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<SEC-DOCUMENT>0001125282-04-003038.txt : 20040624
<SEC-HEADER>0001125282-04-003038.hdr.sgml : 20040624
<ACCEPTANCE-DATETIME>20040624172438
ACCESSION NUMBER:		0001125282-04-003038
CONFORMED SUBMISSION TYPE:	SB-2
PUBLIC DOCUMENT COUNT:		7
FILED AS OF DATE:		20040624

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			COFFEE HOLDING CO INC
		CENTRAL INDEX KEY:			0001007019
		STANDARD INDUSTRIAL CLASSIFICATION:	BEVERAGES [2080]
		IRS NUMBER:				113860760
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		SB-2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-116838
		FILM NUMBER:		04880214

	BUSINESS ADDRESS:	
		STREET 1:		4401 FIRST AVENUE
		STREET 2:		STE 1507
		CITY:			BROOKLYN
		STATE:			NY
		ZIP:			11232
		BUSINESS PHONE:		7188320800

	MAIL ADDRESS:	
		STREET 1:		4401 FIRST AVENUE
		STREET 2:		STE 1507
		CITY:			BROOKLYN
		STATE:			NY
		ZIP:			11232

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	TRANSPACIFIC INTERNATIONAL GROUP CORP
		DATE OF NAME CHANGE:	19960201
</SEC-HEADER>
<DOCUMENT>
<TYPE>SB-2
<SEQUENCE>1
<FILENAME>b332774_sb2.htm
<DESCRIPTION>REGISTRATION STATEMENT
<TEXT>
<html>
<head><title>
Prepared and filed by St Ives Burrups
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<p align="center"><font size="2" face="serif"><b>As filed with the Securities
and Exchange Commission on June&nbsp;24, 2004</b></font></p>
<p align="right"><font size="2" face="serif"><b>Registration No. 333-[&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;]</b></font></p>
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<p align="center"><font size="5" face="serif"><b>U.S. Securities and Exchange Commission</b></font><br>
<font size="2" face="serif"><b>Washington, D.C.  20549</b></font></p>
<hr size="1" width="133" noshade>
<p align="center"><b><font face="serif" size="5">Form SB-2</font></b></p>
<p align="center"><b><font face="serif" size="2">REGISTRATION STATEMENT<br>
UNDER<br>
THE SECURITIES ACT OF 1933</font></b></p>
<hr size="1" width="133" noshade>
<p align="center"><b><font face="serif" size="5">Coffee Holding Co., Inc.</font></b><br>
<font face="serif" size="1">(Name of small business issuer in its charter)</font></p>
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<td align="center" width="33%"><font size="2" face="serif">Nevada</font><br><font size="2" face="serif"><font face="serif" size="1">(State or other jurisdiction of incorporation or organization)</font></font></td>
<td align="center" width="34%"><font size="2" face="serif">2080</font><br><font size="2" face="serif"><font face="serif" size="1"> (Primary Standard Industrial Classification Code Number)</font></font></td>
<td align="center"><font size="2" face="serif">11-2238111</font><br><font size="2" face="serif"><font face="serif" size="1">(I.R.S. Employer</font></font><br><font size="2" face="serif"><font face="serif" size="1">Identification No.)</font></font></td>
</tr>
</table>
<p align="center"><font size="2" face="serif">4401 First Avenue<br>
Brooklyn, New York 11232-0005</font><br>
<font size="2" face="serif">(718) 832-0800</font><br>
<font face="serif" size="1">(Address and telephone number of principal executive offices)</font><br>
<font face="serif" size="1">(Address of principal place of business or intended principal place of business)</font></p>
<p align="center"><font size="2" face="serif">________________</font></p>
<p align="center"><font size="2" face="serif">Andrew Gordon</font><br>
<font size="2" face="serif"> President and Chief Executive Officer</font><br>
<font size="2" face="serif">4401 First Avenue</font><br>
<font size="2" face="serif">Brooklyn, New York 11232-0005</font><br>
<font face="serif" size="1">(Name and address, and telephone of agent for service)</font></p>
<p align="center"><font size="2" face="serif">With copies to:</font></p>
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<td align="center" width="50%"><font size="2" face="serif">Matthew Dyckman, Esq.</font><br>
<font size="2" face="serif">Thacher Proffitt &amp; Wood <font face="serif" size="1">LLP</font></font><br>
<font size="2" face="serif">1700 Pennsylvania Avenue, N.W., Suite 800</font><br>
<font size="2" face="serif">Washington, D.C.  20006</font><br><font size="2" face="serif">(202)&nbsp;347-8400</font></td>
<td align="center"><font size="2" face="serif">Steven M. Skolnick, Esq.</font><br>
<font size="2" face="serif">Lowenstein Sandler PC</font><br>
<font size="2" face="serif">65 Livingston Avenue</font><br>
<font size="2" face="serif">Roseland, New Jersey  07068</font><br>
<font size="2" face="serif">(973) 597-2500</font></td>
</tr>
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<td><hr size="1" width="133" noshade></td>
<td><hr size="1" width="133" noshade></td>
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</table>
<p align="left"><font size="2" face="serif">Approximate date of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.</font></p>
<p align="center"><font size="2" face="serif"><b>CALCULATION OF REGISTRATION FEE</b></font></p>
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<td align="center"><b><font size="2" face="serif"><font face="serif" size="1">Title of Each Class of Securities<br>
to be Registered</font></font></b></td>
<td align="center"><b><font size="2" face="serif"><font face="serif" size="1">Amount to be<br>
registered (1)</font></font></b></td>
<td align="center"><b><font size="1" face="serif">Proposed<br>
Maximum Offering </font><font size="1"><br>
  <font face="serif"><font face="serif">Price Per Share (2)</font></font></font></b></td>
<td align="center"><b><font size="2" face="serif"><font face="serif" size="1">Proposed Maximum<br>
Aggregate Offering Price (2)</font></font></b></td>
<td align="center"><b><font size="2" face="serif"><font face="serif" size="1">Amount of<br>
Registration Fee </font></font></b></td>
</tr>
<tr valign="bottom" bgcolor="#ffffff">
<td height="16"><font size="2" face="serif">Common Stock, $ 0.001 par value</font></td>
<td width="18%" align="center"><font size="2" face="serif">1,840,000</font></td>
<td width="18%" align="center"><font size="2" face="serif"> $&nbsp;&nbsp;6.00&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td width="18%" align="center"><font size="2" face="serif"> $&nbsp;&nbsp;&nbsp;&nbsp;11,040,000</font></td>
<td width="18%" align="center"><font size="2" face="serif"> $&nbsp;&nbsp;1,399</font></td>
</tr>
<tr valign="bottom" bgcolor="#FFFFFF">
<td><font size="2" face="serif">Warrants(3)</font></td>
<td align="center"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;160,000</font></td>
<td align="center"><font size="2" face="serif"> $&nbsp;&nbsp;&nbsp;&nbsp;.000625</font></td>
<td align="center"><font size="2" face="serif"> $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;100</font></td>
<td align="center"><font size="2" face="serif"> $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1</font></td>
</tr>
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<td><font size="2" face="serif">Common Stock, $0.001 par value(4)</font></td>
<td align="center"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;160,000</font></td>
<td align="center"><font size="2" face="serif"> $&nbsp;&nbsp;6.60&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="center"><font size="2" face="serif"> $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,056,000</font></td>
<td align="center"><font size="2" face="serif"> $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;134</font></td>
</tr>
<tr valign="bottom" bgcolor="#FFFFFF">
<td><font size="2" face="serif">Total</font></td>
<td align="center"><font size="2" face="serif">&nbsp;</font></td>
<td align="center"><font size="2" face="serif">&nbsp;</font></td>
<td align="center"><font size="2" face="serif"> $&nbsp;&nbsp;&nbsp;12,096,100</font></td>
<td align="center"><font size="2" face="serif"> $&nbsp;&nbsp;1,534</font></td>
</tr>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td align="left" width="3%"><font face="serif" size="2">(1)</font></td>
    <td align="left"><font face="serif" size="2">Includes the maximum number of shares that may be issued in connection with this offering.</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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    <td><font face="serif" size="2">(2)</font></td>
    <td><font face="serif" size="2">Estimated solely for the purpose of calculating the registration fee.</font></td>
  </tr>
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    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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    <td><font face="serif" size="2">(3)</font></td>
    <td><font face="serif" size="2">To be issued to the underwriter.</font></td>
  </tr>
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    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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    <td><font face="serif" size="2">(4)</font></td>
    <td><font face="serif" size="2">Issuable upon exercise of the underwriter&#146;s warrants. Pursuant to Rule 416 under the Securities Act of 1933, as amended, also includes such additional shares of common stock as may become issuable pursuant to the anti-dilution provision of the warrants.</font></td>
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    <td>&nbsp;</td>
    <td>&nbsp;</td>
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<p align="left"></p>
<p align="left"><b><font face="serif" size="2">The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said section 8(a), may determine.</font></b></p>
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<div style="page-break-before:always"></div>
<Page>
<p align="center"><font size="2" face="serif"><b>Subject to Completion, Dated
June&nbsp;24, 2004</b></font></p>
<p align="left"><font size="2" face="serif"><b>PROSPECTUS</b></font></p>
<p align="center"><font size="4" face="serif"><b>1,600,000 Shares</b></font></p>
<p align="center"><font size="4" face="serif"><b>COFFEE HOLDING CO., INC.</b></font></p>
<p align="center"><font size="4" face="serif"><b>Common Stock </b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">This is our initial public offering of shares of common stock.  We are offering 1,600,000 shares of our common stock.  </font></p>
<p align="left"><font size="2" face="serif">While we have been filing reports under the Securities Exchange Act of 1934, there currently is no public market for our common stock.  We currently anticipate that the initial public offering price will be between $5.00 per share and $6.00 per share.  We have applied to have our common stock listed on the American Stock Exchange under the symbol &#147;JVA.&#148;  See &#147;Underwriting&#148; for information relating to the factors considered in determining the initial public offering price.</font></p>
<p align="left"><font size="2" face="serif"><b>Investing in our common stock involves a high degree of risk.  Please read the &#147;Risk Factors&#148; beginning on page 10.  You will experience immediate and substantial dilution.</b></font></p>
</div>
<table width="80%" border="0" align="center" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td align="left" width="79%"><font size="2" face="serif">Public offering
        price</font></td>
    <td align="left"><font size="2" face="serif">$ </font></td>
  </tr>
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    <td align="left"><font size="2" face="serif">Underwriting discounts</font></td>
    <td align="left"><font size="2" face="serif">$ </font></td>
  </tr>
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    <td align="left"><font size="2" face="serif">Proceeds to Coffee Holding</font></td>
    <td align="left"><font size="2" face="serif">$ </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We have granted the underwriter a 45 day option to purchase up to 240,000 additional shares of common stock on the same terms and conditions as set forth above, solely to cover over-allotments, if any.  </font></p>
<p align="left"><font size="2" face="serif"><b>Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus.  Any representation to the contrary is a criminal offense.</b></font></p>
<p align="left"><font size="2" face="serif">Maxim Group LLC expects to deliver the shares on or about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>, 2004.</font></p>
</div>
<p align="center"><b><font face="serif" size="4">MAXIM GROUP LLC</font></b></p>
<p align="center"><font size="2" face="serif">The date of this prospectus is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>, 2004</font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The information in this prospectus is not complete and may be changed.  We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.</font></p>
</div>
<p align="center"><font face="serif" size="2">&nbsp;</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="contents"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>TABLE OF CONTENTS</b></font></p>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
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<td align="left"><font size="2" face="serif">Prospectus Summary </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1</font></td>
<td align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Special Note Regarding Forward-Looking Statements </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">9</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Risk Factors   </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">10</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Use of Proceeds  </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">23</font></td>
<td align="left">&nbsp;</td>
</tr>
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<td align="left"><font size="2" face="serif">Dilution </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">24</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Capitalization   </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">25</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Dividend Policy </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">25</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Selected Financial Information </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">26</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">27</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Business </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">38</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Management   </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">52</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Security Ownership of Certain Beneficial Owners and Management </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">57</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Certain Relationships and Related Transactions </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">58</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Description of Capital Stock </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">58</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Shares Eligible for Future Sale </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">65</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Underwriting  </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">66</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Legal Matters  </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">69</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Experts  </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">69</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Where You Can Find Additional Information </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">70</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Financial Statements  </font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">F-1</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<p align="left"><font size="2" face="serif">Until &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>, 2004, 25 days after the date of this offering, all dealers that effect transactions in our shares, whether or not participating in this offering, may be required to deliver a prospectus.  This is in addition to the dealer&#146;s obligations to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.</font></p>
<p align="center"><font face="serif" size="2">&nbsp;</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="cover"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>Prospectus Summary</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif"><i>This summary highlights selected information about us. It may not contain all of the information that you find important. You should carefully read this entire document, including the &#147;Risk Factors&#148; section beginning on page 10 and our financial statements and their related notes before making a decision to invest in our common stock. Unless otherwise indicated, the information in this prospectus assumes that the underwriter will not exercise its over-allotment option</i>.</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>General Overview</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif"><b><i>Products and Operations.</i></b>  We are 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.  As a result, we believe that we are well positioned to increase our profitability and endure potential coffee price volatility throughout varying cycles of the coffee market and economic conditions.  Our core products can be divided into three categories:</font></p>
</div>
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<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif"><b><i>Wholesale Green Coffee</i></b><b>:</b>  unroasted raw beans imported from around the world and sold to large and small roasters and coffee shop operators;</font></td>
</tr>
</table>
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<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
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<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">&#149;</font></td>
<td align="left">
<font size="2" face="serif"> <b><i>Private Label Coffee</i></b><b>:</b>  coffee roasted, blended, packaged and sold under the specifications and names of others, including supermarkets that want to have their own brand name on coffee to compete with national brands; and</font></td>
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<font size="2" face="serif"><b><i>Branded Coffee</i></b><b>:</b><i></i>coffee roasted and blended to our own specifications and packaged and sold under our seven brand names in different segments of the market.</font></td>
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<p align="left"><font size="2" face="serif">Our private label and branded coffee products are sold throughout the United States and Canada to supermarkets, wholesalers, and individually owned and multi-unit retail customers.  Our unprocessed green coffee, which includes over 70 types of coffee from all over the world, is sold to specialty gourmet roasters.  </font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We conduct our operations in accordance with strict freshness and quality standards.  All of our private label and branded coffee is produced from high quality coffee beans that are deep roasted for full flavor using a slow roasting process that has been perfected utilizing our more than thirty years of experience in the coffee industry.  In order to ensure freshness, our products are delivered to our customers within 72 hours of roasting.  We believe that our long history has enabled us to develop a loyal customer base. </font></p>
<p align="left"><font size="2" face="serif"><b><i>Geographic Expansion.</i></b>  In February 2004, we acquired certain assets of Premier Roasters, a roaster-dealer located in La Junta, Colorado, for $825,000.  The assets purchased by us include all of the operating equipment located at Premier Roasters&#146; La Junta and Rocky Ford, Colorado locations, as well as all labels for all of Premier Roasters&#146; coffee products.  In connection with the acquisition of these assets, we reached an agreement with the City of La&nbsp;Junta, Colorado on a 20-year lease for a 50,000 square foot facility in La Junta.  We are using the assets that we purchased to expand our integrated wholesale coffee roaster and dealer operations in the Western United States.  In
connection with this transaction, we also entered into a licensing agreement with Del Monte Corporation for the exclusive right to use the S&amp;W and IL CLASSICO trademarks in connection with the production, manufacture and sale of ground coffee for distribution to retail customers in the United States and certain other countries
approved by Del Monte Corporation. </font></p>
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<p align="left"><font size="2" face="serif"><b><i>Financial Highlights.</i></b></font></p>
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<font size="2" face="serif">Net sales and net income increased 27% and 169%, respectively, for the six months ended April 30, 2004 compared to the six months ended April 30, 2003, from approximately $9,570,000 and $274,000, respectively, to approximately $12,180,000 and $738,000, respectively;</font></td>
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<font size="2" face="serif">We increased our overall annual coffee poundage volume from 13 million pounds in 1998 to 17.4 million pounds in 2003; </font></td>
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<font size="2" face="serif">Caf&eacute; Caribe sales have increased 16% for the six months ended April 30, 2004 compared to the six months ended April 30, 2003, based on International Research Incorporated data;</font></td>
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<font size="2" face="serif">We continued to be profitable through varying cycles of the coffee commodity market. From fiscal years 2001 to 2003, when coffee commodity prices were trading at 30-year lows, our net income was approximately $518,000, $755,000, and $622,000, respectively; and</font></td>
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<font size="2" face="serif">Since 1998, we increased the number of our specialty green coffee customers, including coffee houses, single store operators, mall coffee stores and mail order sellers, by 70% from 150 to 255.</font></td>
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<p align="left"><font size="2" face="serif"><b>Our Competitive Strengths</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">To achieve our growth objectives described below, we intend to leverage the following competitive strengths:</font></p>
<p align="left"><font size="2" face="serif"><b><i>Strong Distribution with Capacity For Growth</i></b><b>.</b>  Since 1991, we have been able to expand our distribution to a national platform while operating from only our East Coast location.   We have recently made capital investments to improve our roasting, packaging and fulfillment infrastructure to support the production and distribution of large quantities of fresh coffee products throughout the United States.  We believe that our new La Junta, Colorado facility will allow us to continue to grow our business by further increasing our presence in the Western United States.  By operating out of two facilities, we have gained new economies of scale in both manufacturing and logistical efficiencies and are
confident that we can compete aggressively throughout the United States.</font></p>
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<p align="left"><font size="2" face="serif"><b><i>Positioned to Profitably Grow Through Varying Cycles of the Coffee Market. </i></b>  We believe that we are one of the few coffee companies to  offer a broad array of branded and private label roasted ground coffees and wholesale green coffee across the spectrum of consumer tastes, preferences and price points.  While many of our competitors engage in distinct segments of the coffee business, we sell products in each of the following areas:</font></p>
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<font size="2" face="serif">Retail branded coffee; </font></td>
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<font size="2" face="serif">Retail private label coffee;</font></td>
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<font size="2" face="serif">Wholesale specialty green and whole bean coffees; </font></td>
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<font size="2" face="serif">Food service;</font></td>
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<font size="2" face="serif">Instant coffees; and</font></td>
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<font size="2" face="serif">Niche products.</font></td>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our branded and private label roasted ground coffees are sold predominantly at competitive and value price levels while some of our other branded and specialty gourmet coffees are sold predominantly at the premium price levels. Because of this diversification, we believe that our profitability is not dependent on any one area of the coffee industry and, therefore, is less sensitive than our competition to potential coffee commodity price and overall economic volatility.</font></p>
<p align="left"><font size="2" face="serif"><b><i>Strong Wholesale Green Coffee Market Presence.</i></b>  As one of the largest roaster/dealers of green coffee, we are favorably positioned to increase our specialty coffee sales.  Since 1998, we increased the number of our wholesale green coffee customers, including coffee houses, single store operators, mall coffee stores and mail order sellers, by 69% from 150 to 255.  We are a charter member of the Specialty Coffee Association of America and one of the largest distributors of Swiss water processed decaffeinated coffees along the East Coast.  In addition, we have a 13-year relationship with our largest wholesale green coffee customer, Green Mountain Coffee Roasters (Nasdaq: GMCR).  Our 30-plus years of
experience as a roaster and dealer of green coffee allows us to provide our roasting experience as a value added service to our gourmet roaster customers. The assistance we provide to our customers includes training, coffee blending and market identification. We believe that our relationships with wholesale green coffee customers and our focus on selling green coffee as a wholesaler has enabled us to participate in the growth of the specialty coffee market while mitigating the risks associated with the competitive retail specialty coffee environment. </font></p>
<p align="left"><font size="2" face="serif"><b><i>Diverse Portfolio of Differentiated Branded Coffees. </i></b>Currently, our highest net profit margin is on our branded coffees.  We have amassed a portfolio of five proprietary name brands sold to supermarkets, wholesalers and individually-owned stores in the United States, including brands for specialty espresso, Latin espresso, Italian espresso, 100% Colombian coffee and blended coffee.  In addition, we have entered into a licensing agreement with Del Monte Corporation for the exclusive right to use the S&amp;W and IL CLASSICO trademarks in the United States and other countries approved by Del Monte Corporation in connection with the production, manufacture and sale of roasted whole bean and ground coffee
for distribution to retail customers.  We plan to broaden our customer base and increase penetration with existing customers by expanding the S&amp;W label from a well-known brand on the West Coast to a well-known brand throughout the United States.  Our existing portfolio of differentiated brands combined with our management expertise serve as a platform to add additional name brands through acquisition or licensing agreements which target product niches and segments that do not compete with our existing brands.  In addition, we have added a group of third-party marketing specialists to help grow our branded coffee sales.  These specialists have redesigned our packaging and labels and have assisted in extending our product lines to include instant cappuccinos, large can coffees and
trial-sized mini-brick packages.  </font></p>
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<p align="left"><font size="2" face="serif"><b><i>Management Possesses Approximately 100 Years of Industry Experience.</i></b>  We have been a family operated business for three generations.  Throughout this time, we have remained profitable through varying cycles in the coffee industry and the economy.  Our management team has nearly 100 years combined experience in the coffee business.  Sterling Gordon has over 50 years of experience in the coffee business during which time he has developed a reputation in the industry as an expert in coffee blending and quality.  Andrew Gordon and David Gordon have worked with Coffee Holding for 21 and 23 years, respectively.  David Gordon is an original member of the Specialty Coffee Association of America.  Andrew Gordon
publishes a weekly report on the coffee commodity industry and is perceived by many of his peers and customers as a coffee market expert.  Our employees and management are dedicated to our vision and mission, which is to produce high quality products, as well as to provide quality and responsive service to our customers.<b></b></font></p>
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<p align="left"><font size="2" face="serif"><b>Our Growth Strategy</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We believe that significant growth opportunities exist by selectively pursuing strategic acquisitions and alliances, targeting the rapidly growing Hispanic market, increasing penetration with existing customers by adding new products, and developing our food service business.  By capitalizing on these growth opportunities, we hope to continue to grow our business with our commitment to quality and personalized service to our customers.  We do not intend to compete on price alone nor do we intend to expand sales at the expense of profitability.<b></b></font></p>
<p align="left"><font size="2" face="serif"><b><i>Selectively Pursue Strategic Acquisitions and Alliances</i></b><b>.</b>  We  intend to expand our operations by acquiring coffee companies, seeking strategic alliances and acquiring or licensing brands which complement our business objectives.  Consistent with this strategy, in February 2004, we acquired certain assets of Premier Roasters and we have entered into a licensing agreement with Del Monte Corporation for the exclusive right to use the S&amp;W and IL CLASSICO trademarks in the United States and other countries approved by Del Monte Corporation in connection with the production, manufacture and sale of roasted whole bean and ground coffee for distribution at the retail level.  We are using the assets
we purchased from Premier Roasters and our new facility in La Junta, Colorado to expand our private label coffee and branded coffee operations in the Western United States.  Our Western United States presence recently enabled us to win a competitive bidding process to be the exclusive supplier of ground roast private label coffee for four West Coast divisions of Albertson&#146;s, Inc., the second largest food and drug retailer in the United States.  We intend to further expand the market presence of our branded products outside our primary Northeastern United States market through other acquisitions and strategic alliances.</font></p>
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<p align="left"><font size="2" face="serif"><b><i>Grow Our Caf&eacute; Caribe Product.  </i></b>Hispanic consumers drink four times more coffee per capita than other coffee drinking Americans, according to the Strategy Research Corporation 2000 U.S. Hispanic Market Study.  The Hispanic population in the United States is growing at nine times the average rate and now represents the largest minority demographic in the United States, according to 2000 census data.  We believe there is significant opportunity for our Caf&eacute; Caribe brand to gain market share among Hispanic consumers in the United States.  Caf&eacute; Caribe is a specialty espresso coffee popular with Hispanic consumers.  Although Caf&eacute; Caribe has historically been our leading brand by
revenue, we have not implemented a comprehensive marketing program that targets Hispanic consumers.  We estimate that Caf&eacute; Caribe has a market share of approximately 6% of this segment.  We intend to use a portion of the proceeds of this offering to increase the sales of this brand and other espresso-based products by developing a comprehensive sales and marketing program aimed at Hispanic consumers throughout the United States, particularly in Florida where we believe there is a significant opportunity to capture additional market share.</font></p>
<p align="left"><font size="2" face="serif"><b><i>Further Market Penetration of Our Niche Products.</i></b>  We intend to capture additional market share through our existing distribution channels by selectively adding or introducing new brand names and products across multiple price points, including:</font></p>
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<font size="2" face="serif">Private label &#147;value&#148; blends and trial-sized mini-brick packages;</font></td>
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<font size="2" face="serif">Specialty instant coffees;</font></td>
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<font size="2" face="serif">Instant cappuccinos and hot chocolates; and</font></td>
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<p align="left"><font size="2" face="serif">We recently established relationships with additional independent sales brokers to market our products on a national scale.  </font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif"><b><i>Develop Our Food Service Business.</i></b> We plan to expand further into the food service business by developing new distribution channels for our products.  Currently, we have a limited presence in the food service market.  We have commenced marketing our upscale restaurant and Colombian coffee brands to hotels, restaurants, office coffee services companies and other food service retailers.  In addition, we have expanded our food service offerings to include instant cappuccinos, tea products and an equipment program for our customers.  We attend at least ten annual trade shows held by various buying groups which provide us a national audience to market our food service products.  We intend to use a portion of
the proceeds of this offering to grow our food service distribution both organically and through acquisitions.</font></p>
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<p align="left"><font size="2" face="serif"><b>Principal Executive Office</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our address is 4401 First Avenue, Brooklyn, New York 11232-0005.  Our telephone number is 718-832-0800.  We maintain a website at www.coffeeholding.com.  Information contained on our website does not constitute part of this prospectus.</font></p>
<p align="left"><font size="2" face="serif">We were originally incorporated in New York in 1971.  Pursuant to an Agreement and Plan of Merger between us and Transpacific International Group Corp., we merged with and into Transpacific International Group Corp. in February, 1998, with Transpacific being the surviving corporation.  After the merger, Transpacific changed its name to Coffee Holding Co., Inc.</font></p>
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<p align="center"><font face="serif" size="2">&nbsp;</font></p>
<p align="center"><font face="serif" size="2">&nbsp;</font></p>
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<p align="center"><font face="serif" size="2">6</font></p>
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<p align="center"><font size="2" face="serif"><b>The Offering</b></font></p>
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<td align="left" width="50%"><font size="2" face="serif">Common stock offered</font></td>
<td align="left"><font size="2" face="serif">1,600,000 shares</font></td>
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<td align="left"><font size="2" face="serif">Common stock outstanding<br>after the offering(1)</font></td>
<td align="left"><font size="2" face="serif">5,599,650 shares</font></td>
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<td align="left"><font size="2" face="serif">Use of proceeds</font></td>
<td align="left"><font size="2" face="serif">We intend to use the proceeds of this offering to repay approximately $2.8 million in indebtedness, to increase our sales and marketing efforts, and for general corporate purposes.  As strategic opportunities arise, we may use the proceeds of this offering to fund acquisitions, licensing and other strategic alliances.  See &#147;Use of Proceeds.&#148;</font></td>
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<td align="left"><font size="2" face="serif">Proposed American Stock Exchange symbol</font></td>
<td align="left"><font size="2" face="serif">Currently, no public market for our common stock exists.  We have applied to have our common stock listed on the American Stock Exchange under the symbol &#147;JVA.&#148;</font></td>
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<td align="left"><font size="2" face="serif">Risk factors</font></td>
<td align="left"><font size="2" face="serif">The securities offered by this prospectus are speculative and involve a high degree of risk and investors purchasing securities will experience immediate and substantial dilution and should not purchase the securities unless they can afford the loss of their entire investment. See &#147;Risk Factors&#148; beginning on page 10.</font></td>
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<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> This number does not include 800,000 shares reserved for issuance upon exercise of options eligible for grant under the Coffee Holding Co., Inc. 1998 Stock Option Plan, for which no options have yet been granted, or 160,000 shares of our common stock underlying warrants to be issued to the underwriter.</font></td>
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<p align="center"><font size="2" face="serif"><b>Summary Financial Information</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The summary financial data for the fiscal years ended October 31, 2003, 2002 and 2001 was derived from our financial statements that have been audited by Lazar Levine &amp; Felix LLP for the respective periods.  The information for the six months ended April 30, 2004 and 2003 was derived from unaudited financial data but, in the opinion of management, reflects all adjustments necessary for a fair presentation of the results for such periods.  The summary financial and other data presented below should be read in conjunction with, and is qualified in its entirety by, our audited financial statements and related notes appearing in this prospectus beginning on page F-1.  See &#147;Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operations&#148; for a discussion of our financial statements for the years ended October 31, 2003 and 2002 and for the six months ended April 30, 2004 and 2003.</font></p>
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<td colspan="5" align="center"><font size="1" face="serif"><b>For the<br>Six Months Ended</b></font></td>
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<td align="center"><font size="1" face="serif"><b>October 31,<br>2003</b></font></td>
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<td align="center"><font size="1" face="serif"><b>October 31,<br>2002</b></font></td>
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<td align="center"><font size="1" face="serif"><b>October 31,<br>2001</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>April 30,<br>2004</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>April 30,<br>2003</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="14" align="center"><font size="1" face="serif"><b>(Dollars in thousands, except per share data)</b></font></td>
<td align="right">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>Income Statement Data</b>:</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Net sales</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 20,240</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 17,433</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 20,327</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 12,181</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 9,574</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Cost of sales</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">15,373</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">12,453</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">16,065</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">8,471</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">7,294</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Gross profit</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,867</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,980</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,262</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,710</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,280</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Operating expenses</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,993</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,505</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,162</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,302</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,716</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Income from operations</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;874</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,475</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,100</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,408</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;564</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Other income (expense)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(136</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(162</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">( 269</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(75</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(68</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td ><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Income before income taxes</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;738</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,313</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;831</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,333</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;496</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Provision for income taxes</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">116</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">558</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">313</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">595</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">222</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Net income</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 622</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 755</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 518</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 738</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 274</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Net income  per share &#150; basic and diluted</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .16</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .19</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .13</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .18</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .07</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Book value per share</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .53</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .37</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .19</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .71</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .44</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<br>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="right">&nbsp;</td>
<td colspan="7" align="center" valign="bottom"><font size="1" face="serif"><b>At</b></font> <font size="1" face="serif"><b>October 31,</b></font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td colspan="4" align="center" valign="bottom"><font size="1" face="serif"><b>At April 30, 2004</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="8" align="center" valign="bottom"><hr noshade size="1"></td>
<td align="center" valign="bottom">&nbsp;</td>
<td colspan="5" align="center" valign="bottom"><hr noshade size="1"></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="center"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="2" align="center"><font size="1" face="serif"><b>2003</b></font></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><font size="1" face="serif"><b>2002</b></font></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><font size="1" face="serif"><b>2001</b></font></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><font size="1" face="serif"><b>Actual</b></font></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><font size="1" face="serif"><b>As Adjusted(1)</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="center"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="left">&nbsp;</td>
</tr>

