                                                                                  $         2,893,275

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

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