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[Re-Circulation] Coffee Holding Co., Inc. Reports Results for Three and Nine Months Ended July 31, 2020

STATEN ISLAND, New York, Sep 14, 2020 (GLOBE NEWSWIRE via COMTEX) --

Coffee Holding Co., Inc. (Nasdaq: JVA) (the "Company") today re-circulated its operating results for the three months and nine months ended July 31, 2020 which the Company originally announced on September 11, 2020:

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

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

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

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

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

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

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

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

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

About Coffee Holding

Coffee Holding Co., Inc. is a leading integrated wholesale coffee roaster and dealer in the United States and one of the few coffee companies that offers a broad array of coffee products across the entire spectrum of consumer tastes, preferences and price points. Coffee Holding has been a family-operated business for three generations and has remained profitable through varying cycles in the coffee industry and the economy. The 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.

Forward looking statements

Any statements that are not historical facts contained in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the Company's outlook on the revenue growth at Steep N Brew and Comfort Foods. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. We have based these forward-looking statements upon information available to management as of the date of this release and 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, the effect of the COVID-19 pandemic, intellectual property rights, the outcome of competitive products, risks in product development, the results of financing efforts, the ability to complete transactions and other factors discussed from time to time in the 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.

Company Contact

Coffee Holding Co., Inc.

Andrew Gordon

President& CEO

718-832-0800

COFFEE HOLDING CO., INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

JULY 31, 2020 AND OCTOBER 31, 2019

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

COFFEE HOLDING CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

NINE AND THREE MONTHS ENDED JULY 31, 2020 AND 2019

(Unaudited)

                                                                                                                                                                                                                                      Nine Months Ended                  Three Months Ended
                                                                                                                                                                                                                                      July 31,                           July 31,
                                                                                                                                                                                                                                      2020              2019             2020                2019
NET SALES                                                                                                                                                                                                                                $  56,725,386     $  65,944,583    $   17,344,009      $   21,594,285
COST OF SALES (including $4.5 and $5.9 million of related party costs for the nine months ended July 31, 2020 and 2019, respectively. Including $1.5 and $1.8 million for the three months ended July 31, 2020 and 2019, respectively.)     45,287,198        53,705,272        13,517,482          17,465,685
GROSS PROFIT                                                                                                                                                                                                                                11,438,188        12,239,311        3,826,527           4,128,600
OPERATING EXPENSES:
Selling and administrative                                                                                                                                                                                                                  10,032,993        10,853,495        3,081,985           3,701,112
Officers' salaries                                                                                                                                                                                                                          497,654           530,750           170,250             170,250
TOTAL                                                                                                                                                                                                                                       10,530,647        11,384,245        3,252,235           3,871,362
INCOME (LOSS) FROM OPERATIONS                                                                                                                                                                                                               907,541           855,066           574,292             257,238
OTHER INCOME (EXPENSE)
Interest income                                                                                                                                                                                                                             2,944             8,903             247                 3,548
Loss from equity method investment                                                                                                                                                                                                          (4,539     )      (2,691     )      (1,547     )        (2,613     )
Interest expense                                                                                                                                                                                                                            (150,742   )      (195,493   )      (45,283    )        (64,625    )
TOTAL                                                                                                                                                                                                                                       (152,337   )      (189,281   )      (46,583    )        (63,690    )
INCOME BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY                                                                                                                                                         755,204           665,785           527,709             193,548
Provision for income taxes                                                                                                                                                                                                                  250,804           115,543           161,454             34,413
NET INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY                                                                                                                                                                                    504,400           550,242           366,255             159,135
Less: Net (income) loss attributable to the non-controlling interest                                                                                                                                                                        (214,406   )      (362,501   )      25,069              (47,641    )
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC.                                                                                                                                                                                      $  289,994        $  187,741       $   391,324         $   111,494
Basic and diluted earnings per share                                                                                                                                                                                                     $  .05            $  .03           $   .07             $   .02
Weighted average common shares outstanding:
Basic and diluted                                                                                                                                                                                                                           5,569,349         5,569,349         5,569,349           5,569,349

COFFEE HOLDING CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED JULY 31, 2020 AND 2019

(Unaudited)

                                                                                   2020             2019
OPERATING ACTIVITIES:
Net income                                                                         $  504,400       $  550,242
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization                                                         564,843          547,483
Stock-based compensation                                                              678,709          228,868
Unrealized (gain) loss on commodities                                                 (355,079   )     74,658
Loss on equity method investments                                                     4,539            2,691
Deferred rent                                                                         -                (36,151    )
Amortization of right to use asset                                                    325,140          -
Deferred income taxes                                                                 73,473           (43,988    )
Changes in operating assets and liabilities:
Accounts receivable                                                                   2,587,601        1,421,655
Inventories                                                                           299,249          (2,431,050 )
Prepaid expenses and other current assets                                             (120,563   )     (107,498   )
Prepaid and refundable income taxes                                                   154,158          94,567
Accounts payable and accrued expenses                                                 (1,437,428 )     (1,206,027 )
Change in lease liability                                                             (357,286   )     -
Deposits and other assets                                                                              (5,885     )
Income taxes payable                                                                  217              (1,305     )
Net cash provided by (used in) operating activities                                   2,921,973        (911,740   )
INVESTING ACTIVITIES:
Purchases of machinery and equipment                                                  (392,023   )     (568,235   )
Net cash used in investing activities                                                 (392,023   )     (568,235   )
FINANCING ACTIVITIES:
Advances under bank line of credit                                                    1,141,132        7,626
Proceeds from PPP loan                                                                634,400
Principal payment on note payable                                                     (3,210     )     (70,255    )
Principal payments under bank line of credit                                          (4,512,050 )     (500,000   )
Net cash used in financing activities                                                 (2,739,728 )     (562,629   )
NET DECREASE IN CASH                                                                  (209,778   )     (2,042,604 )
CASH, BEGINNING OF PERIOD                                                             2,402,556        4,611,384
CASH, END OF PERIOD                                                                $  2,192,778     $  2,568,780
                                                                         2020           2019
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
Interest paid                                                            $  159,484     $  197,216
Income taxes paid                                                        $  22,956      $  66,269
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Initial recognition of operating lease right of use asset                $  2,512,022
Initial recognition of operating lease liabilities                       $  2,705,484
Machinery and equipment acquired through financing                       $  26,807

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