<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="14" align="center"><font size="1" face="serif"><b>(Dollars in thousands)</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>Balance Sheet Data</b>:</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Total assets</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 7,035</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 6,042</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 5,713</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 7,749</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 12,310</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Short-term debt</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,076</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,483</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,090</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,605</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,060</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Long-term debt</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,839</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,061</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,880</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 285</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 52</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Total liabilities</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,915</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,544</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,970</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,890</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,112</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Shareholders&#146; equity</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,120</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 1,498</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 743</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,858</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 10,198</font></td>
<td align="left">&nbsp;</td>
</tr>
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<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Adjusted to give effect to the receipt and application of the net proceeds of approximately $7,340,000 from the sale of common shares offered by this prospectus at an assumed initial public offering price of $5.50 per share.</font></td>
</tr>
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<p align="center"><font face="serif" size="2">8</font></p>
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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">This prospectus contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements typically are identified by use of terms such as &#147;may,&#148; &#147;will,&#148; &#147;should,&#148; &#147;plan,&#148; &#147;expect,&#148; &#147;anticipate,&#148; &#147;estimate&#148; and similar words, although some forward-looking statements are expressed differently.  Forward-looking statements represent our management&#146;s judgment regarding future events.  Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove
to be correct.  All statements other than statements of historical fact included in this prospectus regarding our financial position, business strategy, products, products under development, markets, budgets, plans, or objectives for future operations are forward-looking statements.  We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the statements under &#147;Risk Factors&#148; set forth below.</font></p>
</div>
<p align="center"><font face="serif" size="2">&nbsp;</font></p>
<p align="center"><font face="serif" size="2">&nbsp;</font></p>
<p align="center"><font face="serif" size="2">&nbsp;</font></p>
<p align="center"><font face="serif" size="2">&nbsp;</font></p>
<p align="center"><font face="serif" size="2">&nbsp;</font></p>
<p align="center"><font face="serif" size="2">9</font></p>
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<p align="center"><font size="2" face="serif"><b>RISK FACTORS</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif"><i>An investment in our common stock is speculative and involves a high degree of  risk.  You should carefully consider the risks described below before buying our common stock. The risks described below are not the only ones we face and there may be additional risks and uncertainties. These risks could have a material adverse effect on our business, financial condition and results of operations and the value of our common stock. </i></font></p>
</div>
<p align="center"><font size="2" face="serif"><b>Risk Factors Affecting Our Company</b></font></p>
<p align="left"><font size="2" face="serif"><b>Because our business is highly dependent upon a single commodity, coffee, if the demand for coffee decreases, our business could suffer.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our business is centered on essentially one commodity: coffee. Our operations have primarily focused on the following areas of the coffee industry:</font></p>
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<font size="2" face="serif">the roasting, blending, packaging and distribution of private label coffee;</font></td>
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<font size="2" face="serif">the roasting, blending, packaging and distribution of proprietary branded coffee; and</font></td>
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<font size="2" face="serif">the sale of wholesale specialty green coffee.</font></td>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Demand for our products is affected by:</font></p>
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<font size="2" face="serif">consumer tastes and preferences;</font></td>
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<font size="2" face="serif">national, regional and local economic conditions;</font></td>
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<font size="2" face="serif">demographic trends; and</font></td>
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<font size="2" face="serif">the type, number and location of competing products.</font></td>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Because we rely on a single commodity, any decrease in demand for coffee would harm our business more than if we had more diversified product offerings and could materially adversely affect our revenues and operating results. </font></p>
</div>
<p align="left"><font size="2" face="serif"><b>We may not be successful in the implementation of our business strategy or our business strategy may not be successful; either of which will impede our growth and operating results. </b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our business strategy emphasizes, among other things, geographic expansion of our branded and private label products as opportunities arise.  We do not know whether we will be able to implement successfully this portion of our business strategy or whether this portion of our business strategy will be successful. Our ability to implement this business strategy is dependent on our ability to: </font></p>
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<font size="2" face="serif">market our products on a national scale;</font></td>
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<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">10</font></p>
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<font size="2" face="serif">increase our brand recognition on a national scale;</font></td>
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<font size="2" face="serif">enter into distribution and other strategic arrangements with third party retailers; and</font></td>
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<font size="2" face="serif">manage growth in administrative overhead and distribution costs likely to result from the planned expansion of our distribution channels.</font></td>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our operating results and financial condition may be adversely affected if we fail to successfully implement our business strategy or if our business strategy ultimately proves unsuccessful.  In addition, our expenses could increase and our profits could decrease as we implement our growth strategy.</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>We may not be able to successfully implement our strategy of growth through selective acquisitions, licensing arrangements and other strategic alliances.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our strategy of growth through the selective acquisition of coffee companies, the selective acquisition or licensing of additional coffee brands and other strategic alliances presents risks that could materially adversely affect our operating results and financial condition, including:</font></p>
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<font size="2" face="serif">the diversion of our management&#146;s attention;</font></td>
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  <td></td>
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<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">our ability to successfully integrate the operations of any acquired coffee companies with our operations;</font></td>
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  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
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<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
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<font size="2" face="serif">our ability to successfully integrate additional coffee brands with our existing coffee brands;</font></td>
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  <td>&nbsp;</td>
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<font size="2" face="serif">the contingent risks associated with the past operations of, and other unanticipated problems arising in, any acquired coffee company; and</font></td>
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<font size="2" face="serif">increased competition for acquisition, licensing and other business opportunities in the coffee market.</font></td>
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<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">We cannot predict whether:</font></td>
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<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">we will be able to acquire additional coffee companies, acquire or license additional coffee brands or enter into strategic alliances with corporate partners, in any such case, on terms favorable to us or at all;</font></td>
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<font size="2" face="serif">&#149;</font></td>
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<font size="2" face="serif">we will be able to successfully integrate any acquired coffee companies or new coffee brands into our existing business;</font></td>
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<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">11</font></p>
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<font size="2" face="serif">we will be able to realize any anticipated benefits of the acquisition of any additional coffee companies, the acquisition or licensing of any additional brands or the execution of any strategic alliances or other business ventures; </font></td>
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<font size="2" face="serif">any strategic corporate partner will perform its obligations pursuant to any strategic alliance; and</font></td>
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<td>
<font size="2" face="serif">there will be substantial unanticipated costs associated with such acquisitions, licensing arrangements or strategic alliances.</font></td>
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</table>
<p align="left"><font size="2" face="serif">In addition, any such acquisitions, licensing arrangements or strategic alliances may result in:</font></p>
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<font size="2" face="serif">potentially dilutive issuances of our equity securities; and</font></td>
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<font size="2" face="serif">the incurrence of additional debt.</font></td>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">As has been our practice in the past, we will continuously evaluate any such acquisitions, licensing opportunities or strategic alliances.  However, we have not reached any agreement or arrangement with respect to any such acquisition, licensing opportunity or strategic alliance as of the date of this prospectus and we may not be able to consummate any acquisitions, licensing arrangements or strategic alliances on terms favorable to us or at all.  The failure to consummate any such acquisitions, licensing arrangements or strategic alliances may reduce our growth and expansion.</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>The loss of any of our key customers could negatively affect our revenues and decrease our earnings.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We are highly dependant upon sales of our private label and branded coffee to two wholesalers, Supervalu and Topco/Shurfine, and upon sales of wholesale green coffee to one customer, Green Mountain Coffee Roasters.  Sales to Supervalu, Topco/Shurfine, and Green Mountain Coffee Roasters  accounted for approximately 16.1%, 7.5%, and 15.6% of our net sales for the fiscal year ended October 31, 2003 and 10.7%, 6.2%, and 22.6% for the six months ended April 30, 2004, respectively.  Although no other customer accounted for greater than 5% of our consolidated net revenues during these periods, other customers may account for more than 5% of our consolidated net revenues in future periods.  The loss of, or reduction in sales
to, customers such as Supervalu, Topco/Shurfine, Green Mountain Coffee Roasters or any of our other customers to which we sell a significant amount of our products or any material adverse change in the financial condition of such customers would negatively affect our revenues and decrease our earnings.  </font></p>
</div>
<p align="left"><font size="2" face="serif"><b>If we lose our key personnel, including Andrew Gordon and David Gordon, we may not be able to replace them with highly experienced personnel.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our success depends to a large degree upon the services of Andrew Gordon, our President, Chief Executive Officer and Treasurer, David Gordon, our Executive Vice President-Operations and Secretary, and certain other key employees.  We also depend to a large degree on the expertise of our coffee roasters. Our ability to source and purchase a sufficient supply of high quality coffee beans and to roast coffee beans consistent with our quality standards could suffer if we lose the services of any of these individuals.  As a result, our business and operating results would be adversely affected.  We cannot assure you that we would be successful in obtaining and retaining a replacement for either Andrew Gordon or David
Gordon, or any of our other key employees.  In addition, we do not have key-man insurance on the lives of Andrew Gordon or David Gordon.</font></p>
</div>
<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">12</font></p>
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<p align="left"><font size="2" face="serif"><b>If our hedging policy is not effective in controlling our coffee costs and maintaining an adequate supply of green coffee, our coffee costs may increase and our profitability may suffer.  </b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The supply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control.  Historically, we have used short-term coffee futures and options contracts primarily for the purpose of partially hedging and minimizing the effects of changing green coffee prices and to reduce our cost of sales.  In addition, during the latter half of fiscal 2000, we began to acquire futures contracts with longer terms, generally three to six months, primarily for the purpose of guaranteeing an adequate supply of green coffee.  Realized and unrealized gains or losses on futures contracts are accounted for in cost of sales.  Gains on futures contracts reduce cost of sales and losses on
futures contracts increase cost of sales.  Gains on futures contracts were $868,669 and $778,410 for the years ended October 31, 2003 and 2002, respectively, and were $1,158,167 for the six months ended April 30, 2004.  Although the use of these derivative financial instruments has enabled us to mitigate the effect of changing prices, no strategy is effective to eliminate the pricing risks and we generally remain exposed to loss when prices decline significantly in a short period of time, and we generally remain exposed to supply risk in the event of non-performance by the counter-parties to any futures contracts.  Although we generally have been able to pass green coffee price increases through to customers, thereby maintaining our gross profits, we cannot predict whether we will be able
to pass price increases through to our customers in the future.  We cannot assure you that our hedging strategy and the hedges that we enter into will adequately offset the risks of coffee bean price volatility or that our hedges will not result in losses.  Failure to properly design and implement an effective hedging strategy may materially adversely affect our business and operating results.  In this case, our costs of sales may increase, resulting in a decrease in profitability.</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>If we fail to continue to promote and enhance our brands, the value of our brands could decrease and adversely affect our revenues.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We believe that promoting and enhancing our brands is critical to our success.  We intend to increase our marketing expenditures to increase awareness of our brands, which we expect will create and maintain brand loyalty.  If our brand-building strategy is unsuccessful, these expenses may never be recovered, and we may be unable to increase awareness of our brands or protect the value of our brands.  If we are unable to achieve these goals, our revenues and ability to implement our business strategy could be adversely affected.</font></p>
<p align="left"><font size="2" face="serif">Our success in promoting and enhancing our brands will also depend on our ability to provide customers with high quality products and service. Although we take measures to ensure that we sell only fresh roasted coffee, we have no control over our coffee products once they are purchased by our wholesale customers.  Accordingly, wholesale customers may store our coffee for longer periods of time or resell our coffee without our consent, in each case, potentially affecting the quality of the coffee prepared from our products.  Although we believe we are less susceptible to quality control problems than many of our competitors because a majority of our products are sold in cans or brick packs unlike whole bean coffees,
if consumers do not perceive our products and service to be of high quality, then the value of our brands may be diminished and, consequently, our operating results and ability to implement our business strategy may be adversely affected.</font></p>
</div>
<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">13</font></p>
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<p align="left"><font size="2" face="serif"><b>Our roasting methods are not proprietary, so competitors may be able to duplicate them, which could harm our competitive position.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We consider our roasting methods essential to the flavor and richness of our roasted coffee and, therefore, essential to our brands of coffee.  Because we do not hold any patents for our roasting methods, it may be difficult for us to prevent competitors from copying our roasting methods if such methods become known.  If our competitors copy our roasting methods, the value of our coffee brands may be diminished, and we may lose customers to our competitors.  In addition, competitors may be able to develop roasting methods that are more advanced than our roasting methods, which may also harm our competitive position.</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>Our operating results may fluctuate significantly which may cause fluctuation in our stock price.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our operating results may fluctuate from quarter to quarter and year to year.  These fluctuations could be caused by a number of factors including:</font></p>
</div>
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<font size="2" face="serif">fluctuations in purchase prices and supply of green coffee; </font></td>
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<font size="2" face="serif">fluctuations in the selling prices of our products;</font></td>
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<font size="2" face="serif">the level of marketing and pricing competition from existing or new competitors in the coffee industry;</font></td>
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<font size="2" face="serif">our ability to retain existing customers and attract new customers; and</font></td>
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<font size="2" face="serif">our ability to manage inventory and fulfillment operations and maintain gross margins.</font></td>
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<p align="left"><font size="2" face="serif">As a result of the foregoing, period-to-period comparisons of our operating results may not necessarily be meaningful and those comparisons should not be relied upon as indicators of future performance. Fluctuations in operating results can have a negative impact on the value of our common stock. </font></p>
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<p align="left"><font size="2" face="serif"><b>Since we rely heavily on common carriers to ship our coffee on a daily basis, any disruption in their services or increase in shipping costs could adversely affect our business and our relationship with our customers.</b></font></p>
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<p align="left"><font size="2" face="serif">We rely on a number of common carriers to deliver coffee to our customers and to deliver coffee beans to us.  We consider roasted coffee a perishable product and we rely on these common carriers to deliver fresh roasted coffee on a daily basis. We have no control over these common carriers and the services provided by them may be interrupted as a result of labor shortages, contract disputes and other factors. If we experience an interruption in these services, we may be unable to ship our coffee in a timely manner, which could reduce our revenues and adversely effect our relationship with our customers.  In addition, a delay in shipping could require us to contract with alternative, and possibly more expensive,
common carriers and could cause orders to be cancelled or receipt of goods to be refused.  Any significant increase in shipping costs could lower our profit margins or force us to raise prices, which could cause our revenue and profits to suffer.</font></p>
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<p align="left"><font size="2" face="serif"><b>If we are unable to obtain additional financing, we may not be able to fund and grow our operations.</b></font></p>
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<p align="left"><font size="2" face="serif">We anticipate, but cannot assure you, that we will be able to expand our operations and implement our growth strategy in fiscal 2004 through the proceeds of this offering, cash provided by operating activities and borrowings under the credit facility with Wells Fargo Business Credit. This expectation assumes that we will be able to generate a sufficient level of sales in order to increase income, eligible accounts receivable and inventory to permit advances under our line of credit facility.  In the event our expectations are not fulfilled or that we are unable to generate sufficient amounts of cash to implement our growth strategy, we may be required to seek additional financing. We have no current arrangements for
additional financing and there can be no assurance that additional financing will be available to us on commercially reasonable terms, or at all.  If we are not successful in obtaining additional financing, we might not be able to implement our expansion plans.</font></p>
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<p align="left"><font size="2" face="serif"><b>We have indebtedness, which imposes restrictions on our operations and may limit our ability to raise additional capital or implement our business plan.</b></font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of April 30, 2004, we had indebtedness, including a revolving credit facility, secured by the assets of Coffee Holding, and a term loan, each with Wells Fargo Business Credit, of approximately $2.8 million.  Although we intend to use approximately $2.8 million of the offering proceeds to repay indebtedness, after this offering, we may continue to have debt, the terms of which may: </font></p>
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<font size="2" face="serif">require that a portion of our cash flow from operations be dedicated to servicing our debt;</font></td>
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<font size="2" face="serif">limit our ability to obtain additional capital without the consent of the lender through financings, if available at all; and</font></td>
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<font size="2" face="serif">potentially limit our flexibility to implement our business strategy or react to changes in our industry or economic conditions.</font></td>
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<p align="left"><font size="2" face="serif">Our loan agreement with Wells Fargo Business Credit contains financial covenants that place restrictions on our operations, including:</font></p>
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<font size="2" face="serif">limiting our ability to pay dividends or make other distributions to our stockholders and acquire or retire our common stock without the consent of the lender; and </font></td>
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<font size="2" face="serif">prohibiting us from forming or acquiring subsidiaries, merging with or into other companies or selling all or substantially all of our assets without the consent of the lender.</font></td>
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<p align="left"><font size="2" face="serif">These restrictions could adversely impact our ability to implement our business plan or raise additional capital, if needed.</font></p>
<p align="left"><font size="2" face="serif"><b>Significant interruption in the operation of either of our facilities could significantly impair our ability to operate our business.</b></font></p>
<p align="left"><font size="2" face="serif">Even though we recently acquired a second coffee roasting and distribution facility, a significant interruption in the operation of either facility, whether as a result of a natural disaster or other causes, could significantly impair our ability to operate our business.  Due to manufacturing and logistical efficiencies, our New York facility generally services customers in the Northeastern United States and the Midwest United States and our La Junta, Colorado facility services customers in the Western United States.  If there was a significant interruption in the operation of either one of our facilities, we may not have the capacity to service all of our customers out of the lone operating facility and we may not
be able to service our customers in a timely manner.  As a result, our revenues and earnings would be materially adversely affected.</font></p>
<p align="left"><font size="2" face="serif"><b>Compliance with government regulations applicable to us could have a material adverse affect on our business, financial condition and results of operations.</b></font></p>
<p align="left"><font size="2" face="serif">Our coffee roasting operations are subject to various governmental laws and regulations, and require us to obtain licenses relating to customs, health and safety, building and land use and environmental protection.  If we encounter difficulties in obtaining any necessary licenses or complying with any of these laws and regulations, our results of operations and financial condition could be adversely affected.</font></p>
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<p align="center"><font size="2" face="serif"><b>Risk Factors Relating to the Coffee Industry</b></font></p>
<p align="left"><font size="2" face="serif"><b>Increases in the cost of high quality Arabica or Robusta coffee beans could reduce our gross margin and profit.</b></font></p>
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<p align="left"><font size="2" face="serif">Coffee is a traded commodity and, in general, its price can fluctuate depending on:</font></p>
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<p align="left"><font size="2" face="serif">If the cost of wholesale green coffee increases due to any of these factors, our margins could decrease and our profitability could suffer accordingly.  Although we have historically attempted to raise the selling prices of our products in response to increases in the price of wholesale green coffee, when wholesale green coffee prices increase rapidly or to significantly higher than normal levels, we are not always able to pass the price increases through to our customers on a timely basis, if at all, which adversely affects our operating margins and cash flow.  We cannot assure you that we will be able to recover any future increases in the cost of wholesale green coffee.  Even if we are able to recover future
increases, our operating margins and results of operations may still be materially and adversely affected by time delays in the implementation of price increases.</font></p>
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<p align="left"><font size="2" face="serif"><b>Disruptions in the supply or increases in the cost of green coffee could adversely affect our business.</b></font></p>
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<p align="left"><font size="2" face="serif">Green coffee is a commodity and its supply and price are subject to volatility beyond our control. Supply and price are affected by many factors in the coffee growing countries including weather, political and economic conditions, acts of terrorism, as well as efforts by coffee growers to expand or form cartels or associations. If our cost of green coffee increases, we may not be able to pass along those costs to our customers. The effect would have a negative impact on our margins and profitability. If we are unable to procure a sufficient supply of green coffee, our sales would suffer.</font></p>
<p align="left"><font size="2" face="serif">Some of the arabica coffee beans of the quality we purchase do not trade directly on the commodity markets.  Rather, we purchase the high end arabica coffee beans that we use on a negotiated basis.  We depend on our relationships with coffee brokers, exporters and growers for the supply of our primary raw material, high quality Arabica coffee beans. If any of our relationships with coffee brokers, exporters or growers deteriorate, we may be unable to procure a sufficient quantity of high quality coffee beans at prices acceptable to us or at all.  In such case, we may not be able to fulfill the demand of our existing customers, supply new retail stores or expand other channels of distribution. A raw material shortage
could result in a deterioration of our relationship with our customers, decreased revenues or could impair our ability to expand our business.</font></p>
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<p align="left"><font size="2" face="serif"><b>The coffee industry is highly competitive and we may not have the resources to compete effectively.</b></font></p>
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<p align="left"><font size="2" face="serif">The coffee markets in which we do business are highly competitive and competition in these markets is likely to become increasingly more intense due to the relatively low barriers to entry.  The industry in which we compete is particularly sensitive to price pressure, as well as quality, reputation and viability for wholesale and brand loyalty for retail.  To the extent that one or more of our competitors becomes more successful with respect to any key competitive factor, our ability to attract and retain customers could be materially adversely affected.  Our private label and branded coffee products compete with other manufacturers of private label coffee and branded coffees. These competitors, such as Kraft General
Foods, Inc., The Kroger Co., The Procter &amp; Gamble Company and Sara Lee Corporation, have much greater financial, marketing, distribution, management and other resources than we do for marketing, promotions and geographic and market expansion. In addition, there are a growing number of specialty coffee companies who provide specialty green coffee and roasted coffee for retail sale. There can be no assurance that we can compete successfully against existing and new competitors.</font></p>
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<p align="left"><font size="2" face="serif"><b>Adverse public or medical opinion about caffeine may harm our business.</b></font></p>
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<p align="left"><font size="2" face="serif">Some of our coffee products contain caffeine and other active compounds, the health effects of which are not fully understood. A number of research studies conclude or suggest that excessive consumption of caffeine may lead to an increased heart rate, restlessness and anxiety, depression, headaches, sleeplessness and other adverse health effects. An unfavorable report on the health effects of caffeine or other compounds present in coffee could significantly reduce the demand for coffee, which could harm our business and reduce our sales and profits.</font></p>
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<p align="center"><font size="2" face="serif"><b>Risk Factors Related to this Offering</b></font></p>
<p align="left"><font size="2" face="serif"><b>We are controlled by members of the Gordon Family who have the ability to determine the election of our directors and the outcome of all other issues submitted to our stockholders.</b></font></p>
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<p align="left"><font size="2" face="serif">Andrew Gordon and David Gordon, executive officers and directors of Coffee Holding, beneficially own approximately 31.0% of our outstanding shares of common stock.  In addition, other members of the Gordon family beneficially own an additional 55.5% of the outstanding shares of common stock.  After the offering, Andrew Gordon, David Gordon and other members of the Gordon family will beneficially own approximately 61.8% of our outstanding common stock and will be able to control the vote on all matters submitted to a vote of stockholders, including the election of directors, amendments to the Articles of Incorporation and Bylaws and approval of significant corporate transactions.  This control could have the effect of
discouraging, delaying or preventing a change in our control which other stockholders might consider favorable. This control could also have the effect of approving a change in our control on terms which other stockholders might consider unfavorable.</font></p>
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<p align="left"><font size="2" face="serif"><b>We intend to implement anti-takeover provisions which could discourage or prevent a takeover, even if an acquisition would be beneficial to our stockholders.</b></font></p>
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<p align="left"><font size="2" face="serif">We intend to amend our Articles of Incorporation to, among other things, include provisions which could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders.  These provisions include: </font></p>
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<font size="2" face="serif">establishing a classified board of directors requiring that members of the board be elected in different years;</font></td>
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<font size="2" face="serif">authorizing the issuance of &#147;blank check&#148; preferred stock that could be issued by our board of directors to increase the number of outstanding shares or change the balance of voting control and resist a takeover attempt;</font></td>
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<font size="2" face="serif">prohibiting cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates;</font></td>
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<font size="2" face="serif">prohibiting stockholder action by written consent and requiring all stockholder actions to be taken at a meeting of our stockholders; and</font></td>
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<font size="2" face="serif">establishing advance notice requirements for nominations for election to the board of directors and for proposing matters that can be acted upon by stockholders at stockholder meetings.</font></td>
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<p align="left"><font size="2" face="serif">In addition, provisions of the Nevada Revised Statutes and the terms of the employment agreements with our executive officers may discourage, delay or prevent a change in our control.  </font></p>
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<p align="left"><font size="2" face="serif"><b>Sales of substantial amounts of our common stock may occur after this offering, which could cause our stock price to fall.</b></font></p>
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<p align="left"><font size="2" face="serif">Our current stockholders hold a substantial number of shares, which they will be able to sell in the public market in the near future.  Upon the completion of this offering (and excluding shares underlying the underwriter&#146;s warrants), we will have 5,599,650 shares of common stock issued and outstanding (5,839,650 shares if the underwriter&#146;s over-allotment option is exercised in full). Of those shares, the 1,600,000 sold in this offering (1,840,000 if the underwriter&#146;s over-allotment option is exercised in full) and the 29,650 shares registered in the Rule 419 Offering will have been registered under the Securities Act of 1933, as amended, and may be resold without further registration and 3,970,000
shares are &#147;restricted securities&#148; and may not be sold unless the sale is registered under the Securities Act or pursuant to an exemption from registration under the Securities Act.  All of these restricted securities (including 1,239,200 held by our officers and directors and an additional 2,220,200 shares owned by members of the Gordon family who are not our officers or directors) are eligible for sale under the exemption provided by Rule 144 of the Securities Act.  Approximately 3,540,400 shares will be subject to lock-up agreements which prohibit the sale of the shares for nine months after this offering.  However, it is possible that the underwriter could waive the nine-month lock-up period, if, for example, the underwriter determines that the market price of our common
stock has reached a sufficiently stable point that it could bear the sale of shares subject to the lock-ups. Sales of a substantial number of shares of our common stock within a short period of time after this offering could cause our stock price to fall.  In addition, the sale of these shares could impair our ability to raise capital through the sale of additional stock.  </font></p>
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<p align="left"><font size="2" face="serif"><b>There has been no prior market for our common stock.</b></font></p>
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<p align="left"><font size="2" face="serif">Prior to the offering, there has been no public trading market for our common stock. Furthermore, given the minimal number of outstanding shares of common stock held by our non-affiliates, a liquid public market may not develop. We have applied for listing of our common stock on the American Stock Exchange under the symbol &#147;JVA&#148;.</font></p>
<p align="left"><font size="2" face="serif">The development of an active trading market depends on the existence of willing buyers and sellers, the presence of which is not within our control, or the control of any market maker or specialist.  The number of active buyers and sellers of our common stock at any particular time may be limited.  Under such circumstances, you could have difficulty selling your shares on short notice, and, therefore, you should not view our common stock as a short-term investment.  We cannot assure that an active trading market for our securities will develop or be sustained, or at what price the securities will trade. In addition, even if these securities are listed and traded initially on the American Stock Exchange, we may fail
to meet certain minimum standards for continued listing. In that event, our common stock could be delisted, and our common stock would no longer be listed, if we are unable to list our common stock on another trading market.  This may make it extremely difficult to sell or trade our common stock.</font></p>
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<p align="left"><font size="2" face="serif"><b>The market price of our common stock may be volatile.</b></font></p>
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<p align="left"><font size="2" face="serif">Publicly traded stocks have experienced substantial market price volatility.  Those market fluctuations may be unrelated to the operating performance of particular companies whose shares are traded.  The purchase price of our common stock in this offering has been determined by negotiations between us and the underwriter and does not necessarily bear any relationship to our book value, past operating results, financial condition or other established criteria of value and may not be indicative of the market price of our common stock after this offering.  After your shares begin trading, the trading price of your common stock will be determined by the marketplace, and may be influenced by many factors, including
prevailing interest rates, investor perceptions of us and general industry and economic conditions.  If market volatility continues, it may affect the price of your common stock.</font></p>
<p align="left"><font size="2" face="serif">Even if a market for our common stock does develop, there may be significant volatility in the market price due to many factors including: </font></p>
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<p align="left"><font size="2" face="serif">In the past, companies that have experienced volatility in the market price of their stock have been the object of securities class action litigation. If we were the object of securities class action litigation, it could result in substantial costs and a diversion of our management's attention and resources.</font></p>
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<p align="left"><font size="2" face="serif"><b>We will have discretion as to the use of the proceeds of this offering, which we may not use effectively.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We intend to use the proceeds of this offering to repay approximately $2.8 million in indebtedness, to increase our sales and marketing efforts and for general corporate purposes and as strategic opportunities arise, we may use the proceeds of this offering to fund acquisitions, licensing and other strategic alliances.  We will have broad discretion in applying the remaining net proceeds of this offering and may use the proceeds in ways that are not optimal or with which the stockholders disagree.  Accordingly, investors in this offering will be relying on management&#146;s judgment with only limited information about our specific intentions regarding the use of proceeds.</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>You will incur immediate and substantial dilution.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">You will experience an immediate and substantial dilution of $3.68 per share ($3.56 per share assuming exercise of the underwriter&#146;s over-allotment option) in the net tangible book value per share of common stock based on an assumed initial public offering price of $5.50 per share.  Accordingly, existing stockholders will benefit disproportionately from this offering.  If we raise additional capital through the sale of equity, including preferred stock or convertible securities, your percentage of ownership will be diluted.  You may also experience dilution if stock options or warrants to purchase our shares are exercised.  As of the date of this prospectus, we had reserved 800,000 shares of our common stock
for issuance under our 1998 Stock Option Plan and 160,000 shares of our common stock for issuance upon the exercise of warrants to be issued to the underwriter at the completion of this offering.  No other options or warrants had been granted or exercised as of the date of this prospectus.</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>There are risks associated with our underwriter&#146;s lack of experience in public offerings.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Although certain principals of Maxim Group LLC have extensive experience in the securities industry, Maxim Group was formed less than two years ago and thus has limited experience acting as an underwriter in public offerings.  This lack of operating history may have an adverse effect on this offering.</font></p>
</div>
<p align="center"><font face="serif" size="2">21</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p22"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="left"><font size="2" face="serif"><b>If our common stock is deemed to be a &#147;penny stock,&#148; it may be subject to special requirements or conditions that could make it more difficult for you to sell your stock. This could cause our stock price to decline.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">If the trading price of our common stock drops below $5.00 per share and our common stock ceases to be listed on the American Stock Exchange or other comparable national exchange, our common stock may be deemed to be &#147;penny stock.&#148; Penny stocks are stocks:</font></p>
</div>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">With a price of less than $5.00 per share;</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">Not traded on a &#147;recognized&#148; national exchange;</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">Whose prices are not quoted on the Nasdaq automated quotation system; or</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">In issuers with net tangible assets less than $2.0 million (if the issuer has been in continuous operation for at least three years) or $5.0 million (if in continuous operation for less than three years), or with average revenues of less than $6.0 million for the last three years.</font></td>
</tr>
</table>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Broker/dealers dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker/dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to resell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline.</font></p>
</div>
<p align="center"><font face="serif" size="2">22</font></p>
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<page>
<a name="p23"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>USE OF PROCEEDS</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We estimate that the net proceeds to us from the offering will be approximately $7.3 million, or $8.5 million if the underwriter exercises its over-allotment option in full, assuming an initial public offering price of $5.50 per share and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.</font></p>
<p align="left"><font size="2" face="serif">We intend to use the net proceeds of this offering, together with other available funds, to increase our sales and marketing efforts, to repay approximately $2.8 million in indebtedness and for general corporate purposes.  Although we have no present plans or intentions, as strategic opportunities arise, we may use the proceeds of this offering to fund acquisitions, licensing and other strategic alliances.</font></p>
<p align="left"><font size="2" face="serif">The $2.8 million indebtedness that we intend to repay using proceeds of this offering includes outstanding balances on our revolving line of credit, term loan and capital lease.  Our credit facility with Wells Fargo Business Credit provides for a revolving line of credit of up to $5,000,000 based on eligible trade accounts receivable and inventories and a term loan of up to $750,000 based on eligible equipment through November 20, 2004.  Interest on the line of credit is payable monthly at the prime rate plus .25% (an effective rate of 4.25% at April 30, 2004) and interest on the term loan is payable monthly at the prime rate plus .50% (an effective rate of 4.50% at April 30, 2004).  Principal payments on the term
loan are payable in monthly installments of $7,000.  We also lease machinery and equipment under a capital lease which expires in July 2005.  The interest rate on the capital lease is 8-1/3% per annum.  The outstanding balance on the capital lease was $158,236 at April 30, 2004.</font></p>
<p align="left"><font size="2" face="serif">Pending such uses, we intend to invest the net proceeds in direct and guaranteed obligations of the United States, interest-bearing, investment-grade instruments or certificates of deposit.</font></p>
<p align="left"><font size="2" face="serif">Since we cannot specify with certainty the precise manner in which the net proceeds will be allocated, our management will have broad discretion in the application of the net proceeds.</font></p>
</div>
<p align="center"><font face="serif" size="2">23</font></p>
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<page>
<a name="p24"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>DILUTION</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net tangible book value at April 30, 2004 was approximately $2,858,000 or $0.71 per share of common stock.  Net tangible book value per share represents the amount of our total tangible assets less total liabilities divided by the number of shares of common stock outstanding at that date.  After giving effect to the sale of our common stock at an assumed initial public offering price of $5.50 per share, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our, as adjusted net tangible book value at April 30, 2004 would have been approximately $10,198,000, or $1.82 per share ($11,347,000 or $1.94 per share assuming exercise of the underwriter&#146;s
over-allotment option) of common stock.  This represents an immediate increase in the net tangible book value of $1.11 per share ($1.23 per share assuming exercise of the underwriter&#146;s over-allotment option) to existing stockholders and an immediate dilution of $3.68 per share ($3.56 per share assuming exercise of the underwriter&#146;s over-allotment option) to new investors purchasing shares of our common stock in this offering.  The following table illustrates this per share dilution:</font></p>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Assumed public offering price per share (1)</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td align="left" width="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 5.50</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Net tangible book value per share at April 30, 2004</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 0.71</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Increase per share attributable to new investors</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 1.11</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 3%; text-indent: -3%"><font size="2" face="serif">As adjusted net tangible book value per share after the offering(2)</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.82</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Dilution per share to new investors</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 3.68</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font><font size="2" face="serif">____________________</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Before deduction of underwriting discounts and commissions and estimated expenses of the offering.</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">(2)</font></td>
<td align="left">
<font size="2" face="serif"> After deduction of underwriting discounts and commissions and estimated expenses of the offering.</font></td>
</tr>
</table>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The following table summarizes, on an as-adjusted basis, after giving effect to this offering (assuming no exercise of the underwriter&#146;s over-allotment option), the number of shares purchased from us, the total consideration paid and the average price per share paid by the existing stockholders and by the new investors at an assumed initial public offering price of $5.50 per share:</font></p>
</div>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td colspan="4" align="center" valign="bottom"><font size="1" face="serif"><b>Shares<br>
  Purchased</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td colspan="4" align="center" valign="bottom"><font size="1" face="serif"><b>Total<br>
  Consideration</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td rowspan="3" align="center" valign="bottom"><font size="1" face="serif"><b>Average<br>
  Price Per<br>
Share</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td colspan="4" align="center" valign="bottom"><hr noshade size="1"></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td colspan="4" align="center" valign="bottom"><hr noshade size="1"></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="left" valign="bottom">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>Number</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>Percent</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>Amount</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>Percent</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="left" valign="bottom">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td>&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Existing stockholders</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td align="right" width="8%"><font size="2" face="serif">3,999,650</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td align="right" width="8%"><font size="2" face="serif">71.4</font></td>
<td align="left" width="2%"><font size="2" face="serif">%</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 871,887</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td align="right" width="8%"><font size="2" face="serif">9.0</font></td>
<td align="left" width="2%"><font size="2" face="serif">%</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> .22</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">New investors</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,600,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28.6</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">8,800,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;91.0</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 5.50</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Total</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">5,599,650</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;100.0</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 9,671,887</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100.0</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</table>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">In addition, 800,000 shares of our common stock have been reserved for future issuance upon exercise of options to be granted pursuant to our 1998 Stock Option Plan and 160,000 shares of our common stock have been reserved for future issuance upon exercise of warrants to be granted to the underwriter upon completion of this offering.  The issuance of such shares of our common stock may result in further dilution to new investors.  </font></p>
</div>
<p align="center"><font face="serif" size="2">24</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p25"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>CAPITALIZATION</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our capitalization as of April 30, 2004, on an actual basis and as adjusted to reflect the completion of this offering and the sale of 1,600,000 shares of common stock at an assumed initial public offering price of $5.50 per share, and after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.  The share information in this table is based on our shares of common stock outstanding as of April 30, 2004.  This table does not include 800,000 shares of our common stock reserved for future issuance under our 1998 Stock Option Plan and 160,000 shares of our common stock reserved for future issuance upon exercise of warrants to be granted to the
underwriter in connection with this offering.</font></p>
<table cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="4" align="center"><font size="1" face="serif"><b>At April 30, 2004</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td colspan="4" align="center"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="4" align="center"><font size="1" face="serif"><b>(In Thousands)</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>Actual</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>As Adjusted </b>(1)</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
  <td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Long term debt</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> 285</font></td>
<td align="left" width="4%"><font size="2" face="serif">(2)</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> 52</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
  <td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Stockholders&#146; equity:</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Preferred stock, $.001 per value, 10,000,000 shares authorized, no shares issued or outstanding</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Common stock, $.001 par value, 30,000,000 shares authorized, 3,999,650 shares issued and outstanding actual, and 5,599,650 shares issued and outstanding as adjusted(3)</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4</font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">6</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Additional paid-in capital</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;868</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">8,206</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Retained earnings</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,986</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,986</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Total stockholders&#146; equity</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,858</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">10,198</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Total capitalization</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 3,143</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 10,250</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td colspan="2"><hr align="left" width="150" size="1" noshade></td>
  </tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Reflects completion of this offering, the sale of 1,600,000 shares of common stock and the application of the net proceeds from this offering after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">(2)</font></td>
<td align="left">
<font size="2" face="serif"> Includes $210,000 outstanding on the term loan with Wells Fargo Business Credit and $23,350 outstanding on the capital lease with HSBC Business Credit (USA), Inc.  </font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">(3)</font></td>
<td align="left">
<font size="2" face="serif"> Does not include 800,000 shares of common stock reserved for issuance upon exercise of stock options and 160,000 shares of our common stock reserved for future issuance upon exercise of warrants to be granted to the underwriter upon completion of this offering.  Assumes no exercise of the underwriter&#146;s over-allotment option.</font></td>
</tr>
</table>
<p align="center"><font size="2" face="serif"><b>DIVIDEND POLICY</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We do not intend to pay dividends for the foreseeable future.  Under the current terms of our credit facility with Wells Fargo Business Credit, we are prohibited from paying cash dividends without the lender&#146;s written consent.  The payment of dividends in the future will depend upon our debt and equity structure, earnings and financial condition, need for capital in connection with possible future acquisitions and other factors, including economic conditions, regulatory restrictions and tax considerations.  We cannot guarantee that we will pay dividends or, if we pay dividends, the amount or frequency of these dividends.  </font></p>
</div>
<p align="center"><font face="serif" size="2">25</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p26"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>SELECTED FINANCIAL INFORMATION</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The selected financial data for the fiscal years ended October 31, 2003, 2002 and 2001 were derived from our fiscal financial statements audited by Lazar Levine &amp; Felix LLP for the respective periods.  The information for the six months ended April 30, 2004 and 2003 was derived from unaudited financial data but, in the opinion of management, reflects all adjustments necessary for a fair presentation of the results for such periods.  The selected financial and other data presented below should be read in conjunction with, and is qualified in its entirety by, our audited financial statements and related notes appearing in this prospectus on page F-1.  See &#147;Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations&#148; for a discussion of our financial statements for the years ended October 31, 2003 and 2002 for the six months ended April 30, 2004 and 2003.</font></p>
</div>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="right">&nbsp;</td>
<td colspan="7" align="center"><font size="1" face="serif"><b>For the<br>Year Ended</b></font></td>
<td align="left">&nbsp;</td>
<td colspan="5" align="center"><font size="1" face="serif"><b>For the<br>Six Months Ended</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="right">&nbsp;</td>
<td colspan="7" align="center"><hr noshade size="1"></td>
<td align="left">&nbsp;</td>
<td colspan="5" align="center"><hr noshade size="1"></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>October 31,<br>2003</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>October 31,<br>2002</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>October 31,<br>2001</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>April 30,<br>2004</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>April 30,<br>2003</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="14" align="center"><font size="1" face="serif"><b>(Dollars in thousands, except per share data)</b></font></td>
<td align="right">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>Income Statement Data</b>:</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Net sales</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 20,240</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 17,433</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="2%"><font size="2" face="serif"> 20,327</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 12,181</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 9,574</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Cost of sales</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">15,373</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">12,453</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">16,065</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">8,471</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">7,294</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Gross profit</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,867</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,980</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,262</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,710</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,280</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Operating expenses</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,993</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,505</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,162</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,302</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,716</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Income from operations</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;874</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,475</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,100</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,408</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;564</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Other income (expense)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(136</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(162</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">( 269</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(75</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(68</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Income before income taxes</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;738</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,313</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;831</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,333</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;496</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Provision for income taxes</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">116</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">558</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">313</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">595</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">222</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Net income</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 622</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 755</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 518</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 738</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 274</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td ><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td ><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Net income  per share &#150; basic and diluted</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .16</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .19</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .13</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .18</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .07</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Book value per share</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .53</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .37</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .19</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .71</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .44</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<br>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="right">&nbsp;</td>
<td colspan="7" align="center" valign="bottom"><font size="1" face="serif"><b>At</b></font> <font size="1" face="serif"><b>October 31,</b></font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td colspan="4" align="center" valign="bottom"><font size="1" face="serif"><b>At April 30, 2004</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="8" align="center" valign="bottom"><hr noshade size="1"></td>
<td align="center" valign="bottom">&nbsp;</td>
<td colspan="5" align="center" valign="bottom"><hr noshade size="1"></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="center"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="2" align="center"><font size="1" face="serif"><b>2003</b></font></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><font size="1" face="serif"><b>2002</b></font></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><font size="1" face="serif"><b>2001</b></font></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><font size="1" face="serif"><b>Actual</b></font></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><font size="1" face="serif"><b>As Adjusted(1)</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="center"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="center">&nbsp;</td>
<td colspan="2" align="center"><hr noshade size="1"></td>
<td align="left">&nbsp;</td>
</tr>

