Coffee Holding Co. Brews Up Sales Growth, But Q3 Net Loss Stings

TL;DR

**JVA's Q3 net loss is a bitter pill, showing sales growth isn't enough to offset rising costs and acquisition integration challenges; proceed with caution.**

AI Summary

COFFEE HOLDING CO INC (JVA) reported a mixed financial performance for the nine months ended July 31, 2025, with net sales increasing by 19.5% to $68,535,860 from $57,349,477 in the prior year. However, net income for the nine-month period decreased by 38.1% to $591,898 from $955,979. The third quarter (three months ended July 31, 2025) saw a significant net loss of $1,205,413, a sharp decline from a net income of $626,796 in the same period last year, despite a 27.1% increase in net sales to $23,910,514. This quarterly loss was primarily driven by a substantial increase in cost of sales, which rose to $20,997,777 from $14,887,098, and a negative income from operations of $(1,095,151). The company acquired Empire Coffee Company for $800,000 on November 6, 2024, expanding its roasting and packing capabilities. JVA maintains a net working capital surplus of $20,979,529 and is in compliance with its line of credit covenants, due June 28, 2026.

Why It Matters

This mixed performance signals a challenging environment for JVA, where increased sales are not translating into higher profitability, particularly in the most recent quarter. Investors should be concerned about the significant net loss in Q3 2025, which could indicate margin pressures or integration challenges from the Empire Coffee Company acquisition. For employees, the acquisition suggests potential growth, but the overall profitability dip might raise questions about long-term stability. Customers could benefit from expanded product offerings, but the company's financial health impacts its ability to innovate and compete with larger coffee industry players like Starbucks or Keurig Dr Pepper.

Risk Assessment

Risk Level: medium — The company reported a net loss of $1,205,413 for the three months ended July 31, 2025, a significant reversal from a net income of $626,796 in the prior year's comparable quarter. This, coupled with a substantial increase in inventories to $21,685,412 from $15,705,984, suggests potential overstocking or slower sales velocity, increasing carrying costs and obsolescence risk.

Analyst Insight

Investors should closely monitor JVA's next earnings report for signs of improved profitability and successful integration of Empire Coffee Company. Consider holding off on new investments until there's clear evidence of margin recovery and a return to consistent net income, especially given the recent quarterly loss.

Financial Highlights

debt To Equity

N/A

revenue

$68,535,860

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

$591,898

eps

$0.10

gross Margin

N/A

cash Position

N/A

revenue Growth

+19.5%

Revenue Breakdown

Key Numbers

• $68.5M — Net Sales (Increased 19.5% for the nine months ended July 31, 2025, from $57.3M in 2024.)
• $591.9K — Net Income (9 months) (Decreased 38.1% for the nine months ended July 31, 2025, from $956.0K in 2024.)
• $(1.2M) — Net Loss (Q3) (Reported for the three months ended July 31, 2025, compared to $626.8K net income in Q3 2024.)
• $23.9M — Net Sales (Q3) (Increased 27.1% for the three months ended July 31, 2025, from $18.8M in Q3 2024.)
• $800K — Acquisition Cost (Paid for Empire Coffee Company on November 6, 2024.)
• $21.7M — Inventories (Increased significantly from $15.7M at October 31, 2024, indicating potential inventory management issues.)
• $6.25M — Line of Credit (Outstanding balance as of July 31, 2025, with proceeds of $7.75M and payments of $1.5M during the nine months.)
• $0.10 — Basic and Diluted EPS (9 months) (Decreased from $0.17 in the prior year period.)
• $(0.21) — Basic and Diluted EPS (Q3) (A loss per share, compared to $0.11 earnings per share in Q3 2024.)
• $20.9M — Net Working Capital Surplus (As of July 31, 2025, indicating liquidity.)

