COFFEE HOLDING CO INC

Previous wording

There have been no changes to our critical accounting policies during the three months ended January 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.

Current wording

There have been no changes to our critical accounting policies during the three and six months ended April 30, 2025. Critical accounting policies and the significant estimates in accordance with such policies are regularly discussed with our Audit Committee. Those policies are discussed under “Critical Accounting Policies and Estimates” in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our consolidated financial statements and notes thereto, each in our 2024 10-K.

Previous wording

Net Sales. Net sales totaled $21,305,285 for the three months ended January 31, 2025, an increase of $1,764,883, or 9%, from $19,540,402 for the three months ended January 31, 2024. The increase in net sales was due to increased sales of private label and our brands to our wholesale and retail customers.

Current wording

Net Sales. Net sales totaled $23,320,061 for the three months ended April 30, 2025, an increase of $4,324,148, or 23%, from $18,995,913 for the three months ended April 30, 2024. The increase in net sales was due to increased sales of our private label and Cafe Caribe and Cafe Supremo products brands to our wholesale and retail customers.

Previous wording

Gross Profit. Gross profit for the three months ended January 31, 2025 amounted to $5,731,926 or 26.9% of net sales, as compared to $3,480,299 or 17.8% of net sales, for the three months ended January 31, 2024. The increase in gross profits on a percentage and dollar basis was attributable to the factors listed above.

Current wording

Gross Profit. Gross profit for the three months ended April 30, 2025 amounted to $4,418,872 or 18.9% of net sales, as compared to $3,703,980 or 19.5% of net sales, for the three months ended April 30, 2024. The increase in gross profits on a percentage and dollar basis was attributable to the factors listed above.

Previous wording

Operating Expenses. Total operating expenses increased by $1,277,507 to $4,140,895 for the three months ended January 31, 2025 from $2,863,388 for the three months ended January 31, 2024. Selling and administrative expenses increased by $1,239,551 and officers’ salaries increased by $37,956. The increase in selling and administrative expenses was due to higher payroll costs, professional fees, and the acquisition of Empire Coffee Company.

Current wording

Operating Expenses. Total operating expenses decreased by $240,373 to $3,530,257 for the three months ended April 30, 2025 from $3,770,630 for the three months ended April 30, 2024. Selling and administrative expenses decreased by $342,595 and officers’ salaries increased by $102,222. The decrease in selling and administrative expenses was due to lower payroll costs and professional fees.

Previous wording

Other Income (Expense). Other income for the three months ended January 31, 2025 was $31,683, a decrease of $91,867 from other income of $123,550 for the three months ended January 31, 2024. The change was attributable to a decrease in interest expense of $85,863.

Current wording

Other Income (Expense). Other income for the three months ended April 30, 2025 was $17,487, a decrease of $15,336 from other income of $32,823 for the three months ended April 30, 2024. The change was attributable to a decrease in interest expense of $55,701.

Previous wording

Income Taxes. Our expense for income taxes for the three months ended January 31, 2025 totaled $406,092 compared to an expense of $142,337 for the three months ended January 31, 2024. The change was primarily attributable to the difference in the income for the quarter ended January 31, 2025 versus the income in the quarter ended January 31, 2024.

Current wording

Income Taxes. Our expense for income taxes for the three months ended April 30, 2025 totaled $227,073 compared to our benefit of $77,632 for the three months ended April 30, 2024. The change was primarily attributable to the difference in the income for the quarter ended April 30, 2025, versus the loss in the quarter ended April 30, 2024.

Previous wording

Net Income (Loss). We had net income of $1,153,256, or $0.20 per share basic and diluted, for the three months ended January 31, 2025 compared to a net loss of $351,024, or $0.06 per share basic and diluted, for the three months ended January 31, 2024.

Current wording

Net Income (Loss). We had net income of $644,055, or $0.11 per share basic and diluted, for the three months ended April 30, 2025, compared to a net loss of $21,841, or $0.00 per share basic and diluted, for the three months ended April 30, 2024.

Previous wording

Cost of Sales. Cost of sales for the three months ended January 31, 2025 was $15,573,359, or 73.1% of net sales, as compared to $16,060,103, or 82.2% of net sales, for the three months ended January 31, 2024, a decrease of $486,744. Cost of sales consists primarily of the cost of green coffee and packaging materials. This increase in gross margin was due to favorable green coffee prices that were initiated during the three months ended January 31, 2025 for our roasted coffee customers and the cost of goods sold was favorably impacted by an improved inventory situation, along with increased prices to both our wholesale and retail customers, reflecting higher market conditions. Additionally, net sales increased due to higher sales of our private label and branded products to both wholesale and retail customers.