<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td colspan="14" align="center"><font size="1" face="serif"><b>(Dollars in thousands)</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>Balance Sheet Data</b>:</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Total assets</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 7,035</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 6,042</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 5,713</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 7,749</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 12,310</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Short-term debt</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,076</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,483</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,090</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,605</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,060</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Long-term debt</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,839</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,061</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,880</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 285</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 52</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Total liabilities</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,915</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,544</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,970</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 4,890</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,112</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Stockholders&#146; equity</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,120</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 1,498</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 743</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,858</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 10,198</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td colspan="2"><hr align="left" width="150" size="1" noshade></td>
  </tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">(1)</font></td>
<td width="97%" align="left">
<font size="2" face="serif"> Adjusted to give effect to the receipt and application of the net proceeds of approximately $7,340,000 from the sale of  shares of common stock offered by this prospectus.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">26</font></p>
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<a name="p27"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL<br>CONDITION AND RESULTS OF OPERATIONS</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif"><i>The following discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the &#147;Risk Factors&#148; section of this prospectus.  Actual results may differ materially from those contained in any forward-looking statements.  The following discussion should be read in conjunction with &#147;Selected Financial Data&#148; and our financial statements and the notes thereto included elsewhere in this prospectus.</i></font></p>
</div>
<p align="left"><font size="2" face="serif"><b>Overview</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We are 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.  As a result, we believe that we are well positioned to increase our profitability and endure potential coffee price volatility throughout varying cycles of the coffee market and economic conditions.</font></p>
<p align="left"><font size="2" face="serif">Our operations have primarily focused on the following areas of the coffee industry:</font></p>
</div>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">the sale of wholesale specialty green coffee;</font></td>
</tr>
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<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
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<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">the roasting, blending, packaging and sale of private label coffee; and</font></td>
</tr>
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<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">the roasting, blending, packaging and sale of our seven brands of coffee. </font></td>
</tr>
</table>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our operating results are affected by a number of factors including:</font></p>
</div>
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<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">the level of marketing and pricing competition from existing or new competitors in the coffee industry; </font></td>
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<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
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<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">our ability to retain existing customers and attract new customers;</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">fluctuations in purchase prices and supply of green coffee and in the selling prices of our products; and</font></td>
</tr>
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<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">our ability to manage inventory and fulfillment operations and maintain gross margins. </font></td>
</tr>
</table>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our net sales are driven primarily by the success of our sales and marketing efforts and our ability to retain existing customers and attract new customers.  For this reason, we have made the strategic decision to invest in measures that will increase net sales.  During the three months ended April 30, 2004, we acquired certain assets of Premier Roasters.  See &#151; Overview &#151; Recent Developments.&#148;  We also hired a West Coast Brand Manager to market our S&amp;W brand and to increase sales of S&amp;W coffee to new customers and increased attendance at trade shows to promote our food service and private label coffee business.  In the last twelve months, we also hired third party marketing specialists to
increase the sale of our branded coffee through label redesigns and new distribution.   As a result of these efforts, net sales increased in our specialty green coffee, private label and branded coffee business lines in both dollars and pounds sold.  In addition, we increased the number of our customers in all three areas.</font></p>
<p align="left"><font size="2" face="serif">Our net sales are also affected by the price of green coffee.  The supply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control.  Because we generally have been able to pass green coffee price increases through to customers, increased prices of green coffee generally result in increased net sales.  However, increased green coffee prices also generally result in increased cost of sales.  Cost of sales consists primarily of the cost of green coffee and packaging materials and realized and unrealized gains or losses on hedging activity.  </font></p>
</div>
<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">27</font></p>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Historically, we have used short-term coffee futures and options contracts primarily for the purpose of partially hedging and minimizing the effects of changing green coffee prices and to reduce our cost of sales.  In addition, during the latter half of fiscal 2000, we began to acquire futures contracts with longer terms, generally three to six months, primarily for the purpose of guaranteeing an adequate supply of green coffee at favorable prices.  Although the use of these derivative financial instruments has enabled us to mitigate the effect of changing prices, no strategy can entirely eliminate pricing risks and we generally remain exposed to loss when prices decline significantly in a short period of time, and
we generally remain exposed to supply risk in the event of non-performance by the counter-parties to any futures contracts.  If the hedges that we enter do not adequately offset the risks of coffee bean price volatility or our hedges will not result in losses, our cost of sales may increase, resulting in a decrease in profitability.  </font></p>
<p align="left"><font size="2" face="serif"><i>Recent Developments.</i>  In February 2004, we acquired certain assets of Premier Roasters, a roaster-dealer located in La Junta, Colorado, for $825,000.  The assets purchased by us include all of the operating equipment located at Premier Roasters&#146; La Junta and Rocky Ford, Colorado locations, as well as all labels for all of Premier Roasters&#146; coffee products.  In connection with the acquisition of these assets, we reached an agreement with the City of La Junta, Colorado on a 20-year lease for a 50,000 square foot facility in La Junta.  We are using the assets that we purchased to expand our integrated wholesale coffee roaster and dealer operations to the Western United States.  In connection with this
transaction, we also entered into a licensing agreement with Del Monte Corporation for the exclusive right to use the S&amp;W and IL CLASSICO trademarks, including Premium, Premium Decaf, French Roast, Colombian, Colombian Decaf, Swiss Water Decaf, Kona, and Mellow'd Roast lines, in connection with the production, manufacture and sale of ground coffee for distribution to retail customers in the United States and certain other countries approved by Del Monte Corporation.</font></p>
<p align="left"><font size="2" face="serif">We believe that our new La Junta, Colorado facility will allow us to grow our business and increase sales to new and existing customers in the Western United States.  By operating out of two facilities, we will now be able to compete aggressively throughout the United States as we have gained new economies of scale in both manufacturing and logistical efficiencies which were unavailable in the past while operating solely out of our New York facility.  In addition, we intend to broaden our customer base and increase penetration with existing customers by expanding the S&amp;W label from a well-known brand on the West coast to a well-known brand throughout the entire continental United States.  </font></p>
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<p align="left"><font size="2" face="serif"><b>Critical Accounting Policies and Estimates</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are used for, but not limited to, the accounting for the allowance for doubtful accounts, inventories, income taxes and loss contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.</font></p>
<p align="left"><font size="2" face="serif">We believe the following critical accounting policies, among others, may be impacted significantly by judgment, assumptions and estimates used in the preparation of the financial statements:</font></p>
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<td width="3%"><font size="2" face="serif">&#149;</font></td>
<td align="left">
<font size="2" face="serif"> We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, &#147;Revenue Recognition in Financial Statements&#148; (&#147;SAB 101&#148;). Under SAB 101, revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured. We generally recognize revenue at the time of shipment. Sales are reflected net of discounts and returns.</font></td>
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  <td>&nbsp;</td>
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<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">&#149;</font></td>
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<font size="2" face="serif"> Our allowance for doubtful accounts is maintained to provide for losses arising from customers&#146; inability to make required payments. If there is deterioration of our customers&#146; credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required.</font></td>
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  <td>&nbsp;</td>
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<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">&#149;</font></td>
<td align="left">
<font size="2" face="serif"> Inventories are stated at cost (determined on an average cost basis).  Based on our assumptions about future demand and market conditions, inventories are written-down to market value. If our assumptions about future demand change and/or actual market conditions are less favorable than those projected, additional write-downs of inventories may be required.</font></td>
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<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">&#149;</font></td>
<td align="left">
<font size="2" face="serif"> We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, &#147;Accounting for Income Taxes&#148;  (&#147;SFAS No. 109&#148;). Under SFAS No. 109, deferred tax assets and liabilities are determined based on the liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized.</font></td>
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<p align="left"><font size="2" face="serif"><b>Comparison of Results of Operations</b></font></p>
<p align="left"><font size="2" face="serif"><b>Six Months Ended April 30, 2004 Compared to the Six Months Ended April 30, 2003</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif"><i>Net Income</i>.  Net income increased $463,929, or 169.3%, to $738,003 or $.18 per share for the six months ended April 30, 2004 compared to $274,074 or $.07 per share for the six months ended April 30, 2003.  The increase in net income primarily reflects increased net sales, increased margins on our branded coffee and private label coffee products and increased margins on specialty green coffee sales.  </font></p>
<p align="left"><font size="2" face="serif"><i>Net Sales.</i>  Net sales totaled $12,180,960 for the six months ended April 30, 2004, an increase of $2,607,204 or 27.2% from $9,573,756 for the six months ended April 30, 2003.  The increase in net sales reflects initial sales under our license of the S&amp;W brand which we signed in February 2004 and an increase in pounds sold in both private label coffee and branded coffees to existing customers.  Sales of our Caf&eacute; Caribe brand, as measured by Information Resources Incorporated data, increased approximately 16.0% over the comparable 2003 period due in part to the efforts of our third party marketing specialists through label redesigns and new distribution.  The increase in net sales also reflects
increased sales of specialty green coffee.  The number of our customers in the specialty green coffee area grew approximately 4.1% to 255 customers.  These customers are predominately independent gourmet/specialty roasters, some of whom own their own retail outlets.  Sales to new customers in this area historically start slowly because many of these companies are start up ventures.  Because the specialty green coffee area is the fastest growing segment of the coffee market, we believe that our customer base and sales will grow in this area.  The increase in the price of the underlying commodity (coffee) also contributed to the increase in net sales.</font></p>
<p align="left"><font size="2" face="serif"><i>Cost of Sales.</i>  Cost of sales for the six months ended April 30, 2004 was $8,470,986 or 69.5% of net sales, as compared to $7,294,237 or 76.2% of net sales for the six months ended April 30, 2003.  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 primarily was attributable to increased sales and the increase in green coffee purchase prices, partially offset by net gains on future contracts.  As the price of coffee is cyclical and volatile and subject to many factors, including weather, politics and economics, we are unable to predict the purchase price of green coffee for fiscal
2004.  We began to acquire futures contracts with longer terms (generally three to six months) primarily for the purpose of guaranteeing an adequate supply of green coffee at favorable prices beginning in the latter half of fiscal 2000 and continuing through fiscal 2004.  As the price of specialty green coffee beans continued to increase, we used our favorable inventory position to increase our margins.  We had net gains on futures contracts of $1,158,167 for the six months ended April 30, 2004 compared to $476,579 for the comparable period in 2003.  The use of these derivative financial instruments has enabled us to mitigate the effect of changing prices, to increase our margins as coffee prices have increased and to be more competitive with our pricing.</font></p>
<p align="left"><font size="2" face="serif"><i>Gross Profit.</i>  Gross profit for the six months ended April 30, 2004 was $3,709,974, an increase of $1,430,455 or 62.8%, from $2,279,519 for the six months ended April 30, 2003.  Gross profit as a percentage of net sales increased by 6.7% to 30.5% for the six months ended April 30, 2004 from 23.8% for the same period in 2003.  Our hedging activities, reduced pricing pressure from national brands and new business with favorable pricing terms allowed us to increase our margins as the price of green coffee has increased.  As previously discussed, we believe that our favorable inventory position will allow us to increase our sales and ultimately our margins if coffee prices
continue to rise.</font></p>
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<p align="left"><font size="2" face="serif"><i>Operating Expenses.</i>  Total operating expenses increased $585,485 or 34.1% to $2,301,678 for the six months ended April 30, 2004 from $1,716,193 for the same period in 2003 due to increases in selling and administrative expenses and officers&#146; salaries.  Selling and administrative expenses increased $530,262 or 34.8% to $2,054,729 for the six months ended April 30, 2004 from $1,524,467 for the same period in 2003.  The increase in selling and administrative expenses reflects several factors, including the increased costs of operating two facilities, increases in sales commissions, travel expenses and shipping charges, and increased professional fees associated with the acquisition of assets from Premier
Roasters.  </font></p>
<p align="left"><font size="2" face="serif">We acquired certain assets of Premier Roasters and entered into a lease to operate from our new La Junta facility in February 2004.  Prior to commencing operations in La Junta, we incurred expenses associated with repairing and maintaining equipment located at the facility so that such equipment could meet our need and our roasting and blending requirements.  We also incurred expenses associated with the hiring of 25 new employees at the facility.  In addition, because many S&amp;W brand customers had previously placed orders with Premier Roasters, they initially did not require additional inventory to be shipped.  As a result, sales out of our La Junta facility were slower than expected.  However, in April 2004,
these customers began to replace their existing inventories of S&amp;W brand products, resulting in increased sales.  Although we will continue to incur increased operating expenses from operating out of two facilities, we expect to gain new economies of scale in both manufacturing and logistical efficiencies which were unavailable in the past while operating solely out of our New York facility.  We believe that this will allow us to compete aggressively throughout the United States.  </font></p>
<p align="left"><font size="2" face="serif">The increase in commissions and travel expenses reflects the hiring of a West Coast Brand Manager to market our S&amp;W brand as well as increases in sales of S&amp;W coffee to new customers.  We also increased attendance at trade shows to promote our food service and private label coffee business which contributed to our increased travel expenses.  The increase in shipping expenses reflects the increase in pounds of coffee sold, higher rates caused by increased fuel surcharges and gasoline prices, and the addition of new customers during the period.  We believe that these changes reflect our strategic decision to invest in measures that will increase net sales on a present and future basis. Selling and
administrative expenses, as a percentage of net sales, increased 0.9% from 15.9% for the six months ended April 30, 2003 to 16.8% for the six months ended April 30, 2004.  </font></p>
<p align="left"><font size="2" face="serif">Officers&#146; salaries increased $55,223 to $246,949 for the six months ended April 30, 2004 from $191,726 for the six months ended April 30, 2003.  The increase was due to salary increases for senior officers.</font></p>
<p align="left"><font size="2" face="serif"><i>Interest Expense.</i>  Interest expense increased $9,114 or 12.6% from $72,482 for the six months ended April 30, 2003 to $81,596 for the six months ended April 30, 2004.  The increase is attributable to the higher balance in outstanding borrowings under our credit facility for the six months ended April 30, 2004 compared to 2003 due to higher inventory levels necessitated by the operation of two facilities.  Rates of interest on our outstanding borrowings are tied to the prime rate.
 See &#147;&#151;Liquidity and Capital Resources.&#148;</font></p>
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<p align="left"><font size="2" face="serif"><i>Income Before Taxes.</i>  We had income of $1,333,203 before income taxes for the six months ended April 30, 2004 compared to income of $495,674 before income taxes for the six months ended April 30, 2003.  The increase was attributable primarily to improved margins on the sale of our private label, branded and specialty green coffee products due to a favorable inventory position as coffee prices increased.</font></p>
<p align="left"><font size="2" face="serif"><i>Income Taxes</i>.  Our provision for income taxes for the six months ended April 30, 2004 totaled $595,200 compared to $221,600 for the six months ended April 30, 2003 as a result of increased income before taxes.</font></p>
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<p align="left"><font size="2" face="serif"><b>Year Ended October 31, 2003 (Fiscal 2003) Compared to the Year Ended October 31, 2002 (Fiscal 2002) </b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif"><i>Net Income.</i>  Net income decreased $133,293 to $622,082 or $.16 per share for the year ended October 31, 2003 from $755,375, or $.19 per share, for the year ended October 31, 2002.  The decrease in net income primarily reflects the increase in operating expenses and the increase in cost of goods sold as we focused on increasing market share in order to capitalize on increased prices in the future.</font></p>
<p align="left"><font size="2" face="serif"><i>Net Sales.</i>  Net sales totaled $20,239,867 for the year ended October 31, 2003, an increase of $2,807,125 or 16.1% from $17,432,742 for the year ended October 31, 2002.  The increase in net sales reflected increases in the price of coffee and an increase in coffee pounds sold from 16.1 million pounds in 2002 to 17.4 million pounds in 2003.  The increase in pounds of coffee sold was the result of increased sales of our private label coffees to current and new customers and a slight increase in the sales of our branded products.  The number of our customers in the specialty green coffee area grew approximately 8.9% to 245 during the year ended October 31, 2003.  These customers are predominately independent
gourmet/specialty roasters, some of whom own their own retail outlets.  Sales to new customers in this area historically start slowly because many of these companies are start-up ventures.  Since management believes that the specialty green coffee area is the fastest growing segment of the coffee market, we believe that our customer base and sales will expand in this area.  We also believe that historically low coffee prices will continue to encourage consumers to purchase higher quality specialty coffee relative to supermarket brands. </font></p>
<p align="left"><font size="2" face="serif">Our sales prices decreased steadily throughout fiscal 2002 due to the decline in the price of green coffee.  Commencing in late 1998, the purchase price of green coffee began a decline that, with the exception of brief price surges, continued through August 2002.  Declines in green coffee purchase prices eventually led to declines in selling prices.  Sales prices of products which use commodity coffee react fairly quickly to changes in green coffee purchase prices.  Specialty green coffee sales prices tend to react more slowly to changes in purchase prices because demand for specialty coffee is less price sensitive.  We also experienced some pricing pressure in the private label area as national brands cut their
prices in order to increase market share.  The decrease in national brand prices made private label coffee less attractive to consumers compared to these national brands.  However, the price of green coffee began to increase in the last two months of fiscal 2002 and we believe further increases are possible.  If this does occur, national and regional brands will begin either decreasing their levels of promotion or initiating price increases to cover the added expense of higher priced green coffee.  Based on this, we believe that pricing pressure will decrease in fiscal 2004, allowing for both an increase in private label sales and higher prices received for our products.  </font></p>
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<p align="left"><font size="2" face="serif"><i>Cost of Sales.</i>  Cost of sales for the year ended October 31, 2003 was $15,373,127, or 76.0% of net sales, as compared to $12,452,713 or 71.4% of net sales for the year ended October 31, 2002.  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 primarily was attributable to the increase in green coffee purchase prices during fiscal 2003.  As the price of coffee is cyclical and volatile and subject to many factors, including weather, politics and economics, we are unable to predict the purchase price of green coffee for fiscal 2004.  We began to acquire futures contracts with longer
terms (generally three to six months) primarily for the purpose of guaranteeing an adequate supply of green coffee at favorable prices beginning in the latter half of fiscal 2000 and continuing through fiscal 2003.  The use of these derivative financial instruments has enabled us to mitigate the effect of changing prices although we generally remain exposed to loss when prices surge significantly in a short period of time and remain at higher levels, preventing us from obtaining inventory at favorable prices.  We believe that our favorable inventory position will allow us to increase our sales and near term margins if coffee prices continue to rise.  </font></p>
<p align="left"><font size="2" face="serif"><i>Gross Profit.</i>  Our gross profit in fiscal 2003 was $4,866,740, a decrease of $113,289, or 2.3% from $4,980,029 for the year ended October 31, 2002.  Gross profit as a percentage of net sales decreased by 4.6% to 24.0% in fiscal 2003 from 28.6% in fiscal 2002.  Margins decreased primarily due to pricing pressure from national brands which caused us to increase marketing efforts to maintain sales.</font></p>
<p align="left"><font size="2" face="serif"><i>Operating Expenses.</i>  Total operating expenses increased $487,561, or 13.9%, to $3,992,325 in fiscal 2003 from $3,504,764 in fiscal 2002 due to increases in selling and administrative expenses, including freight and officers&#146; salaries, partially offset by a decrease in professional fees.  Officers&#146; salaries were $490,860 in fiscal 2003, an increase of $47,638 from $443,222 for the year ended October 31, 2002.  Selling and administrative expenses increased $439,923 during the period.  We expect advertising and promotional expenses to increase in the future as we continue to increase our participation in national and regional shows to promote our brands and our private label products.  As a percentage
of net sales, total operating expenses decreased 0.4% from 20.1% for the year ended October 31, 2002 to 19.7% for the year ended October 31, 2003.  This change reflects the fact that selling and administrative expenses, in total, increased proportionate to the increase in sales.</font></p>
<p align="left"><font size="2" face="serif"><i>Interest Expense.</i>  Interest expense decreased $34,071, or 18.9%, from $180,678 for the year ended October 31, 2002 to $146,607 for the year ended October 31, 2003.  The decrease was attributable to a decline in the average borrowings outstanding on our line of credit with Wells Fargo Business Credit and on the term loan.  The decrease is also attributable to lower interest rates on outstanding borrowings.  Rates of interest on our outstanding borrowings are tied to the prime rate.  As the prime rate declined from the prior period, the rate of interest payable on our outstanding borrowings also declined.  See &#147;&#151;Liquidity and Capital Resources.&#148;</font></p>
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<p align="left"><font size="2" face="serif"><i>Net Income Before Taxes.</i>  We had income before taxes of $738,448 in fiscal 2003 compared to income before taxes of $1,313,095 in fiscal 2002.  The decrease was primarily attributable to the increase in operating expenses and the increase in cost of goods sold as we focused on increasing market share in order to capitalize on increased prices in the future.</font></p>
<p align="left"><font size="2" face="serif"><i>Income Taxes.</i>  Our provision for income taxes for the year ended October 31, 2003 totaled $116,366 compared to $557,720 for the year ended October 31, 2002.  The decrease was primarily attributable to the decrease in income before taxes for the 2003 fiscal year.</font></p>
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<p align="left"><font size="2" face="serif"><b>Liquidity and Capital Resources</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of April 30, 2004, we had working capital of $933,802 which represented a $2,429,394 decrease from our working capital of $3,363,196 as of October 31, 2003, and total stockholders&#146; equity of $2,858,482, which increased by $738,003 from our total stockholders&#146; equity of $2,120,479 as of October 31, 2003.  Our working capital decreased primarily due to the recategorization of the outstanding balance under our line of credit to short-term liabilities (liabilities due and payable in less than one year).  The outstanding balance under the line of credit was classified as short-term debt in our April 30, 2004 balance sheet since the agreement expires in November 2004, but was classified as long-term debt in
our October 31, 2003 balance sheet.  At April 30, 2004, the outstanding balance on our line of credit was $2,326,406 compared to $2,376,066 at October 31, 2003.  This decrease in working capital was partially offset by a $642,493 increase in inventories at April 30, 2004 compared to October 31, 2003.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a credit facility with Wells Fargo Business Credit.  The credit facility provides for a revolving line of credit of up to $5,000,000 based on eligible trade accounts receivable and inventories and a term loan of up to $750,000 based on eligible equipment.  The line of credit provides for borrowings of up to 85% of our eligible trade accounts receivable and 60% of eligible inventories.  On October 1, 2002, we extended our credit facility for an additional two years to November 20, 2004 at lower interest rates.  Interest on the line of credit is payable monthly at the prime rate plus .25% (an effective rate of 4.25% at April 30, 2004) and interest on the term loan is payable monthly at the prime rate plus .50%
(an effective rate of 4.50% at April 30, 2004).  Principal payments on the term loan are payable in monthly installments of $7,000.  Andrew Gordon and David Gordon, two of our directors and officers, each have guaranteed borrowings under the credit facility up to $500,000. </font></p>
<p align="left"><font size="2" face="serif">In addition, our credit facility with Wells Fargo Business Credit contains covenants that place restrictions on our operations.  Among other things, these covenants: require that a portion of our cash flow from operations be dedicated to servicing our debt;  limit our ability to obtain additional capital through financings without the consent of the lender; limit our ability to pay dividends or make other distributions to our stockholders and acquire or retire our common stock without the consent of the lender; and prohibit us from forming or acquiring subsidiaries, merging with or into other companies or selling all or substantially all of our assets without the consent of the lender.  These restrictions could
adversely impact our ability to implement our business plan, or raise additional capital, if needed.  In addition, if we default under our existing credit facility or if our lender demands payment of a portion or all of our indebtedness, we may not have sufficient funds to make such payments.  We are currently in compliance with all covenants contained in the credit facility.  We intend to renegotiate the terms of our credit facility, including the covenants, prior to its expiration in November 2004.</font></p>
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<p align="left"><font size="2" face="serif">As indicated above, as of April 30, 2004, the line of credit with Wells Fargo Business Credit had an outstanding balance of $2,326,406 as compared to an outstanding balance of $2,376,066 at October 31, 2003.  The outstanding balance under the term loan was $294,000 as of April 30, 2004, and was $336,000 at October 31, 2003.  We were in compliance with all required financial covenants at April 30, 2004.</font></p>
<p align="left"><font size="2" face="serif">We also lease machinery and equipment under a capital lease which expires in July 2005.  The interest rate on the capital lease is 8-1/3% per annum.  The outstanding balance on the capital lease was $158,236 at April 30, 2004 compared to $222,446 at October 31, 2003.</font></p>
<p align="left"><font size="2" face="serif">We had loans payable to our stockholders, all of whom are members of the Gordon family, of $79,646 at October 31, 2003.  The loans were repaid during the quarter ended April 30, 2004.  We do not intend to borrow additional amounts from our stockholders.</font></p>
<p align="left"><font size="2" face="serif">For the six months ended April 30, 2004, our operating activities provided net cash of $1,202,933 as compared to the six months ended April 30, 2003 when net cash used in operating activities was $342,628.  The increased cash flow from operations for the six months ended April 30, 2004 was primarily due to increased net income and decreased accounts receivable and prepaid expenses, offset in part by increased inventory levels and income taxes payable.</font></p>
<p align="left"><font size="2" face="serif">For the six months ended April 30, 2004, our investing activities used net cash of $833,206 as compared to the six months ended April 30, 2003 when net cash used by investing activities was $109,535.  The decreased cash flow from investing activities for the six months ended April 30, 2004 was primarily due to the purchase of property and equipment from Premier Roasters in February 2004.  </font></p>
<p align="left"><font size="2" face="serif">For the six months ended April 30, 2004, our financing activities used net cash of $246,674 as compared to the six months ended April 30, 2003 when net cash provided by financing activities was $515,178.  The decreased cash flow from financing activities was primarily due to net payments under our line of credit.  Net payments on our line of credit increased $662,415 to net cash used of $91,660 for the six months ended April 30, 2004 compared to net cash provided of $570,755 for the six months ended April 30, 2003.  In addition, we repaid $90,804 in loans to our stockholders during the six months ended April 30, 2004.  We also lease machinery and equipment under a capital lease which expires in July 2005.  The
interest rate on the capital lease is 8-1/3% per annum.  Management does not expect to incur other significant capital expenditures in fiscal 2004.  </font></p>
<p align="left"><font size="2" face="serif">In February, 2004, we acquired certain assets of Premier Roasters for $825,000.  In addition, we entered into an agreement with the City of La Junta, Colorado to lease a 50,000 square foot facility for $8,341 per month.  We do not believe that the purchase price or costs associated with operating a second facility will have a material effect on our future cash flow or liquidity position.  We believe that the costs associated with operating the second facility will be mitigated by the new economies of scale in both manufacturing and logistical efficiencies which were unavailable in the past while operating solely out of our New York facility and increased sales to new and existing customers in the Western United
States.</font></p>
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<p align="left"><font size="2" face="serif">We expect to fund our operations, including paying our liabilities, funding capital expenditures and making required payments on our debts, in fiscal 2004 through cash provided by operating activities and the net proceeds of this offering.  We expect that we will generate sufficient cash in this offering and through our operations to continue our business for the next twelve months.  In addition, an increase in eligible accounts receivable and inventory would permit us to make additional borrowings under our line of credit.  We also believe we could, if necessary, obtain additional loans by mortgaging our headquarters.  </font></p>
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<p align="left"><font size="2" face="serif"><b>Market Risks</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Market risks relating to our operations result primarily from changes in interest rates and commodity prices as further described below.</font></p>
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<p align="left"><font size="2" face="serif"><b>Interest Rate Risks</b></font></p>
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<p align="left"><font size="2" face="serif">We are subject to market risk from exposure to fluctuations in interest rates.  At April 30, 2004, our debt consisted of $158,236 of fixed rate debt on the capital lease and $2,620,406 of variable rate debt under our revolving line of credit and term loan.  At April 30, 2004,  interest on the variable rate debt was payable primarily at 4.25% (or .25% above the prime rate) for the revolving line of credit and at 4.50% (or .50% above the prime rate) for the term loan.  We do not expect changes in interest rates to have a material effect on results of operations or cash flows in fiscal 2004, although there can be no assurance that interest rates will not significantly change.</font></p>
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<p align="left"><font size="2" face="serif"><b>Commodity Price Risks</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The supply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control.  Historically, we have used short-term coffee futures and options contracts primarily for the purpose of partially hedging and minimizing the effects of changing green coffee prices, as further explained in Note 2 of the notes to financial statements in this prospectus.  In addition, during the latter half of fiscal 2000, we began to acquire futures contracts with longer terms (generally three to six months) primarily for the purpose of guaranteeing an adequate supply of green coffee.  The use of these derivative financial instruments has enabled us to mitigate the effect of changing
prices although we generally remain exposed to loss when prices decline significantly in a short period of time and remain at higher levels, preventing us from obtaining inventory at favorable prices.  We generally have been able to pass green coffee price increases through to customers, thereby maintaining our gross profits.  However, we cannot predict whether we will be able to pass inventory price increases through to our customers in the future.</font></p>
<p align="left"><font size="2" face="serif">At April 30, 2004, we held 525 options (generally with terms of two months or less) covering an aggregate of 19,687,500 pounds of green coffee beans at a price of $.70 and $.725 per pound.  The fair market value of these options, which was obtained from a major financial institution, was $291,094 at April 30, 2004.</font></p>
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<p align="left"><font size="2" face="serif">We acquire futures contracts with longer terms (generally three to six months) primarily for the purpose of guaranteeing an adequate supply of green coffee.  At April 30, 2004, we held four futures contracts for the purchase of 150,000 pounds of coffee at an average price of $.719 per pound for September 2004 contracts.  The market price of coffee applicable to such contracts was $.714 per pound at that date.</font></p>
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<p align="left"><font size="2" face="serif"><b>Off-Balance Sheet Arrangements</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.</font></p>
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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>BUSINESS</b></font></p>
<p align="left"><font size="2" face="serif"><b>General Overview</b></font></p>
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<p align="left"><font size="2" face="serif"><b><i>Products and Operations.</i></b>  We are 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.  As a result, we believe that we are well positioned to increase our profitability and endure potential coffee price volatility throughout varying cycles of the coffee market and economic conditions.  Our core products can be divided into three categories:</font></p>
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<font size="2" face="serif"><b><i>Wholesale Green Coffee:</i></b>  unroasted raw beans imported from around the world and sold to large and small roasters and coffee shop operators;</font></td>
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<font size="2" face="serif"><b><i>Private Label Coffee:</i></b>  coffee roasted, blended, packaged and sold under the specifications and names of others, including supermarkets that want to have their own brand name on coffee to compete with national brands; and</font></td>
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<font size="2" face="serif"><b><i>Branded Coffee:</i></b> coffee roasted and blended to our own specifications and packaged and sold under our seven brand names in different segments of the market.</font></td>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our private label and branded coffee products are sold throughout the United States and Canada to supermarkets, wholesalers, and individually owned and multi-unit retail customers.  Our unprocessed green coffee, which includes over 70 types of coffee from all over the world, is sold to specialty gourmet roasters.  </font></p>
<p align="left"><font size="2" face="serif">We conduct our operations in accordance with strict freshness and quality standards.  All of our private label and branded coffee is produced from high quality coffee beans that are deep roasted for full flavor using a slow roasting process that has been perfected utilizing our more than thirty years of experience in the coffee industry.  In order to ensure freshness, our products are delivered to our customers within 72 hours of roasting.  We believe that our long history has enabled us to develop a loyal customer base. </font></p>
<p align="left"><font size="2" face="serif"><b><i>Financial Highlights.</i></b></font></p>
</div>
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<font size="2" face="serif">Net sales and net income increased 27% and 169%, respectively, for the six months ended April 30, 2004 compared to the six months ended April 30, 2003, from approximately $9,570,000 and $274,000, respectively, to approximately $12,180,000 and $738,000, respectively;</font></td>
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<font size="2" face="serif">We increased our overall annual coffee poundage volume from 13 million pounds in 1998 to 17.4 million pounds in 2003; </font></td>
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<font size="2" face="serif">Caf&eacute; Caribe sales have increased 16% for the six months ended April 30, 2004 compared to the six months ended April 30, 2003, based on International Research Incorporated data;</font></td>
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<p>&nbsp;</p>
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<font size="2" face="serif">We continued to be profitable through varying cycles of the coffee commodity market. From fiscal years 2001 to 2003, when coffee commodity prices were trading at 30-year lows, our net income was approximately $518,000, $755,000, and $622,000, respectively; and</font></td>
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<font size="2" face="serif">Since 1998, we increased the number of our specialty green coffee customers, including coffee houses, single store operators, mall coffee stores and mail order sellers, by 70% from 150 to 255.</font></td>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif"><b><i>Geographic Expansion.</i></b>  In February 2004, we acquired certain assets of Premier Roasters, a roaster-dealer located in La Junta, Colorado, for $825,000.  The assets purchased by us include all of the operating equipment located at Premier Roasters&#146; La Junta and Rocky Ford, Colorado locations, as well as all labels for all of Premier Roasters&#146; coffee products.  In connection with the acquisition of these assets, we reached an agreement with the City of La Junta, Colorado on a 20-year lease for a 50,000 square foot facility in La Junta.  We are using the assets that we purchased to expand our integrated wholesale coffee roaster and dealer operations in the Western United States.  In connection
with this transaction, we also entered into a licensing agreement with Del Monte Corporation for the exclusive right to use the S&amp;W and IL CLASSICO trademarks in connection with the production, manufacture and sale of ground coffee for distribution to retail customers in the United States and certain other countries approved by Del Monte Corporation. </font></p>
</div>
<p align="left"><font size="2" face="serif"><b>Our Industries</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The United States coffee market consists of two distinct product categories:</font></p>
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<font size="2" face="serif">Commercial ground roast, mass-merchandised coffee; and</font></td>
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<font size="2" face="serif">Specialty coffees, which include:</font></td>
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<font size="2" face="serif">Gourmet coffees (premium grade Arabica coffees sold in whole bean and ground form);</font></td>
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<font size="2" face="serif">Espresso-based beverages; and </font></td>
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<font size="2" face="serif">Premium coffees (upscale coffees mass-marketed by the leading coffee companies).</font></td>
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<p align="left"><font size="2" face="serif"><b><i>Specialty Green Coffee.</i></b> Specialty
    green coffee, or what is sometimes called gourmet coffee, is high quality
    Arabica bean coffee. The Arabica bean is widely considered in the industry
    to be superior to its counterpart, the Robusta bean, which is used mainly
    in non-specialty coffee. High quality Arabica beans usually grow at high
    elevations, absorb little moisture and mature slowly. These factors result
    in beans with a mild aroma and a bright, pleasing flavor that is suitable
    for specialty coffee.Although the overall coffee industry is mature, the
    specialty green coffee market continues to be a fast growing segment.</font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have observed several industry trends that have contributed to the increase in demand for specialty coffee, including: </font></p>
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<font size="2" face="serif">According to the National Coffee Association (&#147;NCA&#148;), the number of specialty coffee retail outlets grew from 500 units in 1991 to over 10,000 units in 2003;</font></td>
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<font size="2" face="serif">Increasing demand for all premium food products, including specialty coffee, where the difference in price from the commercial brands is small compared to the perceived improvement in product quality and taste;</font></td>
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<font size="2" face="serif">Greater consumer awareness of specialty coffee as a result of its increasing availability;</font></td>
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<font size="2" face="serif">Ease of preparation of specialty coffees resulting from the increased use of automatic drip coffee makers and home espresso machines; and</font></td>
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<font size="2" face="serif">The overall low price of Arabica coffee beans, which has allowed consumers to afford higher end specialty 100% Arabica coffees.</font></td>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Hispanic Coffee Market in the United States.</i></b> Hispanics are now the fastest growing and largest minority demographic in the United States.  Some attractive features about the Hispanic coffee market in the United States are: </font></p>
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<font size="2" face="serif">Hispanic consumers drink four times more coffee per capita than other coffee drinking Americans, according to the Strategy Research Corporation 2000 U.S. Hispanic Market Study. </font></td>
</tr>
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<font size="2" face="serif">According to Information Resources Inc., Spanish espresso beverages&#146; total volume sales increased by 12% from April 2003 to April 2004.</font></td>
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<font size="2" face="serif">According to the United States Census Bureau, Hispanic Americans are the largest minority group in the United States as of January 2003 with 37 million people residing throughout the United States. </font></td>
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<font size="2" face="serif">According to Selig Center for Economics, the purchasing power of Hispanic consumers is expected to hit $925.1 billion by 2007.</font></td>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Coffee
        Commodity Market.</i></b><b></b> Due to oversupply, in 2002 and 2003
        coffee prices plummeted to 30-year lows. The price decrease was an 82
        percent drop from four years earlier. In 2003, coffee-producing nations
        received approximately $5.5 billion for their beans, less than half what
        they made in the late 1980s. The oversupply has gone largely unnoticed
        in the United States, the world&#146;s largest coffee consumer because
        Americans have not seen equally steep price declines for coffee products.
        Changes in prices have been obscured by the dramatic expansion in the
        variety of upscale coffees available to ordinary consumers. Selling for
        over $2.00 per cup in many gourmet shops, coffee has become an affordable
        luxury. In 2004, coffee production is expected to fall below demand for
        the first time in six years. The International Coffee Organization Global
        expects coffee production in the agricultural year ending 2004 to fall
        15%. Consequently, for the first six months of 2004, coffee futures are
        at their highest prices in three years and many of the industry leaders
        have increased the prices of their retail coffee products.</font></p>
<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif"><b>Our Competitive Strengths</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To achieve our growth objectives described below, we intend to leverage the following competitive strengths:</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Strong Distribution with Capacity For Growth. </i></b> Since 1991, we have been able to expand our distribution to a national platform while operating from only our East Coast location.   We have recently made capital investments to improve our roasting, packaging and fulfillment infrastructure to support the production and distribution of large quantities of fresh coffee products throughout the United States.  We believe that our new La Junta, Colorado facility will allow us to continue to grow our business by further increasing our presence in the Western United States.  By operating out of two facilities, we have gained new economies of scale in both manufacturing and logistical efficiencies and are
confident that we can compete aggressively throughout the United States.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Positioned to Profitably Grow Through Varying Cycles of the Coffee Market. </i></b>  We believe that we are one of the few coffee companies to offer a broad array of branded and private label roasted ground coffees and wholesale green coffee across the spectrum of consumer tastes, preferences and price points.  While many of our competitors engage in distinct segments of the coffee business, we sell products in each of the following areas:</font></p>
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<font size="2" face="serif">Retail branded coffee; </font></td>
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<font size="2" face="serif">Retail private label coffee;</font></td>
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<font size="2" face="serif">Wholesale specialty green and gourmet whole bean coffees; </font></td>
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<font size="2" face="serif">Food service;</font></td>
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<font size="2" face="serif">Instant coffees; and</font></td>
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<font size="2" face="serif">Niche products.</font></td>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our branded and private label roasted ground coffees are sold predominantly at competitive and value price levels while some of our other branded and specialty coffees are sold predominantly at the premium price levels. Because of this diversification, we believe that our profitability is not dependent on any one area of the coffee industry and, therefore, is less sensitive than our competition to potential coffee commodity price and overall economic volatility.</font></p>
<p align="left"><font size="2" face="serif"><b><i>Strong Wholesale Green Coffee Market Presence.</i></b>  As one of the largest roaster/dealers of green coffee, we are favorably positioned to increase our specialty coffee sales.  Since 1998, we increased the number of our wholesale green coffee customers, including coffee houses, single store operators, mall coffee stores and mail order sellers, by 69% from 150 to 255.  We are a charter member of the Specialty Coffee Association of America and one of the largest distributors of Swiss water processed decaffeinated coffees along the East Coast.  In addition, we have a 13-year relationship with our largest wholesale green coffee customer, Green Mountain Coffee Roasters (Nasdaq: GMCR).  Our 30-plus years of
experience as a roaster and a dealer of green coffee allows us to provide our roasting experience as a value added service to our gourmet roaster customers. The assistance we provide to our customers includes training, coffee blending and market identification. We believe that our relationships with  wholesale green coffee customers and our focus on selling green coffee as a wholesaler  has enabled us to participate in the growth of the specialty coffee market while mitigating the risks associated with the competitive retail specialty coffee environment. </font></p>
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<p align="left"><font size="2" face="serif"><b><i>Diverse Portfolio of Differentiated Branded Coffees. </i></b>Currently, our highest net profit margin is on our branded coffees.  We have amassed a portfolio of five proprietary name brands sold to supermarkets, wholesalers and individually-owned stores in the United States, including brands for specialty espresso, Latin espresso, Italian espresso, 100% Colombian coffee and blended coffee.  In addition, we have entered into a licensing agreement with Del Monte Corporation for the exclusive right to use the S&amp;W and IL CLASSICO trademarks in the United States and other countries approved by Del Monte Corporation in connection with the production, manufacture and sale of roasted whole bean and ground coffee
for distribution to retail customers.  We plan to broaden our customer base and increase penetration with existing customers by expanding the S&amp;W label from a well-known brand on the West Coast to a well-known brand throughout the United States.  Our existing portfolio of differentiated brands combined with our management expertise serve as a platform to add additional name brands through acquisition or licensing agreements which target product niches and segments that do not compete with our existing brands.  In addition, we have added a group of third-party marketing specialists to help grow our branded coffee sales.  These specialists have redesigned our packaging and labels and have assisted in extending our product lines to include instant cappuccinos, large can coffees and
trial-sized mini-brick packages.  </font></p>
<p align="left"><font size="2" face="serif"><b><i>Management Possesses Approximately 100 Years of Industry Experience.</i></b>  We have been a family operated business for three generations.  Throughout this time, we have remained profitable through varying cycles in the coffee industry and the economy.  Our management team has nearly 100 years combined experience in the coffee business.  Sterling Gordon has over 50 years of experience in the coffee business during which time he has developed a reputation in the industry as an expert in coffee blending and quality.  Andrew Gordon and David Gordon have worked with Coffee Holding for 21 and 23 years, respectively.  David Gordon is an original member of the Specialty Coffee Association of America.  Andrew Gordon
publishes a weekly report on the coffee commodity industry and is perceived by many of his peers and customers as a coffee market expert.  Our employees and management are dedicated to our vision and mission, which is to produce high quality products, as well as to provide quality and responsive service to our customers.<b></b></font></p>
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<p align="left"><font size="2" face="serif"><b>Our Growth Strategy</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We believe that significant growth opportunities exist by selectively pursuing strategic acquisitions and alliances, targeting the rapidly growing Hispanic market, increasing penetration with existing customers by adding new products, and developing our food service business.  By capitalizing on this strategy, we hope to continue to grow our business with our commitment to quality and personalized service to our customers.  We do not intend to compete on price alone nor do we intend to expand sales at the expense of profitability. </font></p>
<p align="left"><font size="2" face="serif"><b><i>Selectively Pursue Strategic Acquisitions and Alliances.</i></b>  We  intend to expand our operations by acquiring coffee companies, seeking strategic alliances and acquiring or licensing brands which complement our business objectives.  Consistent with this strategy, in February 2004, we acquired certain assets of Premier Roasters and we have entered into a licensing agreement with Del Monte Corporation for the exclusive right to use the S&amp;W and IL CLASSICO trademarks in the United States and other countries approved by Del Monte Corporation in connection with the production, manufacture and sale of roasted whole bean and ground coffee for distribution at the retail level.  We are using the assets we
purchased from Premier Roasters and our new facility in La Junta, Colorado to expand our private label coffee and branded coffee operations in the Western United States.  Our Western United States presence recently enabled us to win a competitive bidding process to be the exclusive supplier of ground roast private label coffee for four West Coast divisions of Albertson&#146;s, Inc., the second largest food and drug retailer in the United States.  We intend to further expand the market presence of our branded products outside our primary Northeastern United States market through other acquisitions and strategic alliances.</font></p>
<p align="left"><font size="2" face="serif"><b><i>Grow Our Caf&eacute; Caribe Product.  </i></b>Hispanic consumers drink four times more coffee per capita than other coffee drinking Americans, according to the Strategy Research Corporation 2000 U.S. Hispanic Market Study.  The Hispanic population in the United States is growing at nine times the average rate and now represents the largest minority demographic in the United States, according to 2000 census data.  We believe there is significant opportunity for our Caf&eacute; Caribe brand to gain market share among Hispanic consumers in the United States.  Caf&eacute; Caribe is a specialty espresso coffee popular with Hispanic consumers.  Although Caf&eacute; Caribe has historically been our leading brand by
revenue, we have not implemented a comprehensive marketing program that targets Hispanic consumers.  We estimate that Caf&eacute; Caribe has a market share of approximately 6% of this segment.  We intend to use a portion of the proceeds of this offering to increase the sales of this brand and other espresso-based products by developing a comprehensive sales and marketing program aimed at Hispanic consumers throughout the United States, particularly in Florida where we believe there is a significant opportunity to capture additional market share.</font></p>
<p align="left"><font size="2" face="serif"><b><i>Further Market Penetration of Our Niche Products.</i></b>  We intend to capture additional market share through our existing distribution channels by selectively adding or introducing new brand names and products across multiple price points, including:</font></p>
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<font size="2" face="serif">Private label &#147;value&#148; blends and trial-sized mini-brick packages;</font></td>
</tr>
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<font size="2" face="serif">Specialty instant coffees;</font></td>
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<font size="2" face="serif">Instant cappuccinos and hot chocolates; and</font></td>
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<p align="left"><font size="2" face="serif">We recently established relationships with additional independent sales brokers to market our products on a national scale.  </font></p>
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<p align="left"><font size="2" face="serif"><b><i>Develop Our Food Service Business.</i></b> We plan to expand further into the food service business by developing new distribution channels for our products.  Currently, we have a limited presence in the food service market.  We have commenced marketing our upscale restaurant and Colombian coffee brands to hotels, restaurants, office coffee services companies and other food service retailers.  In addition, we have expanded our food service offerings to include instant cappuccinos, tea products and an equipment program for our customers.  We attend at least ten annual trade shows held by various buying groups which provide us a national audience to market our food service products.  We intend to use a portion of
the proceeds of this offering to grow our food service distribution both organically and through acquisitions.</font></p>
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<p align="left"><font size="2" face="serif"><b>Our Core Products </b></font></p>
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<p align="left"><font size="2" face="serif">Our core products can be divided into three categories:</font></p>
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<font size="2" face="serif"><b><i>Wholesale Green Coffee</i></b><b>:</b> unroasted raw beans imported from around the world and sold to large and small roasters and coffee shop operators;</font></td>
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<font size="2" face="serif"><b><i>Private Label Coffee</i></b><b>:</b> coffee roasted, blended, packaged and sold under the specifications and names of others,  including supermarkets that want to have their own brand name on coffee to compete with national brands; and</font></td>
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<font size="2" face="serif"><b><i>Branded Coffee</i></b><b>:</b> coffee roasted and blended to our own specifications and sold under our seven brand names in different segments of the market.</font></td>
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<p align="left"><font size="2" face="serif"><b><i>Wholesale Green Coffee.</i></b>  The specialty green coffee market represents the fastest growing area of our industry.  The number of gourmet coffee houses have been increasing in all areas of the United States.  The growth in specialty coffee sales has created a marketplace for higher quality and differentiated products which can be priced at a premium in the marketplace.  As one of the largest roaster/dealers of green coffee, we are favorably positioned to increase our specialty coffee sales.  We sell green coffee beans to small roasters and coffee shop operators located throughout the United States and carry over 70 different varieties.  Specialty green coffee beans are sold unroasted, direct from
warehouses to small roasters and gourmet coffee shop operators which then roast the beans themselves. We sell from as little as one bag (132 pounds) to a full truckload (44,000 pounds) depending on the size and need of the customer.  We believe that we can increase sales of wholesale green coffee without venturing into the highly competitive retail specialty coffee environment and that we can be as profitable or more profitable than our competition in this segment by selling &#147;one bag at a time&#148; rather
than &#147;one cup at a time.&#148; </font></p>
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<p align="left"><font size="2" face="serif"><b><i>Private Label Coffee.</i></b>   We roast, blend, package and sell coffee under private labels for companies throughout the United States and Canada.  Our private label coffee is sold in cans, brick packages and instants in a variety of sizes.  As of April 30, 2004, we supplied coffee under approximately 35 different labels to wholesalers and retailers, including Supervalu, Topco/ShurFine and Nash Finch, three of the largest grocery wholesalers in North America according to <i>Private Label</i> <i>Magazine.</i>  We produce private label coffee for customers who desire to sell coffee under their own name but do not want to engage in the manufacturing process.  Our  private label customers  seek  a quality similar
to the national brands at a lower cost, which represents a better value for the consumer.</font></p>
<p align="left"><font size="2" face="serif"><b><i>Branded Coffee</i></b><b>.</b>  We roast and blend our branded coffee according to our own recipes and package the coffee at our facilities in Brooklyn, New York and La Junta, Colorado.  We then sell the packaged coffee under our brand labels to supermarkets, wholesalers and individually owned stores throughout the United States.</font></p>
<p align="left"><font size="2" face="serif">We hold trademarks for each of our proprietary name brands and have the exclusive right to use the S&amp;W and IL CLASSICO trademarks in the United States in connection with the production, manufacture and sale of roasted whole bean and ground coffee for distribution at the retail level.  For further information regarding our trademark rights, see &#147;Business&#151;Trademarks.&#148; </font></p>
<p align="left"><font size="2" face="serif">Each of our name brands is directed at a particular segment of the coffee market.  Our branded coffees are:</font></p>
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<font size="2" face="serif"><b><i>Caf&eacute; Caribe </i></b>is a specialty espresso coffee that targets espresso coffee drinkers and, in particular, the Hispanic consumer market;<i></i></font></td>
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<font size="2" face="serif"><b><i>S&amp;W</i></b> is an upscale canned coffee established in 1921 and includes Premium, Premium Decaf, French Roast, Colombian, Colombian Decaf, Swiss Water Decaf, Kona, Mellow'd Roast and IL CLASSICO lines;</font></td>
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<font size="2" face="serif"><b><i>Caf&eacute; Supremo</i></b><i></i> is a specialty
espresso that targets espresso drinkers of all backgrounds and tastes. It is
designed to introduce coffee drinkers to the tastes of dark roasted coffee;</font></td>
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<font size="2" face="serif"><b><i>Don Manuel</i></b> is produced from the finest 100% Colombian coffee beans.  Don Manuel is an upscale quality product which commands a substantial premium compared to the more traditional brown coffee blends.  We also use this known trademark in our food service business because of the high brand quality;</font></td>
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<font size="2" face="serif"><b><i>Fifth Avenue</i></b> is a blended coffee that has become popular as an alternative for consumers who purchase private label or national branded coffee.  We also market this brand to wholesalers who do not wish to undertake the expense of developing a private label coffee program under their own name;</font></td>
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<font size="2" face="serif"><b><i>Via Roma</i></b> is an Italian espresso targeted at the more traditional espresso drinker; and</font></td>
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<font size="2" face="serif"><b><i>Il CLASSICO</i></b> is an S&amp;W brand espresso product.</font></td>
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<p align="left"><font size="2" face="serif"><b>Other Products</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also offer several niche products, including:  </font></p>
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<font size="2" face="serif">instant cappuccinos and hot chocolates; and</font></td>
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<font size="2" face="serif">tea line products.  </font></td>
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<p align="left"><font size="2" face="serif"><b>Raw Materials</b></font></p>
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<p align="left"><font size="2" face="serif">Coffee is a commodity traded on the Commodities and Futures Exchange subject to price fluctuations.  Over the past five years, the average price per pound of coffee beans ranged from approximately $.41 to $1.45.  The price for coffee beans on the commodities market as of April 30, 2004 was $.69 per pound.   Specialty green coffee, unlike most coffee, is not tied directly to the commodities cash markets.  Instead, it tends to trade on a negotiated basis at a substantial premium over commodity coffee pricing, depending on the origin, supply and demand at the time of purchase.  We are a licensed Fair Trade dealer of Fair Trade certified coffee.  Fair Trade certified coffee helps small coffee farmers to increase their
incomes and improve the prospects of their communities and families by guaranteeing farmers a minimum price of five cents above the current market price.  Although we may purchase Fair Trade certified coffee from time to time, we are not obligated to do so and we do not have any commitments to purchase Fair Trade certified coffee.  All of our specialty green coffees, as well as all of the other coffees we import for roasting, are subject to multiple levels of quality control.  </font></p>
<p align="left"><font size="2" face="serif">We purchase our green coffee from dealers located primarily within the United States.  The dealers supply us with coffee beans from many countries, including Colombia, Mexico, Kenya, Indonesia, Brazil and Uganda.  In fiscal 2003, substantially all of our green coffee purchases were from approximately ten suppliers, which accounted for approximately $11.0 million, or 84% of our total product purchases.  One of these suppliers, Rothfos Corporation, accounted for $4.1 million, or 31% of our total product purchases.  An employee of Rothfos Corporation is one of our directors.  We do not believe that the loss of any one supplier, including Rothfos, would have a material adverse effect on our operations due to the
availability of alternate suppliers.  </font></p>
<p align="left"><font size="2" face="serif">The supply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control.  Supply and price can be affected by factors such as weather, politics and economics in the coffee exporting countries.  Increases in the cost of coffee beans can, to a certain extent, be passed on to our customers in the form of higher prices for coffee beans and processed coffee.  Drastic or prolonged increases in coffee prices could also adversely impact our business as it could lead to a decline in overall consumption of coffee.  Similarly, rapid decreases in the cost of coffee beans could force us to lower our sale prices before realizing cost reductions in our purchases.</font></p>
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<p align="left"><font size="2" face="serif">We subject all of our private unroasted green coffee to both a pre-shipment sample approval and an additional sample approval upon arrival into the United States.  Once the arrival sample is approved, we then bring the coffee to one of our facilities to roast and blend according to our own strict specifications.  During the roasting and blending process, samples are pulled off the production line and tested on an hourly basis to ensure that each batch roasted is consistent with the others and meets the strict quality standards demanded by our customers and us.</font></p>
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<p align="left"><font size="2" face="serif"><b>Our Use of Derivatives</b></font></p>
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<p align="left"><font size="2" face="serif">Historically, we have used short-term coffee futures and options contracts primarily for the purpose of partially hedging and minimizing the effects of changing green coffee prices, as further explained in Note 4 of the notes to financial statements in this prospectus.  In addition, during the latter half of fiscal 2000, we began to acquire futures contracts with longer terms (generally three to six months) primarily for the purpose of guaranteeing an adequate supply of green coffee as prices were rising after historical 30 year lows.  The use of these derivative financial instruments has enabled us to mitigate the effect of changing prices although we generally remain exposed to loss when prices decline
significantly in a short period of time or remain at higher levels, preventing us from obtaining inventory at favorable prices.  We generally have been able to pass green coffee price increases through to customers, thereby maintaining our gross profits.  However, we cannot predict whether we will be able to pass inventory price increases through to our customers in the future.  See &#147;Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations &#151; Commodity Price Risks.&#148;</font></p>
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<p align="left"><font size="2" face="serif"><b>Trademarks</b></font></p>
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<p align="left"><font size="2" face="serif">We hold trademarks, registered with the United States Office of Patent and Trademark, for all five of our proprietary coffee brands and an exclusive license for S&amp;W and IL CLASSICO brands for sale in the United States.  Trademark registrations are subject to periodic renewal and we anticipate maintaining our registrations.  We believe that our brands are recognizable in the marketplace and that brand recognition is important to the success of our branded coffee business.</font></p>
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<p align="left"><font size="2" face="serif"><b>Customers</b></font></p>
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<p align="left"><font size="2" face="serif">We sell our private label and our branded coffee to three of the largest wholesalers in the United States (according to Supermarket News) and are the exclusive coffee supplier for Supervalu and Nash Finch Co., the largest and fourth largest wholesalers in the United States.  We sell wholesale green coffee to Green Mountain Coffee Roasters.  Sales to Supervalu, Topco/Shurfine, Nash Finch Co. and Green Mountain Coffee Roasters accounted for approximately 16.1%, 7.5%, 4.9% and 15.6% of our net sales for the fiscal year ended October 31, 2003 and 10.7%, 6.2%, 3.6% and 22.6% for the six months ended April 30, 2004, respectively.</font></p>
<p align="left"><font size="2" face="serif">Although our agreements with wholesale customers generally contain only pricing terms, our contract with Supervalu also contains minimum and maximum purchase obligations at fixed prices.  Because our profits on a fixed-price contract could decline if coffee prices increased, we began to acquire futures contracts with longer terms (generally three to six months) primarily for the purpose of guaranteeing an adequate supply of green coffee at favorable prices beginning in the latter half of fiscal 2000 and continuing through fiscal 2003.  The use of these derivative financial instruments has enabled us to mitigate the effect of changing prices although we generally remain exposed to loss when prices surge significantly
in a short period of time and remain at higher levels, preventing us from obtaining inventory at favorable prices.  In addition, during fiscal 2002 and fiscal 2003, the historically low price of coffee allowed us to replace our existing inventory with cheaper new inventory, locking in additional margins on previously contracted business.  We believe that our favorable inventory position will allow us to increase sales and margins if coffee prices continue to rise.</font></p>
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<p align="left"><font size="2" face="serif"><b>Marketing</b></font></p>
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<p align="left"><font size="2" face="serif">We market our private label and wholesale coffee through trade shows, industry publications, face-to-face contact and through the use of our internal sales force and non-exclusive independent food and beverage sales brokers.  We also use our web site (www.coffeeholding.com) as a method of marketing our coffee products and ourselves.</font></p>
<p align="left"><font size="2" face="serif">For our private label and branded coffees, we will, from time to time in conjunction with retailers and with wholesalers, conduct in-store promotions, such as product demonstrations, coupons, price reductions, two-for-one sales and new product launches to capture changing consumer taste preference for upscale canned coffees.</font></p>
<p align="left"><font size="2" face="serif">We evaluate opportunities for growth consistent with our business objectives.  We recently established relationships with additional independent sales brokers to market our products in the Western United States, an area of the country where we have not had a high penetration of sales.  We intend to use a portion of the proceeds of this offering to increase our sales and marketing program.  In particular, we intend to increase our efforts to market our branded coffees, especially Caf&eacute; Caribe and Caf&eacute; Supremo, toward Hispanic consumers.  We have hired third-party marketing specialists to act as brand managers that will focus exclusively on developing sales of our ethnic espresso brands.  In addition, we
have hired a West Coast Brand Manager to market our S&amp;W and IL CLASSICO brands, as well as our other branded and private label coffee products.  We intend to capture additional market share in our existing distribution channels by selectively adding or introducing new brand names and products across multiple price points, including niche specialty blends, private label &#147;value&#148; blends and mini-brick, filter packages, instant cappuccinos and tea line products.  We also intend to add specialty instant coffees to our extensive line of instant coffee products.</font></p>
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<p align="left"><font size="2" face="serif"><b>Charitable Activities</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Coffee Holding is also a supporter of several coffee oriented charitable organizations.  </font></p>
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<font size="2" face="serif">For over 10 years, we have been members of Coffee Kids, an international non-profit organization that helps to improve the quality of life of children and their families in coffee&#150;growing communities in Mexico, Guatemala, Nicaragua and Costa Rica.</font></td>
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<font size="2" face="serif">We are members of Grounds for Health, an organization that educates, screens, and arranges treatment for women who have cancer and live in the rural coffee growing communities of Mexico.</font></td>
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<font size="2" face="serif">We are a licensed Fair Trade dealer of Fair Trade certified coffee.  Fair Trade helps small coffee farmers to increase their incomes and improve the prospects of their communities and families.  It guarantees farmers a minimum price of $1.26 per pound or five cents above the current market price.</font></td>
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<font size="2" face="serif">Most recently, we are the administrative benefactors to a new non-profit organization called Cup for Education.  After discovering the lack of schools, teachers, and basic fundamental learning supplies in the poor coffee growing communities of Central and Latin America, &#147;Cup&#148; was established by our employee, Karen Gordon, to help build schools, sponsor teachers, and purchase basic supplies such as books, chalk and other necessities for a proper education. </font></td>
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<p align="left"><font size="2" face="serif"><b>Competition</b></font></p>
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<p align="left"><font size="2" face="serif">The coffee market is highly competitive.  We compete in the following areas: </font></p>
<p align="left"><font size="2" face="serif"><b><i>Wholesale Green Coffee.</i></b>  There are many green coffee dealers throughout the United States.  Many of these dealers have greater financial resources than we do.  However, we believe that we have both the knowledge and the capability to assist small specialty gourmet coffee roasters with developing and growing their business.  Our 30-plus years of experience as a roaster and a dealer of green coffee allows us to provide our roasting experience as a value added service to our gourmet roaster customers.  While other coffee merchants may be able to offer lower prices for coffee beans, we market ourselves as a value-added supplier to small roasters, with the ability to help them market their specialty coffee
products and develop a customer base.  The assistance we provide our customers includes training, coffee blending and market identification.  Because specialty green coffee beans are sold unroasted to small coffee shops and roasters that market their products to local gourmet customers, we do not believe that our specialty green coffee customers compete with our private label or branded coffee lines of business.</font></p>
<p align="left"><font size="2" face="serif"><b><i>Private Label Competition.</i></b>  There are several major producers of coffee for private label sale in the United States.  Many other companies produce coffee for sale on a regional basis.  Our main competitors are The Kroger Co. and the coffee division of Sara Lee Corporation.  Both The Kroger Co. and Sara Lee Corporation are larger and have more financial and other resources than we do and therefore are able to devote more resources to product development and marketing.  We believe that we remain competitive by providing a high level of quality and customer service.  This service includes ensuring that the coffee produced for each label maintains a consistent taste and is delivered on time and in the
proper quantities.  In addition, we provide our private label customers with information on the coffee market on a regular basis.</font></p>
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<p align="left"><font size="2" face="serif"><b><i>Branded Competition.</i></b>  Our proprietary brand coffees compete with many other brands that are sold in supermarkets and specialty stores, primarily in the Northeastern United States.  The branded coffee market in both the Northeast and elsewhere is dominated by three large companies:  Kraft General Foods, Inc., The Procter &amp; Gamble Company and Sara Lee Corporation, who also market specialty coffee in addition to non-specialty coffee.  Our large competitors have greater access to capital and a greater ability to conduct marketing and promotions.  We believe that, while our competitors&#146; brands may be more nationally recognizable, our proprietary and licensed brands are just as competitive in the
Northeastern United States and have the potential to be competitive throughout the United States.</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>Government Regulation</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Our coffee roasting operations are subject to various governmental laws and regulations, which require us to obtain licenses, relating to customs, health and safety, building and land use, and environmental protection. Our roasting facility is subject to state and local air-quality and emissions regulation. If we encounter difficulties in obtaining any necessary licenses or if we have difficulty complying with these laws and regulations, then we could be subject to fines and penalties which could have a material adverse effect on our profitability.  In addition, our product offerings could be limited, thereby reducing our revenues.</font></p>
<p align="left"><font size="2" face="serif">We believe that we are in compliance in all material respects with all such laws and regulations and that we have obtained all material licenses and permits that are required for the operation of our business. We are not aware of any environmental regulations that have or that we believe will have a material adverse effect on our operations.</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>Employees</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We have 62 full-time employees, 50 of whom are employed in the areas of coffee roasting, blending and packaging and 12 of whom are in administration and sales.  None of our employees are represented by unions or collective bargaining agreements.  Our management believes that we maintain a good working relationship with our employees.  To supplement our internal sales staff, we sometimes use independent national and regional sales brokers who work on a commission basis.</font></p>
</div>
<p align="center"><font face="serif" size="2">50</font></p>
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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0">
<tr valign="top">
<td align="left"><font size="2" face="serif"><b>Description of Property</b></font></td>
</tr>
</table>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We are headquartered at 4401 First Avenue, Brooklyn, New York, where we own the land and an approximately 15,000 square foot building.  The building houses our executive offices, as well as our plant where we roast, blend and package our coffee.  </font></p>
<p align="left"><font size="2" face="serif">We lease a 50,000 square foot facility located at 27700 Frontage Road in La Junta, Colorado from the City of La Junta.  We pay annual rent of $100,092, beginning in January of 2005 through January of 2024.  </font></p>
<p align="left"><font size="2" face="serif">We also lease a 7,500 square foot warehouse located at 4425A First Avenue in Brooklyn from T &amp; O Management.  T &amp; O Management is not affiliated with us or any of our officers, directors or stockholders.  We pay annual rent of $50,076 until the expiration of the lease on August 31, 2004.  </font></p>
<p align="left"><font size="2" face="serif">We also use a variety of independent, bonded commercial warehouses to store our green coffee beans.  Our management believes that our facilities are adequate for our current operations and for our contemplated operations in the foreseeable future. </font></p>
</div>
<table width="100%" border="0">
<tr valign="top">
<td align="left"><font size="2" face="serif"><b>Legal Proceedings</b></font></td>
</tr>
</table>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We are not a party to, and none of our property is the subject of, any pending legal proceedings other than routine litigation that is incidental to our business.  To our knowledge, no governmental authority is contemplating initiating any such proceedings.  </font></p>
</div>
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<p align="center"><font size="2" face="serif"><b>MANAGEMENT</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">Set forth below is information concerning our directors and executive officers.  Our board of directors currently consists of four directors.  We intend to add three additional directors, each of whom will be independent directors as defined under The American Stock Exchange listing standards, upon completion of the offering.</font></p>
</div>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top" bgcolor="#FFFFFF">
<td align="left" valign="bottom"><font size="1" face="serif"><b>Name</b></font></td>
<td align="left" valign="bottom"><font size="1">&nbsp;</font></td>
<td align="right" valign="bottom"><font size="1">&nbsp;</font></td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>Age</b></font></td>
<td align="center" valign="bottom"><font size="1">&nbsp;</font></td>
<td align="center" valign="bottom"><font size="1">&nbsp;</font></td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>Director Since</b></font></td>
<td align="left" valign="bottom"><font size="1">&nbsp;</font></td>
<td align="right" valign="bottom"><font size="1">&nbsp;</font></td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>Position</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Andrew Gordon</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td align="center" width="8%"><font size="2" face="serif">42</font></td>
<td align="center" width="2%">&nbsp;</td>
<td align="center" width="2%">&nbsp;</td>
<td align="center" width="8%"><font size="2" face="serif">1981</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td align="left" width="35%"><font size="2" face="serif">Chief Executive Officer, President, Treasurer and Director</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">David Gordon</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">39</font></td>
<td align="center">&nbsp;</td>
<td align="center">&nbsp;</td>
<td align="center"><font size="2" face="serif">1983</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Executive Vice President &#150; Operations, Secretary and Director</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Gerard DeCapua</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">42</font></td>
<td align="center">&nbsp;</td>
<td align="center">&nbsp;</td>
<td align="center"><font size="2" face="serif">1997</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Daniel Dwyer</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">47</font></td>
<td align="center">&nbsp;</td>
<td align="center">&nbsp;</td>
<td align="center"><font size="2" face="serif">1998</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif"><i>Andrew Gordon</i> is our Chief Executive Officer, President, Treasurer and one of our directors.  He is responsible for managing our overall business and has worked for Coffee Holding for over 21 years, previously as a Vice President from 1993 to 1997.  Mr. Gordon has worked in all capacities of our business and serves as the direct contact with our major private label accounts.  In addition, Mr. Gordon publishes a weekly report that is distributed to our customers and is perceived by many of his peers and customers as a coffee market expert.  Mr. Gordon received his Bachelor of Business Administration degree from Emory University.  He is the brother of David Gordon.</font></p>
<p align="left"><font size="2" face="serif"><i>David Gordon</i> is our Executive Vice President &#150; Operations, Secretary and one of our directors.  He is responsible for managing all aspects of our roasting and blending operations, including quality control, and, has worked for Coffee Holding for over 23 years, previously as an Operating Manager from 1989 to 1995 and has been a Vice President from 1995 to the present.  He is a charter member of the Specialty Coffee Association of America.  Mr. Gordon attended Baruch College in New York City.  He is the brother of Andrew Gordon.</font></p>
<p align="left"><font size="2" face="serif"><i>Gerard DeCapua</i> has served as a director of Coffee Holding since 1997.  Mr. DeCapua has had his own law practice in Rockville Centre, New York since 1986.  Mr. DeCapua received his law degree from Pace University.</font></p>
<p align="left"><font size="2" face="serif"><i>Daniel Dwyer</i> has been a senior coffee trader at Rothfos Corporation, a green coffee bean supplier, since 1995.  Mr. Dwyer is responsible for our account with Rothfos.  We paid Rothfos approximately $4.1 million for green coffee purchases in fiscal 2003 and expect to pay it a similar amount in fiscal 2004.  All purchases are made on arms&#146; length terms.</font></p>
<p align="left"><font size="2" face="serif">Directors are elected by a plurality of the votes cast at our annual meeting of stockholders.  Once elected, each director serves until the next annual meeting of stockholders and until his or her successor is duly elected and qualified, or until his or her earlier death, resignation or removal.  Officers are appointed by the directors, and, once appointed, each officer serves until his or her successor is duly appointed, or until his or her earlier death, resignation or removal.</font></p>
</div>
<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif"><b>Committees of the Board of Directors</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">We currently do not have any standing committees.  However, upon completion of the offering, we will establish the following committees:  </font></p>
<p align="left"><font size="2" face="serif"><i>Audit Committee.  </i>The Audit Committee will oversee and monitor our financial reporting process and internal control system, review and evaluate the audit performed by our outside auditors and report to the Board of Directors any substantive issues found during the audit.  The Audit Committee will be directly responsible for the appointment, compensation and oversight of the work of our independent auditors.  The Audit Committee will also review and approve all transactions with affiliated parties.  The Board of Directors will adopt a written charter for the Audit Committee.  All members of the Audit Committee will be independent directors as defined under The American Stock Exchange listing standards.  The
Audit Committee will consist of three of the outside directors of Coffee Holding, one of whom will qualify as an Audit Committee Financial Expert as that term is defined by SEC regulations.</font></p>
<p align="left"><font size="2" face="serif"><i>Compensation</i><b><i></i></b><i> Committee</i>.
    The Compensation Committee will provide advice and recommendation to the
    Board of Directors in the areas of employee salaries and benefit programs.
    The Committee will also review the compensation of the President and Chief
    Executive Officer of Coffee Holding and will make recommendations in that
    regard to the Board of Directors as a whole. All members of the Compensation
    Committee will be independent directors as defined under The American Stock
    Exchange listing standards.  </font></p>
<p align="left"><font size="2" face="serif"><i>Nominating and Corporate Governance Committee</i>.  The Nominating and Corporate Governance Committee will meet to recommend the nomination of Directors to the full Board of Directors to fill the terms for the upcoming year or to fill vacancies during a term.  The Nominating and Corporate Governance Committee will consider recommendations from stockholders if submitted in a timely manner in accordance with the procedures established in the Bylaws and will apply the same criteria to all persons being considered.  All members of the Nominating and Corporate Governance Committee will be independent directors as defined under The American Stock Exchange listing standards.</font></p>
<p align="left"><font size="2" face="serif">It will be the policy of the Nominating and Corporate Governance Committee to select individuals as director nominees who shall have the highest personal and professional integrity, who shall have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of the stockholders.  Stockholder nominees will be analyzed by the Nominating and Corporate Governance Committee in the same manner as nominees that are identified by the Nominating and Corporate Governance Committee.  We will not pay a fee to any third party to identify or evaluate nominees.</font></p>
</div>
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<p align="left"><font size="2" face="serif"><b>Executive Compensation</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain compensation information for our chief executive officer and each other executive officer whose salary and bonus compensation exceeded $100,000 for the fiscal years ended October 31, 2003, 2002, or 2001.</font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#FFFFFF">
<td colspan="13" align="center"><font size="2" face="serif"><b>Summary Compensation Table</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td colspan="7" align="center" valign="bottom"><font size="1" face="serif"><b>Annual Compensation</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td width="10%" align="center"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td width="1%" align="right"><hr noshade size="1"></td>
  <td width="10%" align="center"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td width="1%" align="right"><hr noshade size="1"></td>
  <td width="10%" align="center"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left" valign="bottom"><font size="1" face="serif"><b>Name and<br>
Principal Position</b></font></td>
<td align="left" width="2%">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Fiscal Year</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Salary <br>($)</b></font></td>
<td width="2%" align="left"><font size="1">&nbsp;</font></td>
<td colspan="2" align="center" valign="bottom"><font size="1">&nbsp;</font><font size="1" face="serif"><b>Bonus <br>($) (1)</b></font></td>
<td width="2%" align="left"><font size="1">&nbsp;</font></td>
<td colspan="2" align="center" valign="bottom"><font size="1">&nbsp;</font><font size="1" face="serif"><b>All
      Other Compensation<br>
      ($) (2)</b></font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Andrew Gordon</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2003</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">245,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">33,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28,719</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Chief Executive Officer and President</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2002</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">190,254</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">49,500</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2001</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">160,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19,838</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">David Gordon</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2003</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">204,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">33,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,887</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Executive Vice President &#150; Operations</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2002</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">153,467</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">49,500</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2001</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">140,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7,311</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td colspan="2"><hr align="left" width="10%" size="1" noshade></td>
  </tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Amounts shown reflect bonuses earned in each fiscal year.</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">(2)</font></td>
<td align="left">
<font size="2" face="serif"> The amounts set forth consist of amounts paid for the use of an automobile and automobile insurance. </font></td>
</tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
    Board of Directors did not have a compensation committee in fiscal 2003.
    During that year, salaries and bonuses were determined by the Board of Directors.
    Andrew Gordon&#146;s
base salary for fiscal 2004 is $269,500. David Gordon&#146;s base salary for
fiscal
2004 is $224,000. Once established, the Compensation Committee will determine
the salaries and bonuses of Andrew Gordon, David Gordon and our other executive
officers.</font></p>
<p align="left"><font size="2" face="serif"><b>Employment Agreements</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with this offering, we intend to enter into employment agreements with Andrew Gordon to secure his continued service as President and Chief Executive Officer and with David Gordon to secure his continued service as Executive Vice President &#150; Operations.  These employment agreements will have rolling three-year terms that will begin at the conclusion of the offering.  These agreements may be converted to a fixed three-year term by the decision of our Board of Directors or the executive.  These agreements will provide for minimum annual salaries of $325,000 and $300,000, respectively, discretionary cash bonuses, and participation on generally applicable terms and conditions in other compensation and
fringe benefit plans.  They also guarantee customary corporate indemnification and errors and omissions insurance coverage throughout the employment term and thereafter for so long as the executives are subject to liability for such service to the extent permissible by the Nevada Revised Statutes.</font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of the proposed employment agreements will provide that each executive will be entitled to severance benefits if his employment is terminated without &#147;cause&#148; or if he resigns for &#147;good reason&#148; or following a &#147;change in control&#148; (as such terms will be defined in the employment agreements) equal to the value of the cash compensation and fringe benefits that he would have received if he had continued working for the remaining unexpired term of the agreement.  The employment agreements will also provide uninsured disability benefits.  During the term of the employment agreements and, in case of discharge with &#147;cause&#148; or resignation without &#147;good
reason,&#148; for a period of one year thereafter, the executives will be subject to (i) restrictions on competition with us and (ii) restrictions on the solicitation of our customers and employees.  For all periods during and after the term, the executives will be subject to nondisclosure and restrictions relating to our confidential information and trade secrets.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we experience a change in ownership, a change in effective ownership or control or a change in ownership of a substantial portion of our assets as contemplated by Section 280G of the Internal Revenue Code, a portion of any severance payments under the employment agreements might constitute an &#147;excess parachute payment&#148; under current federal tax laws.  Federal tax laws impose a 20% excise tax, payable by each executive, on excess parachute payments.  Under the terms of the proposed employment agreements, we would reimburse the executives for the amount of this excise tax and would make an additional gross-up payment so that, after payment of the excise tax and all income and excise taxes imposed on the
reimbursement and gross-up payments, the executives will retain approximately the same net-after tax amounts under the employment agreement that they would have retained if there were no 20% excise tax.  The effect of this provision is that we, and not the executives, bear the financial cost of the excise tax and we could not claim a federal income tax deduction for an excess parachute payment, excise tax reimbursement or gross-up payment.</font></p>
<p align="left"><font size="2" face="serif"><b>Stock Option Plan</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a stock option plan, Coffee Holding Co., Inc. 1998  Stock Option Plan, under which non-qualified and incentive stock options to purchase shares of common stock may be granted to our directors, officers and other key employees and consultants.  The plan was adopted by our Board of Directors and approved by our stockholders on February 10, 1998.  On June 21, 2004, the plan was amended by our Board of Directors to reduce the number of shares of common stock reserved for issuance under the plan from 2,000,000 to 800,000, subject to adjustment for stock splits, stock dividends, reorganizations, mergers, recapitalizations or other capital adjustments. The plan is administered by our Board of Directors which may
delegate our powers to a committee of the Board.  No options may be granted after February 10, 2008.  The Compensation Committee will determine, at the time of grant, the purchase price of shares issuable pursuant to exercise of stock options; provided that the purchase price of a share of common stock under incentive stock options shall not be less than the fair market value of a share on the date the option is granted.  Unless earlier terminated due to termination of employment or death or disability of the optionee, each stock option shall terminate no later than ten years from the date on which it is granted.  Options are transferable only by will or the laws of descent and distribution.  No options have been granted under the plan.</font></p>
<p align="left"><font size="2" face="serif"><b>Compensation of Directors </b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors
    currently do not receive any compensation for their services. They are, however,
    reimbursed for travel expenses and other out-of-pocket costs incurred in
    connection with attendance at board of directors and committee meetings.
    After the offering, non-employee directors will receive $400 per board meeting
    attended and $400 per committee meeting attended. </font></p>
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<p align="left"><font size="2" face="serif"><b>Indemnification Of Directors And Officers </b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nevada Revised Statutes provides for the discretionary and mandatory indemnification of directors, officers, employees and agents under certain circumstances.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or was serving at request of the corporation as a director, officer, employee or agent of another entity, against expenses, including attorneys&#146; fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action or if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action, had no reasonable cause to believe his conduct was unlawful. This discretionary indemnification, unless ordered by a court, may be made by the corporation only if the indemnification is proper under the circumstances as determined by the stockholders, the board of directors consisting of members who were not parties to the proceeding, or by independent legal counsel.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporation may similarly indemnify a person described above who was or is a party or is threatened to be made a party to any threatened, pending or completed action brought by or in the right of the corporation to procure a judgment in our favor. However, indemnification may not be made for any claim, issue or matter as to which such person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of
the case, the person is fairly and reasonably entitled to be indemnified for such expenses as the court deems proper.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or preceding referred to above, or in defense of any claim, issue or matter herein, the corporation shall indemnify him against expenses, including attorneys&#146; fees, actually and reasonably incurred by him in connection with the defense.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporation may pay or advance expenses in connection with the defense of a proceeding in advance of a final disposition of the action, upon receipt of an undertaking by or on behalf of the indemnitee to repay the amount if it is ultimately determined by a court that he is not entitled to be indemnified by the corporation.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our current Articles of Incorporation provide that we will limit the liability of our officers and directors to the fullest extent permitted by Nevada law.  Our proposed Articles of Incorporation and Bylaws will provide that we also will indemnify our officers and directors to the fullest extent permitted by Nevada law.</font></p>
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<p align="center"><font size="2" face="serif"><b>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL<br>OWNERS AND MANAGEMENT</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information regarding ownership of shares of our common stock, as of April 30, 2004 and as of the date immediately following the offering, by each person known to be the owner of 5% or more of our common stock, by each person who is a director or executive officer and by all directors and executive officers as a group. Except as otherwise indicated, each person and each group shown in the table has sole voting and investment power with respect to the shares of common stock indicated.  For purposes of the table below, in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person is deemed to be the beneficial owner, for purposes of any shares of common
stock:  (1) over which he or she has or shares, directly or indirectly, voting or investment power; or (2) of which he or she has the right to acquire beneficial ownership at any time within 60 days after April 30, 2004.  As used in this prospectus, &#147;voting power&#148; is the power to vote or direct the voting of shares and &#147;investment power&#148; includes the power to dispose or direct the disposition of shares.  Common stock beneficially owned and percentage ownership, before the offering and after the offering, were based on 3,999,650 and 5,599,650 shares outstanding, respectively.  The address of each beneficial owner is c/o Coffee Holding Co., Inc., 4401 First Avenue, Brooklyn, New York 11232-0005.</font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#FFFFFF">
<td align="left" valign="bottom"><font size="1" face="serif"><b>Name of Beneficial Owners,<br>Officers and Directors</b></font></td>
<td align="left" width="2%"><font size="1">&nbsp;</font></td>
<td width="1%" align="right"><font size="1">&nbsp;</font></td>
<td width="12%" align="center"><font size="1" face="serif"><b>Number of Shares<br>
  Owned
      Before<br>
    Offering</b></font></td>
<td width="2%" align="left"><font size="1">&nbsp;</font></td>
<td width="1%" align="right"><font size="1">&nbsp;</font></td>
<td width="12%" align="center"><font size="1" face="serif"><b>Percentage <br>
  Owned Before<br>
  Offering</b></font></td>
<td width="2%" align="left"><font size="1">&nbsp;</font></td>
<td width="1%" align="right"><font size="1">&nbsp;</font></td>
<td width="12%" align="center"><font size="1" face="serif"><b>Percentage<br>
  Owned
      After<br>
    Offering</b></font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td width="12%" align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td width="12%" align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td width="12%" align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Andrew Gordon</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="6%" align="right"><font size="2" face="serif">619,500</font></td>
<td width="8%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="6%" align="right"><font size="2" face="serif">15.5</font></td>
<td width="8%" align="left"><font size="2" face="serif">%</font></td>
<td width="1%" align="right">&nbsp;</td>
<td width="6%" align="right"><font size="2" face="serif">11.1</font></td>
<td width="6%" align="left"><font size="2" face="serif">%</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">David Gordon</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">619,500</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">15.5</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">11.1</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Gerard DeCapua</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Daniel Dwyer</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Rachelle L. Gordon(1)</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,069,600</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">26.7</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">19.1</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Sterling A. Gordon(2)</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,069,600</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">26.7</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">19.1</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">All directors and executive <br>officers as a group (4 persons)</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">1,239,200</font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">31.0</font></td>
<td align="left" valign="bottom"><font size="2" face="serif">%</font></td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">22.1</font></td>
<td align="left" valign="bottom"><font size="2" face="serif">%</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left"><hr align="left" width="20%" size="1" noshade>
    </td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right" valign="bottom">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">*</font></td>
<td align="left">
<font size="2" face="serif"> Less than 1%.</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Includes 870,000 shares owned by the Rachelle L. Gordon 2002 Grantor Retained Annuity Trust of which Rachelle L. Gordon is the grantor, beneficiary and trustee, with sole power to vote and dispose of the shares; and 199,600 shares of common stock owned by Rachelle Gordon&#146;s husband, Sterling A. Gordon.  Mrs. Gordon is the mother of Andrew Gordon and David Gordon.</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">(2)</font></td>
<td align="left">
<font size="2" face="serif"> Includes 199,600 shares owned by Mr. Gordon directly and 870,000 shares owned by the Sterling A. Gordon 2002 Grantor Retained Annuity Trust of which Sterling A. Gordon is the grantor, beneficiary and trustee, with sole power to vote and dispose of the shares;.  Mr. Gordon is the father of Andrew Gordon and David Gordon.</font></td>
</tr>
</table>
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<p align="center"><font size="2" face="serif"><b>CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, certain of our stockholders, directors and officers have made loans to us for working capital purposes.  We had loans payable to our stockholders, all of whom are members of the Gordon family, of $79,646 at October 31, 2003.  The loans were repaid during the quarter ended April 30, 2004.  We do not intend to borrow additional amounts from our stockholders.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Andrew Gordon and David Gordon have guaranteed up to $500,000 of the payment of our borrowings under our outstanding credit facilities from Wells Fargo Business Credit.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Daniel Dwyer, a director, is a senior coffee trader for Rothfos Corporation, a coffee trading company.  Mr. Dwyer is responsible for our account.  We paid Rothfos approximately $4.1 million for green coffee purchases in fiscal 2003 and expect to pay it a similar amount in fiscal 2004.  All purchases are made on arms&#146; length terms.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that all of the transactions set forth above were made on terms no less favorable to us than could have been obtained from unaffiliated third parties.  All future transactions between us and our officers, directors and principal stockholders and their affiliates will be subject to approval by an independent committee of our Board of Directors.</font></p>
<p align="center"><font size="2" face="serif"><b>DESCRIPTION OF CAPITAL STOCK</b></font></p>
<p align="left"><font size="2" face="serif"><b>General</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following description of our securities is a summary, does not purport to be complete and is subject in all respects to our Articles of Incorporation, as amended, Bylaws and Nevada law. </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our authorized capital stock consists of 30,000,000 <b></b>shares of common stock, par value $.001 per share, and 10,000,000 shares of preferred stock, par value $.001 per share.</font></p>
<p align="left"><font size="2" face="serif"><b>Common Stock</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the date of this prospectus, there are 3,999,650 shares of common stock issued and outstanding and 472 registered holders of our common stock.  Holders of common stock have the right to cast one vote for each share held of record on all matters submitted to a vote of holders of common stock, including the election of directors. There is no right to cumulate votes. Stockholders holding a majority of the total number of shares then issued and outstanding and entitled to vote are necessary to constitute a quorum for the transaction of business. Directors are elected by a majority of the votes cast and all other corporate actions must be authorized by a majority of votes cast by the holders of shares entitled to
vote on the matter.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of common stock are entitled to receive dividends pro rata based on the number of shares held, when, as and if declared by the Board of Directors from funds legally available therefore. In the event of the liquidation, dissolution or winding up of our affairs, all assets and funds available for distribution to the holders of our common stock shall be distributed pro rata. Holders of common stock are not entitled to preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions applicable to the common stock.</font></p>
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<p align="left"><font size="2" face="serif"><b>Preferred Stock</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Articles of Incorporation authorize the issuance of up to 10,000,000 shares of preferred stock, none of which are currently outstanding, with the Board of Directors having the right to determine the designations, rights, preferences and powers of each series of preferred stock. Accordingly, the Board of Directors is empowered, without stockholder approval, to issue preferred stock with voting, dividend, conversion, redemption, liquidation or other rights which may be superior to the rights of the holders of common stock and could adversely affect the voting power and other equity interests of the holders of common stock.</font></p>
<p align="left"><font size="2" face="serif"><b>Underwriter&#146;s Warrants</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to issue warrants to the underwriter to purchase from us up to 160,000 shares of our common stock.  These warrants are exercisable at a price per share equal to 110% of the public offering price per share in this offering and will allow for cashless exercise.  The warrants will provide for registration rights, including a one time demand registration right and unlimited piggyback registration rights, and customary anti-dilution provisions for stock dividends and splits and recapitalizations consistent with the National Association of Securities Dealers, Inc. Rules of Fair Practice.  </font></p>
<p align="left"><font size="2" face="serif"><b>Provisions of our proposed Articles of Incorporation, Bylaws and Employment Agreements with Andrew Gordon and David Gordon and Nevada law may have anti-takeover effects</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provisions in our proposed Articles of Incorporation, Bylaws and employment agreements, together with provisions of the Nevada Revised Statutes, may have anti-takeover effects.</font></p>
<p align="left"><font size="2" face="serif"><b>Our proposed Articles of Incorporation and Bylaws </b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our proposed Articles of Incorporation and Bylaws will contain a number of provisions relating to corporate governance and rights of stockholders which might discourage future takeover attempts.  As a result, stockholders who might desire to participate in such transactions may not have an opportunity to do so.  In addition, these provisions will also render the removal of our Board of Directors or management more difficult.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following description is a summary of the provisions of the proposed Articles of Incorporation and Bylaws.  See &#147;Where You Can Find Additional Information&#148; as to how to review copies of these documents.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Directors.</i>  Certain provisions of our proposed Articles of Incorporation and Bylaws will impede changes in control of our Board of Directors.  Our proposed Articles of Incorporation will provide that our Board of Directors will be divided into three classes with directors in each class, except for the initial directors, elected for three-year staggered terms.  Thus, it would take two annual elections to replace a majority of our Board of Directors.  Our proposed Articles of Incorporation will provide that the size of our Board of Directors may be increased or decreased only by a majority vote of the Board of Directors.  The proposed Articles of Incorporation will also provide that any vacancy occurring in our
Board of Directors, including a vacancy created by an increase in the number of directors, shall be filled for the remainder of the unexpired term by a majority vote of the directors then in office.  Finally, the proposed Articles of Incorporation and Bylaws will impose notice and information requirements in connection with the nomination by stockholders of candidates for election to our Board of Directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders.</font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The proposed Amended and Restated Articles of Incorporation will provide that a director may be removed from office, with or without cause, by the affirmative vote of stockholders representing not less than eighty percent (80%) of the voting power of the issued and outstanding stock entitled to vote.  In the absence of this provision, the affirmative vote of the stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to vote could remove the entire Board and replace it with persons of such holders&#146; choice.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Restrictions on Call of Special Meetings.</i>  The proposed Articles of Incorporation will provide that a special meeting of stockholders may be called by a majority of our Board of Directors or the affirmative vote of a majority of the disinterested directors then in office, or, upon written application, by stockholders holding at least 80% of the capital stock entitled to vote at the meeting.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Votes of Stockholders.</i>  The proposed Articles of Incorporation will prohibit cumulative voting for the election of directors.  No cumulative voting means that our directors and officers and members of the Gordon family may have the power to elect all of the directors to be elected at any particular meeting and could prevent representation of other stockholders on our Board of Directors.  In addition, the proposed Articles of Incorporation will also provide that any action required or permitted to be taken by our stockholders may be taken only at an annual or special meeting and prohibits stockholder action by written consent in lieu of a meeting.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Authorization of Preferred Stock.</i>  The proposed Articles of Incorporation will authorize 10,000,000 shares of preferred stock, par value $0.001 per share.  We will be authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the Board of Directors will be authorized to fix the designations and relative preferences, limitations and voting rights, if any.  In the event of a proposed merger, tender offer or other attempt to gain control of us that the Board of Directors does not approve, it may be possible for the Board of Directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the completion of
such a transaction.  An effect of the possible issuance of preferred stock therefore may be to deter a future attempt to gain control of us.  Our Board of Directors has no present plan or intention to issue any preferred stock.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Higher Stockholder Vote Required to Approve Certain Business Combinations</i>.  The proposed Amended and Restated Articles of Incorporation will require the approval of the holders of at least eighty percent (80%) of our outstanding shares of voting stock in connection with certain &#147;Business Combinations&#148; with an Interested Stockholder after the expiration of three years after the date the person becomes an Interested Stockholder, except in cases where the proposed Business Combination has been approved in advance by a majority of those members of the Board of Directors who are unaffiliated with the Interested Stockholder and who were directors prior to the time when the Interested Stockholder became
and Interested Stockholder.  In addition, the Business Combination must also satisfy any one of the following requirements:  (1) the Business Combination is approved by our Board of Directors prior to the date that the person first became an Interested Stockholder; (2) the transaction by which the Interested Stockholder became an Interested Stockholder was approved by our Board of Directors prior to the date such shares were purchased; (3) the Business Combination is approved by the affirmative vote of the holders of stock representing a majority of the outstanding voting power not beneficially owned by the Interested Stockholder proposing the Business Combination, at a meeting duly called for that purpose no earlier than three years after the date that the person first became an
Interested Stockholder; or (4) the consideration to be received by all the holders of our outstanding stock not beneficially owned by the Interested Stockholder equals or exceeds thresholds set forth by the Nevada Revised Statutes.  </font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Business Combination&#148; means:</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any merger or consolidation of us with the interested stockholder, or any other corporation, which is, or after the merger or consolidation would be, an affiliate or associate of the interested stockholder.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, to or with the interested stockholder or any affiliate or associate of the interested stockholder of our assets or any of our subsidiaries&#146; assets:</font></p>
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<font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Having an aggregate market value equal to 5 percent or more of the aggregate market value of all our assets, determined on a consolidated basis;</font></td>
</tr>
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<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
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<font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Having an aggregate market value equal to 5 percent or more of the aggregate market value of all our outstanding shares; or</font></td>
</tr>
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<font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Representing 10 percent or more of our earning power or net income, determined on a consolidated basis.</font></td>
</tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The issuance or transfer by us or any of our subsidiaries, in one transaction or a series of transactions, of our shares or any of our subsidiaries&#146; shares that have an aggregate market value equal to 5 percent or more of the aggregate market value of all our outstanding shares to the interested stockholder or any affiliate or associate of the interested stockholder except under the exercise of warrants or rights to purchase shares offered, or a dividend or distribution paid or made, pro rata to all our stockholders.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The adoption of any plan or proposal for our liquidation or dissolution proposed by, or under any agreement, arrangement or understanding, whether or not in writing, with, the interested stockholder or any affiliate or associate of the interested stockholder.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any reclassification of securities, including, without limitation, any splitting of shares, dividend distributed in shares, or other distribution of shares with respect to other shares, or any issuance of new shares in exchange for a proportionately greater number of old shares, recapitalization, merger or consolidation of us with any of our subsidiaries, or other transaction, with the interested stockholder or any affiliate or associate of the interested stockholder which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of the interested stockholder or any affiliate or associate of the interested
stockholder, except as a result of immaterial changes because of adjustments of fractional shares.</font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any receipt by the interested stockholder or any affiliate or associate of the interested stockholder of the benefit, directly or indirectly, except proportionately as our stockholder, of any loan, advance, guarantee, pledge or other financial assistance or any tax credit or other tax advantage provided by or through Coffee Holding, Co., Inc.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Interested stockholder,&#148; means any person, other than us, who is: </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The beneficial owner, directly or indirectly, of 10 percent or more of the voting power of our outstanding voting shares; or</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; An affiliate or associate of ours and at any time within 3 years immediately before the date in question was the beneficial owner, directly or indirectly, of 10 percent or more of the voting power of our then outstanding shares.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Evaluation of Offers.</i>  The proposed Articles of Incorporation further provide that our Board of Directors shall, when evaluating any offer to us from another party to:</font></p>
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<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">make a tender offer or exchange offer for any of our outstanding equity securities;</font></td>
</tr>
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  <td></td>
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<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">merge or consolidate us with another corporation or entity; or</font></td>
</tr>
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  <td></td>
  <td>&nbsp;</td>
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<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
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<font size="2" face="serif">purchase or otherwise acquire all or substantially all of our properties and assets,</font></td>
</tr>
</table>
<p align="left"><font size="2" face="serif">in connection with the exercise of its judgment in determining what is in the best interest of us and our stockholders, give due consideration to the extent permitted by law to all relevant factors, including, without limitation, our employees, suppliers, creditors and customers; the economy of the state, region and nation; community and societal considerations; and the long- and short-term interests of us and our stockholders, including the possibility that these interests will best be served by our continued independence.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By having these standards in our proposed Articles of Incorporation, the Board of Directors may be in a stronger position to oppose such a transaction if our Board of Directors concludes that the transaction would not be in our best interests, even if the price offered is significantly greater than the market price of any of our equity securities.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Amendment to Proposed Articles of Incorporation and Bylaws.</i>  The proposed Articles of Incorporation may be amended by the affirmative vote of 80% of the total votes eligible to be cast by stockholders, voting together as a single class; provided, however, that if at least a majority of our Board of Directors recommend approval of the amendment, then such amendment shall require the affirmative vote of only a majority of the total votes eligible to cast by stockholder, voting together as a single class.</font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bylaws may be amended by the affirmative vote of a majority of our Board of Directors or by the affirmative vote of at least 80% of the total votes eligible to be cast by stockholders, voting together as a single class.  These provisions could have the effect of discouraging a tender offer or other takeover attempt where the ability to make fundamental changes through Bylaw amendments is an important element of the takeover strategy of the acquiror.</font></p>
<p align="left"><font size="2" face="serif"><b>Proposed Employment Agreements </b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The provisions described above are intended to reduce our vulnerability to takeover attempts and other transactions which have not been negotiated with and approved by members of our Board of Directors. The provisions of the proposed employment agreements may also discourage takeover attempts by increasing the costs to be incurred by us in the event of a takeover.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors believes that the provisions of the proposed Articles of Incorporation, Bylaws and employment agreements are in the best interests of us and our stockholders.  An unsolicited non-negotiated proposal can seriously disrupt the business and management of a corporation and cause it great expense. Accordingly, the Board of Directors believes it is in the best interests of us and our stockholders to encourage potential acquirors to negotiate directly with management and that these provisions will encourage such negotiations and discourage non-negotiated takeover attempts. It is also the Board of Directors&#146; view that these provisions should not discourage persons from proposing a merger or other
transaction at a price which reflects our true value and that otherwise is in the best interests of all stockholders.</font></p>
<p align="left"><font size="2" face="serif"><b>Nevada Law</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nevada Revised Statutes provides generally that a Nevada corporation may not engage in a business combination with any stockholder who is the beneficial owner of 10% or more of the voting power of the outstanding voting shares of the corporation for three years after the stockholder acquired the shares unless the combination or the purchase of shares made by the interested stockholder on the interested stockholders&#146; date of acquiring shares is approved by the Board of Directors of the corporation before that date.  A Nevada corporation may not engage in any business combination with an interested stockholder after the expiration of three years after his date of acquiring the shares other than a business
combination meeting all of the requirements of the Articles of Incorporation and either (1) the business combination is approved by the Board of Directors before the interested stockholders&#146; date of acquiring the shares or as to which the purchase of shares made by the interested stockholder on that date had been approved by the Board of Directors before that date, (2) the business combination is approved by the affirmative vote of the holders of stock representing a majority of the outstanding voting power not beneficially owned by the interested stockholder proposing the combination or any affiliate or associate of the interested stockholder proposing the combination at a meeting duly called for that purpose no earlier than three years after the interested stockholder&#146;s date
of acquiring shares, or (3) the consideration to be received by all of the holders of outstanding stock of the corporation not beneficially owned by the interested stockholder equals or exceeds thresholds set forth by the Nevada Revised Statutes.</font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The power of the Board of Directors to issue and determine the designations, rights, preferences, and powers of each series of preferred stock may be utilized as a method of discouraging, delaying or preventing a change of control of us.</font></p>
<p align="left"><font size="2" face="serif"><b>Transfer Agent and Registrar</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The transfer agent and registrar for our common stock is OTR, Inc. Its address is 317 SW Alder, Suite 1120, Portland, Oregon 97204 and its telephone number is (503) 225-0375.</font></p>
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<p align="center"><font size="2" face="serif"><b>SHARES ELIGIBLE FOR FUTURE SALE</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the completion of this offering (and excluding shares underlying the underwriter&#146;s warrants), we will have 5,599,650 shares of common stock issued and outstanding (5,839,650 shares if the underwriter&#146;s over-allotment option is exercised in full). Of those shares, the 1,600,000 sold in this offering (1,840,000 if the underwriter&#146;s over-allotment option is exercised in full) and the 29,650 shares registered in the Rule 419 Offering will have been registered under the Securities Act of 1933, as amended, and may be resold without further registration and 3,970,000 shares are &#147;restricted securities&#148; and may not be sold unless the sale is registered under the Securities Act or pursuant to
an exemption from registration under the Securities Act.  All of these restricted securities (including 1,239,200 held by our officers and directors and an additional 2,220,200 shares owned by members of the Gordon family who are not our officers or directors) are eligible for sale under the exemption provided by Rule 144 of the Securities Act.    </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors, executive offers and certain of our stockholders, including Andrew Gordon and David Gordon and other members of the Gordon Family, have agreed that, for a period of nine (9) months after the effective date of the registration statement of which this prospectus is a part, they will not sell, contract to sell, grant any option for the sale of or otherwise dispose of any of our equity securities, or any securities convertible into or exercisable or exchangeable for our equity securities, other than through intra-family transfers or transfers to trusts for estate planning purposes, without the written consent of the underwriter.  </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, under Rule 144 as currently in effect, a stockholder who has beneficially owned any restricted securities for at least one year will be entitled to sell the securities provided that specified public information, manner of sale and notice requirements are satisfied, and provided that the number of shares to be sold in any three-month period does not exceed the greater of (i) 1% of the then outstanding shares of common stock or (ii) the average weekly trading volume of the common stock during the four calendar weeks preceding the date on which notice of the sale is given to the U.S. Securities and Exchange Commission (the &#147;SEC&#148;).  A  stockholder who is not an officer, director or beneficial
owner of 10% or more of our common stock at any time during the 90 days preceding the sale, and who has beneficially owned the restricted shares for at least two years, will be eligible to sell such shares under subparagraph (k) of Rule 144 without regard to the volume restrictions and other requirements.  Except upon the consent of the underwriter, holders of 3,540,400 shares, including all executive officers and directors, have agreed not to, directly or indirectly, issue, or agree or offer to sell, transfer, assign, encumber or grant an option for the purchase or sale of, pledge, hypothecate or otherwise dispose of any beneficial interest in such shares for a period of nine months following the commencement of the offering.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to this offering, there has been no public market for our common stock and no prediction can be made as to the effect, if any, that market sales of shares of common stock or the availability of such shares for sale will have on the market prices prevailing from time to time.  Nevertheless, the possibility that substantial amounts of common stock may be sold in the public market may adversely affect prevailing market prices for the common stock and could impair our ability to raise capital through the sale of our equity securities.</font></p>
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<p align="center"><font size="2" face="serif"><b>UNDERWRITING</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b></b>Maxim Group LLC is the underwriter of the offering described in this prospectus.  We have entered into an underwriting agreement with the underwriter with respect to the shares of our common stock being offered pursuant to this offering.  In connection with  this offering and subject to certain conditions contained in the underwriting agreement, the underwriter has agreed to purchase, and we have agreed to sell, the number of shares of our common stock listed below:</font></p>
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    <td width="3%">&nbsp;</td>
    <td width="20%"><font size="2" face="serif"><u>Underwriter</u></font></td>
    <td width="15" align="center"><font size="2" face="serif"><u>Number of Shares</u></font></td>
    <td width="59%">&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><font size="2" face="serif">Maxim Group LLC</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><hr noshade size="1"></td>
    <td>&nbsp;</td>
  </tr>
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    <td>&nbsp;</td>
    <td><font size="2" face="serif">Total</font></td>
    <td align="center"><font size="2" face="serif">1,600,000</font></td>
    <td>&nbsp;</td>
  </tr>
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    <td>&nbsp;</td>
    <td>&nbsp;</td>
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<p align="left"><font size="2" face="serif"><b>Nature of Underwriting Commitment</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b></b>The underwriting agreement provides that the underwriter is committed to purchase all of the shares of common stock offered by this prospectus if they purchase any of the shares.  This commitment does not apply to the shares of common stock subject to an over-allotment option granted by us to the underwriter to purchase additional shares of common stock in this<b></b>offering.  The underwriting agreement also provides that the obligations of the underwriter to pay for and accept delivery of the shares of common stock are subject to the passing upon of certain legal matters by counsel and certain other conditions.  </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b></b>Pursuant to the underwriting agreement, we have granted to the underwriter an option, exercisable for 45 days after the date of this prospectus, to purchase up to an additional 240,000 shares of common stock from us on the same terms and at the same per share price as the other shares of common stock being purchased by the underwriter from us.  The underwriter may exercise the option solely to cover over-allotments, if any, in the sale of shares of common stock that the underwriter has agreed to purchase from us.  If the over-allotment option is exercised in full, the total public offering price, underwriting discounts and commissions and proceeds to us before expenses will be $[ ], $[ ] and $[ ],
respectively.</font></p>
<p align="left"><font size="2" face="serif"><b>Conduct of the Offering</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b></b>The following table shows the per share and total underwriting discounts and commissions to be paid by us in connection with this offering.  These amounts are shown assuming both no exercise and full exercise of the underwriter&#146;s over-allotment option.</font></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="3%">&nbsp;</td>
    <td align="center"><font size="2" face="serif"><b></b></font></td>
    <td width="17%" align="center"><font size="1" face="serif"><b><u>Without
    Option</u></b></font></td>
    <td width="17%" align="center"><font size="1" face="serif"> <b><u>With Option</u></b></font></td>
    <td width="46%">&nbsp;</td>
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    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
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    <td>&nbsp;</td>
    <td><font size="2" face="serif">&nbsp;Per Share&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></td>
    <td><font size="2" face="serif">$</font></td>
    <td><font size="2" face="serif">$</font></td>
    <td>&nbsp;</td>
  </tr>
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    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
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    <td>&nbsp;</td>
    <td><font size="2" face="serif">Total</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
    estimate that the total expenses of the offering payable by us, excluding
underwriting discounts and commissions, will be approximately $625,000.</font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The underwriter will initially offer the shares of common stock to be sold in this offering directly to the public at the initial public offering price set forth on the cover of this prospectus and some of the shares of common stock to certain dealers at the initial public offering less a concession not in excess of $[ ] per share.  The underwriter may allow, and such dealers may reallow, a concession not in excess of $[ ] per share on sales to certain other dealers.  After the shares are released to the public, the underwriter may change the offering price and the other selling terms from time to time.  No change in those terms will change the amount of proceeds to be received by us as set forth on the cover of this
prospectus. <b></b>The underwriter has informed us that they do not expect to confirm sales of shares of common stock offered by this prospectus to accounts over which they exercise discretionary authority without obtaining the specific approval of the account holder.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the offering, there has been no public market for the common stock.   The initial public offering price for the common stock will be negotiated between the underwriter and us.  Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our recent financial results and current financial condition, our future prospects, the qualifications of our management, and the consideration of the above factors in relation to market valuation of companies in related businesses.  </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have applied to list our common stock on the American Stock Exchange under the symbol &#147;JVA&#148;.</font></p>
<p align="left"><font size="2" face="serif"><b>Indemnification</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b></b>The underwriting agreement provides for indemnification between us and the underwriter against specified liabilities, including liabilities under the Securities Act of 1933, and for contribution by us and the underwriter to payments that may be required to be made with respect to those liabilities.</font></p>
<p align="left"><font size="2" face="serif"><b>Underwriter&#146;s Compensation </b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
    have agreed to sell the shares of common stock to the underwriter at the
    initial public offering price less the underwriting discount set forth on
    the cover of this prospectus. The underwriting agreement also provides that
    the underwriter will be paid a non-accountable expense allowance equal to
    3% of the gross proceeds from the sale of the shares of common stock offered
    by this prospectus, including any common stock purchased on exercise of the
    over-allotment option. We have also granted the underwriter a right of first
    refusal to act as lead underwriter for any public or private equity offerings
    by us for a period of 15&nbsp;months following this offering.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
    have also agreed to issue warrants to the underwriter to purchase from us
    up to 160,000 shares of our common stock. These warrants are exercisable
    during the four-year period commencing one year from this offering at a price
    per share equal to 110% of the public offering price per share in this offering
    and
    will
    allow
    for
    cashless
    exercise.
    The
    warrants
    will
    provide for registration rights, including a one time demand registration
    right and unlimited piggyback registration rights, and customary anti-dilution
    provisions for stock dividends and splits and recapitalizations consistent
    with the National Association of Securities Dealers, Inc. Rules of Fair Practice.  </font></p>
<p align="center"><font size="2" face="serif">67</font></p>
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<p align="left"><font size="2" face="serif"><b>Lock-up Agreements</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
    directors, executive officers and certain of our stockholders, including
    Andrew Gordon and David Gordon and other members of the Gordon family, have
    agreed
    that, for a period of nine (9) months after the effective date of the registration
    statement of which this prospectus is a part, they will not sell, contract
    to sell, grant any option for the sale of or otherwise dispose of any of
    our equity securities, or any securities convertible into or exercisable
    or exchangeable for our equity securities, other than through intra-family
    transfers or transfers to trusts for estate planning purposes, without the
written consent of the underwriter.  </font></p>
<p align="left"><font size="2" face="serif"><b>Stabilization</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b></b>Until the distribution of the shares of common stock offered by this prospectus is completed, rules of the Securities and Exchange Commission may limit the ability of the underwriter to bid for and to purchase shares of our common stock.  As an exception to these rules, the underwriter may engage in transactions effected in accordance with Regulation M under the Securities Exchange Act of 1934 that are intended to stabilize, maintain or otherwise affect the price of our common stock.  The underwriter may engage in over-allotment sales, syndicate covering transactions, stabilizing transactions and penalty bids in accordance with Regulation M.</font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"></td>
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&nbsp;</font></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">Over-allotments occur when the underwriter sells more of our shares than it purchases from us in this offering.  In order to cover the resulting short position, the underwriter may exercise the over-allotment option described above.  Additionally, the underwriter may engage in syndicate covering transactions.  Syndicate covering transactions are bids for or purchases of our common stock on the open market by the underwriter in order to reduce a short position incurred by the underwriter on behalf of the underwriting syndicate.  There is no contractual limit on the size of any syndicate covering transaction.</font></td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"></td>
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&nbsp;</font></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">Stabilizing transactions consist of bids or purchases made by the underwriter for the purpose of preventing or slowing a decline in the market price of our securities while the offering is in progress.</font></td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"></td>
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&nbsp;</font></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">A penalty bid is an arrangement permitting the underwriter to reclaim the selling concession that would otherwise accrue to an underwriter if the common stock originally sold by the underwriter was later repurchased by the underwriter and therefore was not effectively sold to the public by such underwriter.</font></td>
</tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, the purchase of a security to stabilize or to reduce a short position could cause the price of the security to be higher than it might otherwise be.  Neither we nor the underwriter make any representation or prediction about the direction or magnitude of any effect that the transactions described above may have on the price of our common stock.  In addition, neither we nor the underwriter make any representation that the underwriter will engage in these types of transactions or that these types of transactions, once commenced, will not be discontinued without notice.</font></p>
<p align="center"><font size="2" face="serif">68</font></p>
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<p align="center"><font size="2" face="serif"><b>LEGAL MATTERS</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The legality of the securities offered in this prospectus has been passed upon for us by Thacher Proffitt &amp; Wood LLP, Washington, DC.  Lowenstein Sandler PC, Roseland, NJ, has served as counsel to the underwriter in connection with this offering.</font></p>
<p align="center"><font size="2" face="serif"><b>EXPERTS</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements as of October 31, 2003 and 2002 and for the years then ended, included in this prospectus have been audited by Lazar Levine &amp; Felix LLP, independent auditors, as stated in their report appearing in this prospectus and elsewhere in the registration statement, and have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.  </font></p>
<p align="center"><font face="serif" size="2">69</font></p>
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<p align="center"><font size="2" face="serif"><b>WHERE YOU CAN FIND ADDITIONAL
INFORMATION</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to the informational requirements of the Exchange Act and must file annual, quarterly and current reports and other information with the SEC.  You may examine this information without charge at the public reference facilities of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549.  You may obtain copies of this material from the SEC at prescribed rates.  You may obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC also maintains a website that contains reports, proxy and information statements and other information regarding registrants, including us, that file electronically with the SEC. The address for this web site is
&#147;<u>http://www.sec.gov.</u>&#148;</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have filed with the SEC a registration statement on Form SB-2 and related exhibits under the Securities Act of 1933, as amended, with respect to the common stock offered in this document.  As permitted by the rules and regulations of the SEC, this document does not contain all the information set forth in the registration statement and related exhibits.  You may examine the registration statement and exhibits without charge at the Public Reference Room of the SEC and you may obtain copies from the SEC at prescribed rates.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This document contains a description of the material features of certain exhibits to the Form SB-2.  The statements as to the contents of such exhibits, however, are, of necessity, brief descriptions and are not necessarily complete; each such statement is qualified by reference to such contract or document.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Copies of our Articles of Incorporation and Bylaws are available for review at any of our offices.  </font></p>
<p align="center"><font size="2" face="serif">70</font></p>
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<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.</b></font></p>
<p align="center"><font size="2" face="serif"><b>INDEX TO FINANCIAL STATEMENTS </b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b></b></font></p>
<p align="left"><font size="2" face="serif"></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b></b></font></td>
    <td width="10%" align="center"><font size="2" face="serif"><b><u>PAGE(S)</u></b></font></td>
  </tr>
  <tr valign="top">
    <td colspan="2" align="left"><font size="2" face="serif"><b>FINANCIAL STATEMENTS:</b></font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center">&nbsp;</td>
  </tr>
  <tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="center"><font size="2" face="serif"> F-2</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center"></td>
  </tr>
  <tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">BALANCE SHEETS AT APRIL 30, 2004
    (UNAUDITED) AND OCTOBER 31, 2003</font></td>
<td align="center"><font size="2" face="serif">F-3</font></td>
</tr>
  <tr>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center"></td>
  </tr>
  <tr valign="top">
  <td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">STATEMENTS OF INCOME FOR THE SIX
    MONTHS ENDED APRIL 30, 2004 AND 2003 (UNAUDITED)<br>
    AND FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002</font></td>
<td align="center"><font size="2" face="serif">F-4</font></td>
</tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center"></td>
  </tr>
  <tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">STATEMENTS OF CHANGES IN STOCKHOLDERS&#146; EQUITY
    FOR THE SIX MONTHS ENDED APRIL 30, 2004 AND 2003 (UNAUDITED) AND FOR THE
    YEARS
    ENDED OCTOBER 31, 2003 AND 2002</font></td>
<td align="center"><font size="2" face="serif">F-5</font></td>
</tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center"></td>
  </tr>
  <tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">STATEMENTS OF CASH FLOWS FOR
    THE SIX MONTHS ENDED APRIL 30, 2004 AND 2003 (UNAUDITED) AND FOR THE YEARS
    ENDED OCTOBER 31, 2003 AND 2002&nbsp;</font></td>
<td align="center"><font size="2" face="serif">F-6</font></td>
</tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center"></td>
  </tr>
  <tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">NOTES TO FINANCIAL STATEMENTS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></td>
<td align="center"><font size="2" face="serif">F-7 &#150; F- 17</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-1</font></p>
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<p align="center"><font size="2" face="serif"><b>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</b></font></p>
<p align="left"><font size="2" face="serif">To the Board of Directors<br>
</font><font size="2" face="serif">Coffee Holding Co., Inc.</font></p>
<p align="left"><font size="2" face="serif">We have audited the accompanying balance sheet of Coffee Holding Co., Inc. as of October 31, 2003 and the related statements of operations, changes in stockholders&#146; equity and cash flows for the two years in the period ended October 31, 2003.  These financial statements are the responsibility of the Company&#146;s management.  Our responsibility is to express an opinion on these financial statements based on our audits.</font></p>
<p align="left"><font size="2" face="serif">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.</font></p>
<p align="left"><font size="2" face="serif">In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Coffee Holding Co., Inc. as of October 31, 2003 and the results of its operations and its cash flows for each of the two years in the period ended October 31, 2003, in conformity with accounting principles generally accepted in the United States of America.</font></p>
<div style="margin-left: 50%">
<p align="left"><font size="2" face="serif"><u>Lazar Levine &amp; Felix LLP</u><br>
<b>LAZAR LEVINE &amp; FELIX LLP</b></font></p>
</div>
<p align="left"><font size="2" face="serif">New York, New York<br>
</font><font size="2" face="serif">December 10, 2003</font></p>
<p align="center"><font face="serif" size="2">F-2</font></p>
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<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>BALANCE SHEETS</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>April 30,<br>
</b><b>2004</b></font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif">October 31, <br>
  2003</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="center"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>(unaudited)</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif"><b>- ASSETS -</b></font></td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>CURRENT ASSETS:</b></font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Cash</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"><b>196,885</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">73,832</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Due from broker</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>790,871</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">894,123</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Accounts receivable, net of allowance for doubtful
 accounts of $119,435</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>1,725,997</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,154,683</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Inventories</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>2,423,917</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,781,424</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Prepaid expenses and other current assets</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>296,858</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">431,432</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Deferred tax asset</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>104,300</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">103,700</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 12%; text-indent: -6%"><font size="2" face="serif"><b>TOTAL CURRENT ASSETS</b></font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>5,538,828</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">5,439,194</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 3%; text-indent: -3%"><font size="2" face="serif">Property and equipment, at cost, net of accumulated
 depreciation of $3,209,469 and $2,991,206</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>2,165,376</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,579,294</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Deposits and other assets</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>33,496</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">16,796</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Loans to related parties</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>11,158</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"><b>7,748,858</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">7,035,284</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif"><b>- LIABILITIES AND STOCKHOLDERS&#146; EQUITY -</b></font></td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>CURRENT LIABILITIES:</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Current portion of term loan</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"><b>84,000</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">84,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Current portion of obligations under capital
 lease</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>134,886</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">130,551</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Line of credit borrowings</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>2,326,406</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Accounts payable and accrued expenses</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>1,684,029</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,861,447</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Income taxes payable &#150; current</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>375,705</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 12%; text-indent: -6%"><font size="2" face="serif"><b>TOTAL CURRENT LIABILITIES</b></font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>4,605,026</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,075,998</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Term loan, net of current portion</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>210,000</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">252,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Obligations under capital lease, net of current portion</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>23,350</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">91,895</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Line of credit borrowings</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,376,066</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Loans from related parties</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">79,646</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Income taxes payable &#150; deferred</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>52,000</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">39,200</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 12%; text-indent: -6%"><font size="2" face="serif"><b>TOTAL LIABILITIES</b></font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>4,890,376</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">4,914,805</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>COMMITMENTS AND CONTINGENCIES</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>STOCKHOLDERS&#146; EQUITY: </b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Preferred stock, par value $.001 per share;
 10,000,000 shares authorized; none issued</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Common stock, par value $.001 per share;
30,000,000 shares authorized, 3,999,650 shares issued and outstanding</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif"><b></b><b>4,000</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">4,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Additional paid-in capital</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>867,887</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">867,887</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Retained earnings</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>1,986,595</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,248,592</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 12%; text-indent: -6%"><font size="2" face="serif"><b>TOTAL STOCKHOLDERS&#146; EQUITY </b></font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>2,858,482</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,120,479</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"><b>7,748,858</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 7,035,284</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">See notes to Condensed Financial Statements.</font></p>