Key Players & Entities

• COFFEE HOLDING CO INC (company) — Registrant
• Empire Coffee Company (company) — Acquired entity
• Second Empire, LLC (company) — Wholly-owned subsidiary that acquired Empire Coffee Company
• SEC (regulator) — Securities and Exchange Commission
• $68,535,860 (dollar_amount) — Net sales for nine months ended July 31, 2025
• $591,898 (dollar_amount) — Net income for nine months ended July 31, 2025
• $1,205,413 (dollar_amount) — Net loss for three months ended July 31, 2025
• $800,000 (dollar_amount) — Acquisition price for Empire Coffee Company
• $20,979,529 (dollar_amount) — Net working capital surplus as of July 31, 2025
• Nasdaq Stock Market LLC (company) — Exchange where JVA is registered

FAQ

Risk Factors

• Inventory Management [medium — operational]: Inventories increased significantly to $21.7 million as of July 31, 2025, from $15.7 million at October 31, 2024. This substantial increase may indicate potential inventory management issues, leading to increased holding costs, risk of obsolescence, or potential write-downs.
• Quarterly Net Loss [high — financial]: The company reported a net loss of $1,205,413 in the third quarter ended July 31, 2025, a sharp decline from a net income of $626,796 in the prior year's Q3. This was driven by a significant increase in cost of sales, which rose to $20,997,777 from $14,887,098, resulting in negative income from operations.
• Decreasing Profitability [medium — financial]: Despite a 19.5% increase in net sales for the nine months ended July 31, 2025, net income decreased by 38.1% to $591,898 from $955,979 in the prior year. This trend indicates pressure on margins and operational efficiency.
• Integration of Acquisitions [medium — operational]: The acquisition of Empire Coffee Company for $800,000 on November 6, 2024, adds complexity to operations. Successful integration of its roasting and packing capabilities is crucial for realizing expected synergies and avoiding operational disruptions.

Industry Context

The coffee industry is characterized by fluctuating commodity prices, intense competition, and evolving consumer preferences. Companies like JVA operate within a landscape that requires efficient supply chain management, effective cost control, and strategic growth initiatives, such as acquisitions, to maintain market share and profitability.

Regulatory Implications

The company is subject to standard financial reporting regulations, including GAAP. Recent accounting pronouncements from FASB regarding segment reporting and expense disaggregation may require future adjustments to disclosures, but currently, their adoption has not had a material impact on the consolidated financial statements.

What Investors Should Do

1. Monitor inventory levels closely.
2. Analyze the drivers of the Q3 net loss.
3. Evaluate the performance of the Empire Coffee acquisition.
4. Assess the impact of rising costs on margins.

Key Dates

• 2024-11-06: Acquisition of Empire Coffee Company — The company acquired Empire Coffee Company for $800,000, expanding its roasting and packing capabilities. This strategic move aims to enhance operational capacity and customer base.
• 2025-07-31: End of Third Quarter and Nine Months — Reporting period for the 10-Q, showing increased net sales but a significant net loss in Q3, highlighting operational challenges and margin pressures.
• 2026-06-28: Line of Credit Maturity — The company's line of credit matures on this date, requiring refinancing or repayment. The company is currently in compliance with its covenants.

Glossary

CODM

Chief Operating Decision Maker. This is the individual or group responsible for allocating resources to reportable segments and assessing their performance. (Relevant for understanding how segment performance is evaluated and reported, particularly in light of new FASB guidance on segment reporting.)

UCC Chapter 9 sale

A type of sale conducted under the Uniform Commercial Code, often used in the context of business asset sales, particularly when a business is in financial distress or undergoing a restructuring. (Indicates the nature of the acquisition of Empire Coffee Company, suggesting it was an asset purchase under specific legal provisions.)

Acquisition Method of Accounting

A method used to account for business combinations, where the acquirer recognizes the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at fair value on the acquisition date. (Explains how the Empire Coffee Company acquisition was recorded on the company's financial statements, focusing on the fair value of assets and liabilities.)

ASC 805

Accounting Standards Codification Topic 805, Business Combinations. This guidance provides principles and requirements for how an acquirer recognizes and measures the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree. (The accounting standard followed for the Empire Coffee Company acquisition, specifically regarding the identification and valuation of intangible assets.)