Current wording

***Cost of Sales.***Cost of sales for the six months ended April 30, 2025 was $34,474,548, or 77.3% of net sales, as compared to $31,352,036, or 81.4% of net sales, for the six months ended April 30, 2024. Cost of sales consists primarily of the cost of green coffee and packaging materials and realized and unrealized gains or losses on hedging activity. This increase in gross margin was due to favorable green coffee prices that were initiated during the six months ended April 30, 2025, for our roasted coffee customers and the cost of goods sold was favorably impacted by improved inventory management, along with increased prices to both our wholesale and retail customers, reflecting higher market conditions. Additionally, net sales increased due to higher sales of our private label and branded products to both wholesale and retail customers.

Previous wording

As of January 31, 2025, we had working capital of $22,386,733, which represented a $859,750 increase from our working capital of $ 21,526,983 as of October 31, 2024. Our working capital increased primarily due to the $495,767 increase in due from broker, a $980,195 increase in cash and cash equivalents, and a $2,398,168 increase in accounts receivable offset by a $2,200,000 increase on the line of credit.

Current wording

As of April 30, 2025, we had working capital of $25,831,578, which represented a $965,841 increase from our working capital of $21,526,983 as of October 31, 2024. Our working capital increased primarily due to the $1,509,920 increase in inventory, a $1,221,965 increase in due from broker, and a $779,055 increase in accounts receivable offset by a $3,000,000 increase on the line of credit.

Previous wording

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 $2,200,000 and $9,620,000 as of January 31, 2025 and October 31, 2024, respectively.

Current wording

Each of the A&R Loan Facility and A&R Loan Agreement contains covenants, subject to certain exceptions, that place annual restrictions on the Borrowers’ operations, including covenants relating to debt restrictions, capital expenditures, indebtedness, minimum deposit restrictions, tangible net worth, net profit, leverage, employee loan restrictions, dividend and repurchase restrictions (common stock and preferred stock), and restrictions on intercompany transactions. The outstanding balance on our line of credit was $3,000,000 and $0 as of April 30, 2025 and October 31, 2024, respectively.

Previous wording

For the three months ended January 31, 2025, our operating activities used cash of $401,898 as compared to the three months ended January 31, 2024 when operating activities provided net cash of $4,594,849. The decrease in cash flow from operations was primarily due to the increase in accounts receivable from October 31, 2024 to January 31, 2025, compared to a decrease in accounts receivable of $2,524,747 from October 31, 2023 to January 31, 2024. Non-cash charges, including depreciation and amortization, unrealized gain on commodities, loss on equity method investments, amortization of right-of-use assets, and deferred income taxes, resulted in cash used of $393,042 for the three months ended January 31, 2025 compared to non-cash charges provided of $513,003 for the three months ended January 31, 2024.

Current wording

For the six months ended April 30, 2025, our operating activities used cash of $1,555,954 as compared to the six months ended April 30, 2024 when operating activities provided cash of $3,390,694. The decrease in cash flow from operations was primarily due to the increase in inventory from October 31, 2024 to April 30, 2025. Non-cash charges, including depreciation and amortization, unrealized gain on commodities, amortization of right-of-use assets, and deferred income taxes, resulted in cash used of $603,581 for the six months ended April 30, 2025 compared to non-cash charges provided of $24,165 for the six months ended April 30, 2024.

Previous wording

For the three months ended January 31, 2025, our investing activities provided used cash of $817,906 as compared to the three months ended January 31, 2024 when net cash used in investing activities was $0. The decrease in our cash provided by investing activities was due to purchases of machinery and equipment during the three months ended January 31, 2025.

Current wording

For the six months ended April 30, 2025, our investing activities used cash of $992,907 as compared to the six months ended April 30, 2024 when net cash provided in investing activities was $2,925,927. The decrease in our cash provided by investing activities was due to the proceeds from the sale of an investment of $3,150,000 during the three months ended April 30, 2024.

Previous wording

For the three months ended January 31, 2025, our financing activities used net cash of $2,200,000 compared to net cash used in financing activities of $4,920,963 for the three months ended January 31, 2024. The change in cash flow from financing activities for the three months ended January 31, 2025 was primarily due to our credit line activity.

Current wording

For the six months ended April 30, 2025, our financing activities provided net cash of $3,000,000 compared to net cash used in financing activities of $6,622,909 for the six months ended April 30, 2024. The change in cash flow from financing activities for the six months ended April 30, 2025 was primarily due to our credit line activity.