<p align="center"><font face="serif" size="2">F-3</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf4"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>STATEMENTS OF INCOME</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="4" align="center" valign="bottom"><font size="1" face="serif"><b>Six Months Ended<br>
April 30,<br>
(Unaudited)</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="4" align="center" valign="bottom"><font size="1" face="serif">For the Years Ended<br>
October 31,</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>2004</b></font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">2003</font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">2003</font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">2002</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif"><b>NET SALES</b></font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="10%" align="right"><font size="2" face="serif"><b>12,180,960</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="11%" align="right"><font size="2" face="serif">9,573,756</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="10%" align="right"><font size="2" face="serif">20,239,867</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="10%" align="right"><font size="2" face="serif"> 17,432,742</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>COST OF SALES</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>8,470,986</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">7,294,237</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">15,373,127</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">12,452,713</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif"><b>GROSS PROFIT</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>3,709,974</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,279,519</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">4,866,740</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">4,980,029</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>OPERATING EXPENSES:</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Selling and administrative</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>2,054,729</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,524,467</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,501,465</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,061,542</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Officers&#146; salaries</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>246,949</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">191,726</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">490,860</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">443,222</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 12%; text-indent: -6%"><font size="2" face="serif"><b>TOTALS</b></font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>2,301,678</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,716,193</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,992,325</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,504,764</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif"><b>INCOME FROM OPERATIONS</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>1,408,296</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">563,326</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">874,415</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,475,265</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>OTHER INCOME (EXPENSE)</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Interest income</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>6,503</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">4,830</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">9,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">18,508</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Other income</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,640</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Interest expense</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(81,596</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(72,482</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(146,607</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(180,678</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>(75,093)</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(67,652)</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(135,967)</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(162,170</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>INCOME BEFORE INCOME TAXES</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>1,333,203</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">495,674</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">738,448</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,313,095</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Provision for income taxes</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b><b>595,200</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">221,600</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">116,366</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">557,720</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>NET INCOME</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"><b>738,003</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">274,074</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">622,082</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 755,375</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Basic and diluted earnings per share</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>.18</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .07</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .16</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .19</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Weighted average common shares outstanding</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>3,999,650</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,999,650</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,999,650</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,999,650</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
<td></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">See notes to Condensed Financial Statements.</font></p>