Year-Over-Year Comparison

Compared to the prior year, COFFEE HOLDING CO INC (JVA) has demonstrated robust top-line growth, with net sales increasing by 19.5% for the nine months ended July 31, 2025. However, this growth has not translated to the bottom line; net income has decreased by 38.1%, and the third quarter saw a significant net loss of $1.2 million, a stark contrast to the prior year's profit. This indicates a substantial deterioration in profitability and margin pressure, likely due to increased costs, despite the company's efforts to expand through acquisitions.

Key Financial Figures

• $0.001 — ch registered Common Stock, par value $0.001 per share JVA The Nasdaq Stock Mark

Filing Documents

• form10-q.htm (10-Q) — 602KB
• ex31-1.htm (EX-31.1) — 18KB
• ex32-1.htm (EX-32.1) — 10KB
• 0001493152-25-013137.txt ( ) — 3546KB
• jva-20250731.xsd (EX-101.SCH) — 27KB
• jva-20250731_cal.xml (EX-101.CAL) — 54KB
• jva-20250731_def.xml (EX-101.DEF) — 69KB
• jva-20250731_lab.xml (EX-101.LAB) — 265KB
• jva-20250731_pre.xml (EX-101.PRE) — 203KB
• form10-q_htm.xml (XML) — 426KB

Financial Statements

Financial Statements F-1 Unaudited Condensed Consolidated Balance Sheets as of July 31, 2025 and October 31, 2024 F-1 Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended July 31, 2025 and 2024 F-2 Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and nine months ended July 31, 2025 and 2024 F-3 Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended July 31, 2025 and 2024 F-4 Notes to the Unaudited Condensed Consolidated Financial Statements F-5 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 1 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 6 ITEM 4.

Controls and Procedures

Controls and Procedures 6 PART II OTHER INFORMATION 8 ITEM 1.

Legal Proceedings

Legal Proceedings 8 ITEM 1A.

Risk Factors

Risk Factors 8 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 8 ITEM 3. Defaults Upon Senior Securities 8 ITEM 4. Mine Safety Disclosures 8 ITEM 5. Other Information 8 ITEM 6. Exhibits 9

SIGNATURES

SIGNATURES 10 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 $ 979,772 $ 1,381,023 Accounts receivable, net of allowances for credit losses of $ 144,000 for 2025 and 2024 10,084,545 9,367,338 Inventories 21,685,412 15,705,984 Due from broker 4,444,179 1,466,059 Prepaid expenses and other current assets 831,640 167,207 Prepaid and refundable income taxes — 285,439 TOTAL CURRENT ASSETS 38,025,548 28,373,050 Building, machinery, and equipment, net 3,206,896 3,221,865 Customer list and relationships, net of accumulated amortization of $ 308,625 and $ 285,750 for 2025 and 2024, respectively 131,375 154,250 Trademarks and tradenames 327,000 327,000 Equity method investments 39,651 39,651 Right-of-use asset 2,696,475 1,166,537 Deferred income tax assets, net 908,107 592,398 Deposits and other assets 544,915 135,937 TOTAL ASSETS $ 45,879,967 $ 34,010,688 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 8,083,215 $ 5,743,899 Due to broker 1,910,048 794,804 Line of credit 6,250,000 — Lease liabilities - current portion 802,756 307,364 TOTAL CURRENT LIABILITIES 17,046,019 6,846,067 Lease liabilities – long term 1,934,511 865,668 Deferred compensation payable 129,972 121,386 TOTAL LIABILITIES 19,110,502 7,833,121 Commitments and Contingencies (Note 9) - - 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, 6,633,930 shares issued for July 31, 2025 and October 31, 2024; 5,708,599 shares outstanding for July 31, 2025 and October 31, 2024 6,634 6,634 Additional paid in capital 19,094,618 19,094,618 Retained

financial statements and related disclosures

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 ta

financial statements and related disclosures

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 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 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 $ 800,000 in a Uniform Commercial Code ("UCC") Chapter 9 sale (the "Second Empire Acquisition"). Operations of Second Empire will include roasting and packing for current Company's customers as well as customers of Empire Coffee. The results of Second Empire are included in the Company's condensed consolidated financial statements from the date of acquisition. 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 dur

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