<p align="center"><font face="serif" size="2">F-4</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf5"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>STATEMENTS
OF CHANGES IN STOCKHOLDERS&#146; EQUITY</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td colspan="5" align="center" valign="bottom"><font size="1" face="serif"><b>Common Stock</b></font></td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td colspan="5" align="center" valign="bottom"><font size="1" face="serif"><b>$.001 Par Value</b></font></td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Number of <br>
    Shares</b></font></td>
  <td align="left">&nbsp;</td>
  <td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Amount</b></font></td>
  <td align="left">&nbsp;</td>
  <td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Additional<br>
    Paid-in
      Capital</b></font></td>
  <td align="left">&nbsp;</td>
  <td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Retained Earnings (Accumulated
    Deficit)</b></font></td>
  <td align="left">&nbsp;</td>
  <td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Total</b></font></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Balance, October 31, 2001 </font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="9%" align="right"><font size="2" face="serif">3,999,650</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="9%" align="right"><font size="2" face="serif"> 4,000</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="9%" align="right"><font size="2" face="serif"> 867,887</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="9%" align="right"><font size="2" face="serif"> (128,865</font></td>
<td width="2%" align="left"><font size="2" face="serif">)</font></td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="9%" align="right"><font size="2" face="serif"> 743,022</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Net income</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">755,375</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">755,375</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Balance, October 31, 2002</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,999,650</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">4,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">867,887</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">626,510</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,498,397</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Net income</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">622,082</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">622,082</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Balance, October 31, 2003</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">3,999,650</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">4,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">867,887</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,248,592</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,120,479</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>Net income (unaudited)</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><b><font size="2" face="serif">&#151;</font></b></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>738,003</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>738,003</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif"><b>Balance, April 30, 2004 (unaudited)</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>3,999,650</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"><b>4,000</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"><b>867,887</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>1,986,595</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>2,858,482</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">See notes to Condensed Financial Statements.</font></p>


<p align="center"><font face="serif" size="2">F-5</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf6"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>STATEMENTS OF CASH FLOWS</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td colspan="5" align="center" valign="bottom"><font size="1" face="serif"><b>For the Six Months Ended<br>
April 30,<br>
(Unaudited)</b></font></td>
<td align="left">&nbsp;</td>
<td colspan="5" align="center" valign="bottom"><font size="1" face="serif">For the Years Ended<br>
October 31,</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>2004</b></font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">2003</font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">2003</font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">2002</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>OPERATING ACTIVITIES:</b></font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Net income</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>738,003</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 274,074</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 622,082</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 755,375</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Adjustments to reconcile net income to net
cash provided by (used in) operating activities:</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 15%; text-indent: -6%"><font size="2" face="serif">Depreciation and amortization</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>230,424</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">152,924</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">299,774</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">270,994</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 15%; text-indent: -6%"><font size="2" face="serif">Bad debts (recovery)</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(12,154</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 15%; text-indent: -6%"><font size="2" face="serif">Deferred taxes</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>12,200</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(600</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(38,300</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(26,200</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Changes in operating assets and liabilities:</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 15%; text-indent: -6%"><font size="2" face="serif">(Increase) decrease in due from broker</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>103,252</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(179,579</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(125,521</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(494,037</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 15%; text-indent: -6%"><font size="2" face="serif">(Increase) decrease in accounts receivable</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>429,686</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(150,669</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(371,261</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">118,327</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 15%; text-indent: -6%"><font size="2" face="serif">(Increase) in inventories</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(642,493</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(374,378</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(363,280</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(66,994</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 15%; text-indent: -6%"><font size="2" face="serif">(Increase) decrease in prepaid expenses and other
 current assets</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif"><b>134,574</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">(81,421</font></td>
<td align="left" valign="bottom"><font size="2" face="serif">)</font></td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">(348,165</font></td>
<td align="left" valign="bottom"><font size="2" face="serif">)</font></td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">(42,378</font></td>
<td align="left" valign="bottom"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 15%; text-indent: -6%"><font size="2" face="serif">(Decrease) increase in accounts payable and accrued
 expenses</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif"><b>(177,418</b></font></td>
<td align="left" valign="bottom"><font size="2" face="serif"><b>)</b></font></td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">111,605</font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">(190,015</font></td>
<td align="left" valign="bottom"><font size="2" face="serif">)</font></td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">301,128</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 15%; text-indent: -6%"><font size="2" face="serif">(Decrease) increase in income taxes
 payable</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>375,705</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(82,430</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(229,540</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">7,225</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 18%; text-indent: -6%"><font size="2" face="serif"><b>Net cash provided by (used in) operating activities</b></font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>1,202,933</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(342,628</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(744,226</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">823,440</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>INVESTING ACTIVITIES:</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Purchases of property and equipment</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(790,882</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(109,535</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(62,758</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(435,538</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Disposal of fixed assets</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(25,624</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Security deposits</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(16,700</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 18%; text-indent: -6%"><font size="2" face="serif"><b>Net cash (used in) investing
activities</b></font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(833,206</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(109,535</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(62,758</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(435,538</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>FINANCING ACTIVITIES:</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Advances on term loan</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">40,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Principal payments on term loan</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(42,000</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(42,000</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(84,000</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(120,000</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 5%; text-indent: -6%"><font size="2" face="serif">Decrease in cash and cash equivalents restricted
 under credit facility and mortgage note</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">&#151;</font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">&#151;</font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">279,518</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Advances under bank line of credit</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>13,255,484</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">10,206,597</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">21,358,723</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">18,037,747</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Principal payments under bank line of credit</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(13,305,144</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(9,603,842</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(20,304,030</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(19,055,590</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Advances of obligations under capital leases</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>&#151;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">383,764</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Principal payments of obligations under capital leases</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(64,210</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(58,375</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(120,521</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(40,797</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">(Repayment) advances from related parties</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(90,804</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,798</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(12,924</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(68,410</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 18%; text-indent: -6%"><font size="2" face="serif"><b>Net cash (used in) provided by financing
activities</b></font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(246,674</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">515,178</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">837,248</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(543,768</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif"><b>NET INCREASE (DECREASE) IN CASH</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>123,053</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">63,015</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">30,264</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(155,866</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Cash, beginning of year</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>73,832</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">43,568</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">43,568</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">199,434</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif"><b>CASH, END OF PERIOD/YEAR</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>196,885</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 106,583</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 73,832</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 43,568</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Interest paid</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>81,596</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 72,482</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 143,682</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 145,969</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>

<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Income taxes paid</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>7,449</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 305,430</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 396,295</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 494,669</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
<td></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">See notes to Consolidated Financial Statements.</font></p>


<p align="center"><font face="serif" size="2">F-6</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf7"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, </b><b>2003 AND </b><b>2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended April 30, 2004 and 2003 is unaudited)</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td><font size="2" face="serif"><b>NOTE 1   -</b></font></td>
<td width="3%"></td>
<td width="88%" align="left"><font size="2" face="serif"> <b>BUSINESS ACTIVITIES AND
REVERSE ACQUISITION:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Coffee Holding Co., Inc. (&#147;Coffee&#148;), which was incorporated in New York on January 22, 1971, conducts wholesale coffee operations, including manufacturing, roasting, packaging, marketing and distributing roasted and blended coffees for private labeled accounts and its own brands, and sells green coffees.  The Company&#146;s sales are primarily to customers that are located throughout the United States.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left"></td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif"><b>NOTE 2  -</b></font></td>
<td align="left"></td>
<td><font size="2" face="serif"> <b>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Use of estimates:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Cash equivalents:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Cash equivalents represent highly liquid investments with maturities of three months or less at the date of purchase.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Inventories:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif">Inventories are valued at the lower of cost (first-in, first-out basis) or market.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Property and equipment:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Hedging:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company uses options and futures contracts to partially hedge the effects of fluctuations in the price of green coffee beans.  Options and futures contracts are marked to market with current recognition of gains and losses on such positions.  The Company does not defer such gains and losses since its positions are not considered hedges for financial reporting purposes.  The Company&#146;s accounting for options and futures contracts may have the effect of increasing earnings volatility in any particular period.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">At April 30, 2004, the Company held 525 options (generally with terms of two months or less) covering an aggregate of 19,687,500 pounds of green coffee beans at a price of $.70 and $.725 per pound. The fair market value of these options, which was obtained from a major financial institution, was $291,094 at April 30, 2004.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">At April 30, 2003, the options contracts held by the Company were immaterial.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-7</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf8"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.</b></font></p>
<p align="center"><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS</b></font></p>
<p align="center"><font size="2" face="serif"><b>OCTOBER 31, </b><b>2003 AND </b><b>2002</b></font></p>
<p align="center"><font size="2" face="serif"><b>(Information as of and for the periods ended April 30, 2004 and 2003 is unaudited)</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td><font size="2" face="serif"><b>NOTE 2   -</b></font></td>
<td width="3%"></td>
<td width="88%" align="left">
<font size="2" face="serif"> <b>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Hedging (Continued):</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">At October 31, 2003, the Company held 150 options covering an aggregate of 5,625,000 pounds of green coffee beans at $.60 per pound. The fair market value of these options, which was obtained from a major financial institution, was approximately $95,813 at October 31, 2003. </font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">At October 31, 2002, the Company held 75 options covering an aggregate of 2,812,500 pounds of green coffee beans at prices ranging from $.60 to $.65 per pound. The fair market value of these options, which was obtained from a major financial institution, was approximately $145,000 at October 31, 2002. </font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company acquires futures contracts with longer terms (generally three to four months) primarily for the purpose of guaranteeing an adequate supply of green coffee.  At April 30, 2004, the Company held 4 futures contracts for the purchase of 150,000 pounds of coffee at an average price of $.719 per pound for September 2004 contracts.  The market price of coffee applicable to such contracts was $.714 per pound at that date.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">At April 30, 2003, the Company held 100 futures contracts for the purchase of 3,750,000 pounds of coffee at an average price of $.65 per pound for various July 2003 contracts.  The market price of coffee applicable to such contracts was $.69 per pound at that date.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">At October 31, 2003 and 2002, the Company held 183 and 70 longer-term futures contracts for the purchase of 6,862,500 and 2,625,000 pounds of coffee at an average price of $.65 and $.62 per pound, respectively.  The market price of coffee applicable to such contracts was $.59 and $.62 per pound at October 31, 2003 and $.66 per pound at October 31, 2002.  </font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company historically has had short term contracts with some of its customers (generally one to two years in duration).  The Company currently has agreements with two of its wholesale customers in which it is the supplier at fixed prices for lines of private label ground coffee.  The Company is the exclusive supplier of one of these customers.  The agreements generally contain only pricing terms. </font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Included in cost of sales and due from broker for the six month periods ended April 30, 2004 and 2003 and for the years ended October 31, 2003 and 2002, the Company recorded realized and unrealized gain and losses respectively, on these hedging contracts as follows:</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td colspan="5" align="center" valign="bottom"><font size="1" face="serif"><b>Six Months Ended April 30,</b></font></td>
<td align="left">&nbsp;</td>
<td colspan="5" align="center" valign="bottom"><font size="1" face="serif">Years Ended October 31,</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>2004</b></font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif">2003</font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif">2003</font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif">2002</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td width="9%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Realized Gain and (losses)</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="9%" align="right"><font size="2" face="serif"> <b>1,484,441</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="9%" align="right"><font size="2" face="serif"> 574,923</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="9%" align="right"><font size="2" face="serif">$1,116,694</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="9%" align="right"><font size="2" face="serif"> 776,580</font></td>
<td width="5%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Unrealized Gain and (losses)</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>(326,274</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> (98,344</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">$(248,025)</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 1,830</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"></td>
<td width="88%" align="left"><font size="2" face="serif"><b><i>Advertising:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company expenses the cost of advertising and promotions as incurred.  Advertising costs charged to operations totaled $143,130 and $109,751 for the years ended October 31, 2003 and 2002, respectively and $85,667 and $62,526 for the six month periods ended April 30, 2004 and 2003, respectively.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-8</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf9"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, </b><b>2003 AND </b><b>2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended April 30, 2004 and 2003 is unaudited)</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="12%"><font size="2" face="serif"><b>NOTE 2 -</b></font></td>
<td width="3%"></td>
<td align="left"><font size="2" face="serif"> <b>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Income taxes:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company accounts for income taxes pursuant to the asset and liability method which requires deferred income tax assets and liabilities to be computed for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  The income tax provision or credit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities (see also Note
7).</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Stock options:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">In accordance with the provisions of Accounting Principles Board Opinion No. 25, &#147;Accounting for Stock Issued to Employees,&#148; the Company will recognize compensation costs as a result of the issuance of stock options to employees based on the excess, if any, of the fair value of the underlying stock at the date of grant or award (or at an appropriate subsequent measurement date) over the amount the employees must pay to acquire the stock.  Therefore, the Company will not be required to recognize compensation expense as a result of any grants of stock options to employees at an exercise price that is equivalent to or greater than fair value.  The Company will also make pro forma disclosures, as required by Statement of Financial
Accounting Standards No. 123, &#147;Accounting for Stock-Based Compensation&#148; (&#147;SFAS 123&#148;), of net income or loss as if a fair value based method of accounting for stock options had been applied, if such amounts differ materially from the historical amounts.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Earnings (loss) per share:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company presents &#147;basic&#148; and, if applicable, &#147;diluted&#148; earnings per common share pursuant to the provisions of Statement of Financial Accounting Standards No. 128, &#147;Earnings per Share&#148; (&#147;SFAS 128&#148;), as amended by SFAS No. 148 (see below) and certain other financial accounting pronouncements.  Basic earnings (loss) per common share are calculated by dividing net income or loss by the weighted average number of common shares outstanding during each period. The calculation of diluted earnings per common share is similar to that of basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all
potentially dilutive common shares, such as those issuable upon the exercise of stock options, were issued during the period.  Since the Company had no potentially dilutive securities outstanding in any period presented, diluted earnings per share equals basic earnings per share in the accompanying statement of operations.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The weighted average common shares outstanding used in the computation of basic and diluted earnings per share in each period presented was the 3,999,650 shares of common stock actually outstanding during those periods.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Fair value of financial instruments:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument when available. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-9</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf10"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, </b><b>2003 AND </b><b>2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended April 30, 2004 and 2003 is unaudited)</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="12%"><font size="2" face="serif"><b>NOTE 2 -</b></font></td>
<td width="2%"></td>
<td align="left">
<font size="2" face="serif"> <b>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Revenue recognition:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, &#147;Revenue Recognition in Financial Statements&#148; (&#147;SAB 101&#148;).  Under SAB 101, revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured. The Company generally recognizes revenue at the time of shipment.  Sales are reflected net of discounts and returns.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Recent accounting pronouncements:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">On July 30, 2002, the FASB issued Statement of Financial Accounting Standards No. 146, &#147;Accounting for Costs Associated with Exit or Disposal Activities&#148; (&#147;SFAS 146&#148;), that is applicable to exit or disposal activities initiated after December 31, 2002.  This standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan.  This standard does not apply where SFAS 144 is applicable.  The adoption of this new standard does not have any impact on the Company&#146;s operating results and financial position at this time.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">On December 31, 2002, the FASB issued Statement of Financial Accounting Standards No. 148, &#147;Accounting for Stock-Based Compensation-Transition and Disclosure&#148; (&#147;SFAS 148&#148;), that is applicable to financial statements issued for fiscal years ending after December 15, 2002.  In addition, interim disclosure provisions are applicable for financial statements issued for interim periods beginning after December 15, 2002.  This standard amends SFAS 123 and provides guidance to companies electing to voluntarily change to the fair value method of accounting for stock-based compensation.  In addition, this standard amends SFAS 123 to require more prominent and more frequent disclosures in financial statements regarding the effects
of stock-based compensation.  The adoption of this new standard does not have any impact on the Company&#146;s operating results and financial position at this time.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">In January 2003, FASB Interpretation No. 46 (&#147;FIN No. 46&#148;), &#147;Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51,&#148; was issued.  In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities.  FIN No. 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity&#146;s activities or is entitled to receive a majority of
the entity&#146;s residual returns or both.  Currently, this standard has no effect on the Company&#146;s financial statements.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">During April 2003, the Financial Accounting Standards Board issued SFAS 149, &#147;Amendment of Statement   133 on Derivative Instruments and Hedging Activities.&#148;  SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS 133, &#147;Accounting for Derivative Instruments and Hedging Activities.&#148;  The statement requires that contracts with comparable characteristics be accounted for similarly and clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows.  SFAS 149 is effective for contracts entered into or modified after June 30, 2003, except in certain
circumstances, and for hedging relationships designated after June&nbsp;30, 2003.  The adoption of this standard has not had a material effect on the Company&#146;s financial statements.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-10</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf11"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, </b><b>2003 AND </b><b>2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended April 30, 2004 and 2003 is unaudited)</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="12%"><font size="2" face="serif"><b>NOTE 2 -</b></font></td>
<td width="2%"></td>
<td align="left">
<font size="2" face="serif"> <b>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Recent accounting pronouncements (Continued):</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">In May 2003, the FASB issued &#147;SFAS 150&#148;, &#147;Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity&#148;. &#147;SFAS 150&#148; requires that certain financial instruments, which under previous guidance were accounted for as equity, must now be accounted for as liabilities.  The financial instruments affected include mandatorily redeemable stock, certain financial instruments that require or may require the issuer to buy back some of its shares in exchange for cash or other assets and certain obligations that can be settled with shares of stock.  SFAS 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning
of the first interim period beginning after June&nbsp;15, 2003.  The adoption of this standard has had no effect on the Company&#146;s financial statements.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif"><b><i>Reclassifications:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Certain accounts in the 2002 financial statements may have been reclassified to conform to the 2003 presentation.</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>

</tr>
<tr valign="top">
<td><font size="2" face="serif"><b>NOTE 3   -</b></font></td>
<td></td>
<td align="left">
<font size="2" face="serif"> <b>INVENTORIES:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif">Inventories at April 30, 2004 and October 31, 2003 consisted of the following:</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>April 30, 2004</b></font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif">October 31, 2003</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td width="14%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Packed coffee</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="10%" align="right"><font size="2" face="serif"> <b>610,799</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="10%" align="right"><font size="2" face="serif"> 213,062</font></td>
<td width="25%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Green coffee</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>1,043,978</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">999,137</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Packaging supplies</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>769,140</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">569,225</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Totals</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>2,423,917</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">$1,781,424</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="12%"><font size="2" face="serif"><b>NOTE 4 -</b></font></td>
<td width="2%"></td>
<td align="left"><font size="2" face="serif"> <b>PROPERTY AND EQUIPMENT:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td align="left"><font size="2" face="serif">Property and equipment at April 30, 2004 and October 31, 2003 consisted of the following:</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif">Estimated<br>
  Useful Life</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>April 30,<br>
  2004</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif">October 31,<br>
  2003</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="center"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td width="14%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Building and improvements</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="9%" align="center"><font size="2" face="serif">30 years</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="9%" align="right"><font size="2" face="serif"> <b>1,257,251</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="9%" align="right"><font size="2" face="serif">$1,252,448</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Machinery and equipment</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">7 years</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>3,404,382</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,606,859</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Machinery and equipment under capital leases</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">7 years</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>426,404</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">426,404</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Furniture and fixtures</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">7 years</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>145,808</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">143,789</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>5,233,845</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">4,429,500</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 6%; text-indent: -6%"><font size="2" face="serif">Less accumulated depreciation
 (including $121,828 and $91,372, respectively arising from capital leases)</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif"><b>3,209,469</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">2,991,206</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>2,024,376</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,438,294</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Land</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>141,000</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">141,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Totals</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>2,165,376</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">$1,579,294</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">

<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Depreciation expense totaled $299,774 and $270,994 for the years end October 31, 2003 and 2002, respectively and $230,424 and $152,924 for the six month periods ended April 30, 2004 and 2003, respectively.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-11</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf12"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, </b><b>2003 AND </b><b>2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended April 30, 2004 and 2003 is unaudited)</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="12%"><font size="2" face="serif"><b>NOTE 5 -</b></font></td>
<td width="2%"></td>
<td align="left"><font size="2" face="serif"><b>CREDIT FACILITY AND OTHER
 BORROWINGS:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b></b>As of October 2003, the Company was obligated under a $5,750,000 credit facility provided by Wells Fargo Business Credit.  The credit facility consisted of a $5,000,000 revolving line of credit and a $750,000 term loan secured by all the assets of the Company.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The line of credit provides for borrowing of up to 85% of the Company&#146;s eligible trade accounts receivable and 60% of its eligible inventories up to a maximum of $5,000,000.  The term loan provides for borrowings of up to the greater of 80% of the cost of eligible equipment or $750,000.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">As a result of amendments to prior agreements with Wells Fargo Business Credit, that became effective on October 1, 2002, interest on borrowings under the line of credit and the term loan are payable monthly at the prime rate plus .25% and .50%, respectively (an effective rate of 4.25% and 4.50% respectively, at October 31, 2003).  In addition, the credit facility will not expire until November 20, 2004; the maximum amount of borrowings under the term loan increased form $600,000 to $750,000; term loan principal payments decreased from $10,000 to $7,000 per month commencing November 1, 2002; the amount of borrowings guaranteed by each of the two stockholders is $500,000; a restricted cash collateral deposit aggregating approximately $290,000 was
used to reduced the outstanding line of credit balance; and the Company&#146;s ability to continue to use the credit facility will become subject to its ability to meet specified financial covenants and ratios.  In addition, the outstanding balances under the term loan were classified as long-term liabilities in the accompanying October 31, 2003 balance sheet based on the Company&#146;s ability to either defer payments until, or make installment payments through, November 20, 2004.  The term loan, has an outstanding balance of $336,000 (including a current portion of $84,000) and aggregate borrowing of $2,376,066 were outstanding under its credit line facility at October 31, 2003.  The line of credit can be withdrawn at Wells Fargo Business Credit&#146;s option.  The Company was in
compliance with the required financial covenants at October 31, 2003 and at April 30, 2004.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The outstanding balance under the term loan was $294,000 and under the line of credit agreement was $2,326,406 at April 30, 2004.  The entire line of credit amount is being reflected as short term at that date, since the principal loan balance is due in November of 2004.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif"><b>NOTE 6   -</b></font></td>
<td></td>
<td align="left">
<font size="2" face="serif"> <b>LOANS TO/FROM RELATED PARTIES:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company had loans payable to certain of its stockholders aggregating $79,646 at October 31, 2003 and loans receivable from a stockholder of $11,158 at April 30, 2004. The loans are due on demand but payments are not expected to be required in the next twelve months. These loans bear interest at 6% per annum.  Interest expense totaled approximately $5,405 and $13,000 for the years ended October 31, 2003 and 2002 respectively.  Interest expense for the six month periods ended April 30, 2004 and 2003 totaled approximately $1,200 and $2,800, respectively.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-12</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf13"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, 2003 AND 2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended April 30, 2004 and 2003 is unaudited)</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="12%"><font size="2" face="serif"><b>NOTE 7 -</b></font></td>
<td width="2%"></td>
<td align="left"><font size="2" face="serif"> <b>INCOME TAXES:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities as of April 30, 2004 and October 31, 2003 are as follows:</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>April 30, 2004</b></font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif">October 31, 2003</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td width="14%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Deferred tax assets:</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="20%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Accounts receivable</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>55,200</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 49,100</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Inventory</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>49,100</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">54,600</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>104,300</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 103,700</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Deferred tax liability:</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">Fixed assets</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>52,000</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">39,200</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
  <td><hr noshade size="2">
  </td>
  <td><hr noshade size="2">
  </td>
  <td></td>
</tr>

<tr valign="top">
  <td></td>
  <td></td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company&#146;s provision for income taxes for the periods presented consisted of the following:</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="4" align="center"><font size="1" face="serif"><b>Six Months Ended April 30,</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="4" align="center"><font size="1" face="serif">Years Ended October 31, </font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td colspan="5"><hr noshade size="1"></td>
<td></td>
<td colspan="5"><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="1" face="serif"><b>2004</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="1" face="serif">2003</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="1" face="serif">2003</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="1" face="serif">2002</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td width="14%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Federal</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="10%" align="right"><font size="2" face="serif"> <b>400,000</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="10%" align="right"><font size="2" face="serif"> 148,600</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="right"><font size="2" face="serif"><b>$</b>150,004</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="10%" align="right"><font size="2" face="serif"> 387,265</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">State and local</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>195,200</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">73,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b></b>(33,638</font></td>
<td align="left"><font size="2" face="serif">)<b>*</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">170,455</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Total </font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>595,200</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 221,600</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b>116,366</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 557,720</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;* Includes prior year over accrual of state franchise taxes.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">A reconciliation of the difference between the expected income tax rate using the statutory federal tax rate and the Company&#146;s effective tax rate is as follows:</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td colspan="5" align="center" valign="bottom"><font size="1" face="serif"><b>Six Months Ended April 30,</b></font></td>
<td align="left">&nbsp;</td>
<td colspan="5" align="center" valign="bottom"><font size="1" face="serif">Years Ended October 31,</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>2004</b></font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">2003</font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">2003</font></td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">2002</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td width="14%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">US Federal income tax statutory rate</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="right"><font size="2" face="serif"><b>30</b></font></td>
<td width="2%" align="left"><font size="2" face="serif"><b>%</b></font></td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="right"><font size="2" face="serif">30</font></td>
<td width="2%" align="left"><font size="2" face="serif">%</font></td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="right"><font size="2" face="serif">34</font></td>
<td width="2%" align="left"><font size="2" face="serif">%</font></td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="right"><font size="2" face="serif">34</font></td>
<td width="2%" align="left"><font size="2" face="serif">%</font></td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 3%; text-indent: -3%"><font size="2" face="serif">State income taxes, net of federal
tax benefit</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif"><b>9</b></font></td>
<td align="left" valign="bottom"><font size="2" face="serif"><b>%</b></font></td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">8</font></td>
<td align="left" valign="bottom"><font size="2" face="serif">%</font></td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">8</font></td>
<td align="left" valign="bottom"><font size="2" face="serif">%</font></td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">8</font></td>
<td align="left" valign="bottom"><font size="2" face="serif">%</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Other</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>6</b></font></td>
<td align="left"><font size="2" face="serif"><b>%</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">    7</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(26</font></td>
<td align="left"><font size="2" face="serif">%)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Effective tax rate</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>45</b></font></td>
<td align="left"><font size="2" face="serif"><b>%</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">45</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">16</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">42</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="14%"><font size="2" face="serif"><b>NOTE 8   -</b></font></td>
<td align="left">
<font size="2" face="serif"> <b>COMMITMENTS AND CONTINGENCIES:</b></font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Operating leases:</i></b></font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">a)</font></td>
<td align="left">
<font size="2" face="serif"> The Company occupies warehouse facilities under an operating lease, which expired on August&nbsp;31, 2002 and was renewed for an additional two years.  The lease requires the Company to also pay utilities and other maintenance expenses.  Rent charged to operations amounted to $50,076 and $47,346 for the years ended October 31, 2003 and 2002, and $25,038 for each of the six month periods ended April 30, 2004 and 2003, respectively.  Future minimum rental payments under the noncancelable operating lease in years subsequent to October 31, 2003 are $41,730 in 2004.  </font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company also uses a variety of independent, bonded commercial warehouses to store its green coffee beans.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-13</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="pf14"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, 2003 AND 2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended April 30, 2004 and 2003 is unaudited)</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="14%"><font size="2" face="serif"><b>NOTE 8   -</b></font></td>
<td align="left">
<font size="2" face="serif"> <b>COMMITMENTS AND CONTINGENCIES (Continued):</b></font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Operating leases (Continued):</i></b></font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="14%"></td>
<td width="3%">
<font size="2" face="serif">b)</font></td>
<td>
<font size="2" face="serif">In February 2004, the Company entered into a lease for office and warehouse space in La Junta City, Colorado with an unrelated third party.  This lease, which is at a monthly rental of $8,341 beginning January 2005, expires on January 31, 2024.</font></td>
</tr>
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td><font size="2" face="serif">The aggregate minimum future lease payments
      for the Colorado location as of October 31, 2004 for each of the next five
    years are as follows:</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#FFFFFF">
  <td width="14%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif"><u>October 31,</u></font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="50%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">2004</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> &#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">2005</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">83,411</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">2006</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100,093</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">2007</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100,093</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">2008</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100,093</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Thereafter</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,526,418</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 1,910,108</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Obligation under capital leases:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company has leased machinery and equipment under a capital lease, which expires in July 2005. The asset and liability under the capital lease is recorded at the lower of the present value of the minimum lease payments or the fair value of the asset.  The asset is being depreciated over the lease term.  Depreciation expense of assets under capital lease are included in depreciation expense and amounted to $60,915 for each of the years ended October 31, <b></b>2003 and 2002 and $30,458 for each of the six months ended April&nbsp;30, 2004 and 2003.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Assets held under capital lease are as follows:</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>April 30, 2004</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif">October 31, 2003</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td width="14%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Machinery and equipment</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="10%" align="right"><font size="2" face="serif"> <b>426,404</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="10%" align="right"><font size="2" face="serif"> 426,404</font></td>
<td width="30%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Less:  accumulated depreciation</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(121,830</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(91,372</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>304,574</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 335,032</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="14%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Minimum annual future lease payments under the capital lease for each of the next two years and in the aggregate are:</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>April 30, 2004</b></font></td>
<td align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif">October 31, 2003</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
  <td></td>
  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td width="14%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Year ended October 31, </font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="30%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#ffffff">
  <td  align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">2004</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>70,625</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 141,249</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 9%; text-indent: -6%"><font size="2" face="serif">2005</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>94,165</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">94,165</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>

  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
  <td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Total minimum lease payments</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>164,790</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">235,414</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Less:  amount representing interest</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(6,554</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(12,968</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Present value of minimum lease payments</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>158,236</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">222,446</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Less:  current portion</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>(134,886</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(130,551</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Long-term portion</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>23,350</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 91,895</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-14</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="pf15"></a>
<p>&nbsp;</p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, 2003 AND 2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended April 30,
2004 and 2003 is unaudited)</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="14%"><font size="2" face="serif"><b>NOTE 8   -</b></font></td>
<td align="left">
<font size="2" face="serif"> <b>COMMITMENTS AND CONTINGENCIES (Continued):</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Obligation under capital leases (Continued):</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The interest rate on the capital lease is 8 1/3% per annum, which approximates the Company&#146;s incremental rate of borrowing at the time the lease was entered into.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Legal proceedings:</i></b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company is a party to various legal proceedings.  In the opinion of management, these actions are routine in nature and will not have a material adverse effect on the Company&#146;s financial statements in subsequent years.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif"><b>NOTE 9   -</b></font></td>
<td align="left">
<font size="2" face="serif"> <b>CONCENTRATIONS OF CREDIT RISK:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, amounts due from broker and trade accounts receivable.  The Company maintains its cash and cash equivalents in bank and brokerage accounts the balances of which, at times, may exceed Federal insurance limits.  At October 31, 2003 and April 30, 2004, the Company did not have cash balances that exceeded Federal insurance limits.  The net balance of the Company&#146;s investments in derivative financial instruments also represents an amount due from a broker. Exposure to credit risk is reduced by placing such deposits and investments with major financial institutions and monitoring their credit
ratings.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Approximately 16% of the Company&#146;s sales were derived from each of two customers in 2003.  Those customers also accounted for approximately $266,000 and $61,700 of the Company&#146;s account receivable balance as of October 31, 2003. Approximately 18% and 17% of the Company&#146;s sales were derived from two customers during 2002.
Those customers also accounted for approximately $132,000 and $141,000 of the Company&#146;s accounts receivable balance at October 31, 2002.  </font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Approximately 23% of the Company&#146;s sales were derived from one customer for the six month period ended April 30, 2004.  That customer also accounted for approximately $111,000 of the Company&#146;s accounts receivable balance at April 30, 2004.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Approximately 20% and 16% of the Company&#146;s sales were derived from two customers for the six month period ended April 30, 2003.  Those customers also accounted for approximately $438,000 and $157,000 respectively, of the Company&#146;s accounts receivable total at April 30, 2003.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Concentrations of credit risk with respect to other trade receivables are limited due to the short payment terms generally extended by the Company; by ongoing credit evaluations of customers; and by maintaining an allowance for doubtful accounts that management believes will adequately provide for credit losses.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Management does not believe that credit risk was significant for any of the periods presented herewith.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-15</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pf16"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, 2003 AND 2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended
April 30, 2004 and 2003 is unaudited)</b></font></p>

<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="14%"><font size="2" face="serif"><b>NOTE 10   -</b></font></td>
<td align="left">
<font size="2" face="serif"> <b>STOCK OPTION PLAN:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">On February 10, 1998, the Company&#146;s stockholders consented to the adoption of the Company&#146;s stock option plan (the &#147;Plan&#148;) whereby incentive and/or nonincentive stock options for the purchase of up to 2,000,000 shares of the Company&#146;s common stock may be granted to the Company&#146;s directors, officers, other key employees and consultants.  Under the Plan, the exercise price of all options must be at least 100% of the fair market value of the common stock on the date of grant (the exercise price of an incentive stock option for an optionee that holds more than 10% of the combined voting power of all classes of stock of the Company must be at least 110% of the fair market value on the date of grant).</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">No options have been granted under the Plan.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif"><b>NOTE 11   -</b></font></td>
<td align="left">
<font size="2" face="serif"> <b>MAJOR VENDORS/RELATED PARTY:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">For the six months ended April 30, 2004, purchases from two suppliers, were in excess of 10% of the Company&#146;s total purchases.  Purchases from these suppliers were approximately $3,723,000 and $1,081,000 and the corresponding accounts payable to these suppliers at April 30, 2004 were approximately $304,000 and $83,000, respectively.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">For the six months ended April 30, 2003, purchases from one supplier, was in excess of 10% of the Company&#146;s total purchases.  Purchases from this supplier were approximately $2,209,000 and the corresponding accounts payable to this supplier at April 30, 2003 was approximately $276,000.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">During fiscal 2003, substantially all of the Company&#146;s purchases were from ten vendors.  The ten vendors accounted for 84% of total product purchases.  Two of these vendors accounted for 31% and 11% of total purchases.  These vendors accounted for approximately $66,700 and $124,400 of the Company&#146;s accounts payable at October 31, 2003.</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">During fiscal 2002, substantially all of the Company&#146;s purchases were from ten vendors.  The ten vendors accounted for 89% of total product purchases.  One of these vendors accounted for 33% of total purchases and approximately $128,700 of the Company&#146;s accounts payable at October 31, 2002.  In addition, an employee of this vendor is a director of the Company.  Purchases from that vendor totaled approximately $4,110,900 and $3,415,200 in 2003 and 2002, respectively.  </font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Management believes that all transactions are made at arms length and does not believe that the loss of any one vendor would have a material adverse effect on the Company&#146;s operations due to the availability of alternate suppliers.</font></td>
</tr>
<tr>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif"><b>NOTE 12 -</b></font></td>
<td><font size="2" face="serif"><b>CONSULTING AGREEMENT:</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">On July 26, 2002, the Company entered into an agreement with two investment banking firms (collectively &#147;Managing Underwriters&#148;) for the Managing Underwriters to serve as the Company&#146;s exclusive financial advisors and Managing Underwriters for 12 months.  The main function of the Managing Underwriters was to facilitate a public offering of the Company&#146;s common stock.  The Company terminated this agreement on December 11, 2002.  No funds were raised under this agreement.</font></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-16</font></p>
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<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.<br>
</b></font><font size="2" face="serif"><b>NOTES TO FINANCIAL STATEMENTS<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, 2003 AND 2002<br>
</b></font><font size="2" face="serif"><b>(Information as of and for the periods ended April 30, 2004 and 2003 is unaudited)</b></font></p>

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  <tr valign="top">
    <td width="14%" align="left"><font size="2" face="serif"><b>NOTE 13 &#150;</b></font></td>
        <td align="left"><font size="2" face="serif"><b>PURCHASE OF
    ASSETS:</b></font></td>
  </tr>
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    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
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<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">On February 4, 2004, the Company entered into an agreement to purchase certain assets of an unrelated third party.  The Company purchased coffee roasting and blending equipment located in a facility in Colorado, labels for private coffee products produced at this facility and certain other assets. The purchase price for these assets was $825,000, based upon an independent appraisal. The Company has also reached an agreement with the city of La Junta, Colorado to lease the facility formerly operated by the seller.</font></td>
</tr>
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    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
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<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company also entered into a 10 year (renewable for an additional 10 years) licensing agreement with Del Monte Corp, for the exclusive right to use the &#147;S&amp;W&#148; and &#147;Il Classico&#148; trademarks in the United States in connection with the production, manufacture and sale of roasted whole bean and ground coffee for distribution at the retail distribution level. The Company will pay Del Monte Corp., 2% of net revenues generated by the sale of these products.</font></td>
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  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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<td><font size="2" face="serif"><b>NOTE 14 -</b></font></td>
<td align="left"><font size="2" face="serif"><b>SUBSEQUENT EVENTS:</b></font></td>
</tr>
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    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
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<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company has entered into an agreement with Maxim Group LLC for Maxim Group to serve as the Company&#146;s financial advisors and lead managing underwriters for a proposed public offering of the Company&#146;s common stock which would raise approximately $10 million. The Maxim Group will have the right to purchase for a period of forty-five days following the public offering up to an additional fifteen percent of the number of shares of common stock offered to the public by the Company, at the public offering price less the underwriting discount (ten percent) to cover over-allotments, if any.  The Company paid $25,000 to Maxim Group upon execution of the agreement and will pay an additional $25,000 to Maxim Group upon filing of a
registration statement for the proposed offering with the SEC.  If the public offering is successfully completed, the Company shall pay to the Maxim Group a non-accountable expense allowance equal to three percent of the gross proceeds derived from the public offering including any proceeds derived from the over-allotment.  The Company has also agreed to sell to the Maxim Group for an aggregate of $100, warrants to purchase up to ten percent of the shares being offered at 110% of the offering price.  The warrant shall be exercisable for a period of five years and contain provisions for cashless exercise, antidilution and piggyback registration rights.  To date no funds have been raised under this agreement.</font></td>
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<p align="center"><font face="serif" size="2">F-17</font></p>
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<p align="left"><font size="2" face="serif">You should rely only on the information contained in or incorporated by reference into this prospectus. We have not, and the underwriter has not, authorized any other person to provide you with any different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is correct only as of the date of this prospectus regardless of the time or the delivery of this prospectus or any sale of these securities.</font></p>
<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.</b></font></p>
<p align="center"><font size="2" face="serif"><b>1,600,000 shares </b></font></p>
<p align="center"><font size="2" face="serif"><b>Common Stock </b></font></p>
<p align="center"><font size="2" face="serif"><b>&#150;&#150;&#150;&#150;</b></font></p>
<p align="center"><font size="2" face="serif"><b>PROSPECTUS</b></font></p>
<p align="center"><font size="2" face="serif"><b>MAXIM GROUP LLC</b></font></p>
<p align="center"><font size="2" face="serif"><b>, 2004</b></font></p>
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<p align="center">&nbsp;</p>
<p align="center">&nbsp;</p>
<p>&nbsp;</p>
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<p align="center"><font size="2" face="serif"><b>PART II</b></font></p>
<p align="center"><font size="2" face="serif"><b>INFORMATION NOT REQUIRED IN PROSPECTUS</b></font></p>
<p align="left"><font size="2" face="serif"><b>Item 24.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Indemnification of Directors and Officers.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The Nevada Revised Statutes provides for the discretionary and mandatory indemnification of directors, officers, employees and agents under certain circumstances.</font></p>
<p align="left"><font size="2" face="serif">A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or was serving at request of the corporation as a director, officer, employee or agent of another entity, against expenses, including attorneys fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to
any criminal action, had no reasonable cause to believe his conduct was unlawful. This discretionary indemnification, unless ordered by a court, may be made by the corporation only if the indemnification is proper under the circumstances as determined by the stockholders, the board of directors consisting of members who were not parties to the proceeding, or by independent legal counsel.</font></p>
<p align="left"><font size="2" face="serif">A corporation may similarly indemnify a person described above who was or is a party or is threatened to be made a party to any threatened, pending or completed action brought by or in the right of the corporation to procure a judgment in our favor. However, indemnification may not be made for any claim, issue or matter as to which such person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of
the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.</font></p>
<p align="left"><font size="2" face="serif">To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or preceding referred to above, or in defense of any claim, issue or matter herein, the corporation shall indemnify him against expenses, including attorneys&#146; fees, actually and reasonably incurred by him in connection with the defense.</font></p>
<p align="left"><font size="2" face="serif">A corporation may pay or advance expenses in connection with the defense of a proceeding in advance of a final disposition of the action, upon receipt of an undertaking by or on behalf of the indemnitee to repay the amount if it is ultimately determined by a court that he is not entitled to be indemnified by the corporation.</font></p>
<p align="left"><font size="2" face="serif">Our current Articles of Incorporation provide that we will limit the liability of our officers and directors to the fullest extent permitted by Nevada law.</font></p>
<p align="left"><font size="2" face="serif">Our proposed Articles of Incorporation and Bylaws will provide that we will indemnify our officers and directors to the fullest extent permitted by Nevada law.  The proposed Articles of Incorporation will also empower us to purchase and maintain insurance to protect ourselves and our directors, officers, employees and agents and those who were or have agreed to become directors, officers, employees or agents, against any liability, regardless of  whether or not we would have the power to indemnify those persons against such liability under the law or the provisions set forth in the Articles of Incorporation; provided that such insurance is available on acceptable terms as determined by a vote of the Board of
Directors.  We are also authorized to enter into individual indemnification contracts with directors, officers, employees and agents which may provide indemnification rights and procedures different from those set forth in our Articles of Incorporation.  We expect to purchase directors&#146; and officers&#146; liability insurance consistent with the provisions of our Articles of Incorporation as soon as practicable.</font></p>
</div>
<p>&nbsp;</p>
<p align="center"><font size="2" face="serif">II-1</font></p>
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<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The Underwriting Agreement to be filed as Exhibit 1.1 will provide for indemnification by the underwriters of the Company, its directors and officers.</font></p>
<p align="left"><font size="2" face="serif">The proposed employment agreements with Andrew Gordon, President and Chief Executive Officer and a director, and David Gordon, Executive Vice President, Secretary and a director, provide that we shall cause the Executives to be covered by and named as an insured under any policy or contract of insurance obtained by it to insure its directors and officers against personal liability for acts or omissions in connection with service as an officer or director or service in other capacities at our request.  The coverage provided to the Executives are required to be of the same scope and on the same terms and conditions as the coverage (if any) provided to other officers or directors of the Company and shall continue for so
long as the Executives shall be subject to personal liability relating to such service to the extent permitted under the Nevada Revised Statutes.  The proposed employment agreements also provide that, to the maximum extent permitted under applicable law, we shall indemnify the Executives against and hold each harmless from any costs, liabilities, losses and exposures to the fullest extent and on the most favorable terms and conditions that similar indemnification is offered to any director or officer of us or any subsidiary or Affiliate of us and shall continue for so long as the Executives shall be subject to personal liability relating to such service to the extent permitted under the Nevada Revised Statutes.</font></p>
</div>
<p align="center"><font face="serif" size="2">II-2</font></p>
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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="left"><font size="2" face="serif"><b>Item 25.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Other Expenses of Issuance and Distribution</b>.</font></p>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">SEC Registration Fee (1)</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 1,534</font></td>
<td align="left" width="2%">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">National Association of Securities Dealers filing fee (1)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,710</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Amex Listing Fees</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;62,500</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Printing</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Legal fees and expenses</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;150,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Underwriters&#146; non-accountable expense allowance</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;264,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Accounting fees and expenses</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;50,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Blue Sky fees and expenses (including fees of counsel)</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Miscellaneous</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">5,249</font></td>
<td align="left">&nbsp;</td>
</tr>
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<td></td>
<td><hr noshade size="1"></td>
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<td></td>
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<td align="left"><font size="2" face="serif"><b>TOTAL</b></font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 580,000</font></td>
<td align="left">&nbsp;</td>
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<td></td>
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<p align="left"><font size="2" face="serif">_________________</font></p>
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<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Actual expenses based upon the registration and issuance of 1,840,000 shares of common stock to be sold in this offering at $6.00 per share and 160,000 underwriter&#146;s warrants and 160,000 shares of common stock issuable upon exercise of underwriter&#146;s warrants at an exercise price of $6.60 per share.  All other expenses are estimated.</font></td>
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<p align="left"><font size="2" face="serif"><b>Item 26.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Recent Sales of Unregistered Securities.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">None.</font></p>
</div>
<p align="center"><font face="serif" size="2">II-3</font></p>
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<p align="left"><font size="2" face="serif"><b>Item 27.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Exhibits and Financial Statement Schedules.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The exhibits and financial statement schedules filed as a part of this Registration Statement are as follows:</font></p>
</div>
<p align="left"><font size="2" face="serif"><b>(a)</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>List of Exhibits.</b>  (Filed herewith unless otherwise noted.)</font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#ffffff">
  <td align="center"><font size="2" face="serif"><b><u>Exhibit No.</u></b></font></td>
  <td align="left"><font size="2" face="serif"><b><u>Description</u></b></font></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="center" width="6%">&nbsp;</td>
  <td align="left">&nbsp;</td>
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<td width="10%" align="center"><font size="2" face="serif">1.1</font></td>
<td align="left"><font size="2" face="serif">Form of Underwriting Agreement.*</font></td>
<td width="2%" align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">2.1</font></td>
<td align="left"><font size="2" face="serif">Agreement and Plan of Merger by and Among Transpacific International Group Corp. and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 2 to Post-Effective Amendment No. 1 to the Registration Statement on Form SB-2 (file No. 333-00588-NY) as filed with the Commission on November 10, 1997).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="center"><font size="2" face="serif">2.2</font></td>
<td align="left"><font size="2" face="serif">Asset Purchase Agreement, dated February 4, 2004, by and between Coffee Holding Co., Inc. and Premier Roasters LLC (incorporated herein by reference to the Current Report on Form 8-K dated February 4, 2004 as filed with the SEC on February 20, 2004.)</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">3.1</font></td>
<td align="left"><font size="2" face="serif">Articles of Incorporation of Coffee Holding, as amended (incorporated herein by reference to Exhibit 3.1 to Coffee Holding's  Annual  Report on Form  10-KSB for the fiscal  year ended October 31, 2002).</font></td>
<td align="left">&nbsp;</td>
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<td align="center"><font size="2" face="serif">3.2</font></td>
<td align="left"><font size="2" face="serif">Certificate of Amendment of Articles of Incorporation of Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 3.2 to Coffee Holding&#146;s Quarterly Report on Form 10-Q for the quarter ended April 30, 1998).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">3.3</font></td>
<td align="left"><font size="2" face="serif">Coffee Holding&#146;s By-Laws, as amended (incorporated herein by reference to Exhibit 3.3 to Coffee Holding&#146;s Quarterly Report on Form 10-Q for the quarter ended April 30, 1998).</font></td>
<td align="left">&nbsp;</td>
</tr>
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<td align="center"><font size="2" face="serif">4.1</font></td>
<td align="left"><font size="2" face="serif">Form of Stock Certificate of Coffee Holding Co., Inc.</font></td>
<td align="left">&nbsp;</td>
</tr>
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<td align="center"><font size="2" face="serif">4.2</font></td>
<td align="left"><font size="2" face="serif">Form of Warrant Certificate.*</font></td>
<td align="left">&nbsp;</td>
</tr>
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<td align="center"><font size="2" face="serif">5.1</font></td>
<td align="left"><font size="2" face="serif">Opinion of Thacher Proffitt &amp; Wood LLP as to legality of securities being offered.</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">10.1</font></td>
<td align="left"><font size="2" face="serif">Lease with T&amp;O Management Corp.
    dated August 15, 1997 (incorporated herein by reference to Exhibit 10.1 to
    Coffee Holding&#146;s Quarterly Report on Form 10-Q for the quarter ended April
    30, 1998).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="center"><font size="2" face="serif">10.2</font></td>
<td align="left"><font size="2" face="serif">1998 Stock Option Plan (incorporated herein by reference to Exhibit 10.3 to Coffee Holding&#146;s Annual Report on Form 10-K for the fiscal year ended October 31, 2000).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">10.3</font></td>
<td align="left"><font size="2" face="serif">Loan and Security Agreement dated as of November 21, 1997 between Coffee Holding and NationsCredit Commercial Corporation (incorporated herein by reference to Exhibit 10.3 to Coffee Holding&#146;s Annual Report on Form 10-K for the fiscal year ended October 31, 2000).</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">II-4</font></p>
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<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#ffffff">
<td align="center" width="10%"><font size="2" face="serif">10.4</font></td>
<td align="left"><font size="2" face="serif">First Amendment to Loan and Security Agreement dated as of May 22, 1998 between Coffee Holding and NationsCredit Commercial Corporation (incorporated herein by reference to Exhibit 10.3 to Coffee Holding&#146;s Annual Report on Form 10-K for the fiscal year ended October 31, 2000).</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">10.5</font></td>
<td align="left"><font size="2" face="serif">Second Amendment dated as of November 29, 2000 to Loan and Security Agreement between Coffee Holding and Wells Fargo Business Credit, Inc., as assignee (incorporated herein by reference to Exhibit 10.3 to Coffee Holding&#146;s Annual Report on Form 10-K for the fiscal year ended October 31, 2000).</font></td>
<td align="left">&nbsp;</td>
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<tr valign="top" bgcolor="#ffffff">
<td align="center"><font size="2" face="serif">10.6</font></td>
<td align="left"><font size="2" face="serif">Term Note dated as of November 29, 2000 made by Coffee Holding in favor of Wells Fargo Business Credit, Inc., in the principal amount of $600,000 (incorporated herein by reference to Exhibit 10.3 to Coffee Holding&#146;s Annual Report on Form 10-K for the fiscal year ended October 31, 2000).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">10.7</font></td>
<td align="left"><font size="2" face="serif">Third Amendment dated as of October 1, 2002 to Loan and Security Agreement between Coffee Holding and Wells Fargo Business Credit, Inc., as assignee (incorporated herein by reference to Exhibit 10.7 to Coffee Holding&#146;s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002)</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="center"><font size="2" face="serif">10.8</font></td>
<td align="left"><font size="2" face="serif">Term Note dated as of October 1, 2002 made by Coffee Holding in favor of Wells Fargo Business Credit, Inc., in the principal amount of $750,000 (incorporated herein by reference to Exhibit 10.8 to Coffee Holding&#146;s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">10.9</font></td>
<td align="left"><font size="2" face="serif">Capital Lease Agreement with HSBC Business Credit (USA), Inc. (incorporated herein by reference to Exhibit 10.9 to Coffee Holding&#146;s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="center"><font size="2" face="serif">10.10</font></td>
<td align="left"><font size="2" face="serif">Sales contract with Supervalu and Cub Foods (incorporated herein by reference to Exhibit 10.10 to Coffee Holding&#146;s Annual Report on Form 10-KSB for the year ended October 31, 2002) (confidential portions have been redacted and filed separately with the Commission).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">10.11</font></td>
<td align="left"><font size="2" face="serif">Sales contract with Shurfine Central (incorporated herein by reference to Exhibit 10.11 to Coffee Holding&#146;s Annual Report on Form 10-KSB for the year ended October 31, 2002) (confidential portions have been redacted and filed separately with the Commission).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="center"><font size="2" face="serif">10.12</font></td>
<td align="left"><font size="2" face="serif">Lease dated February 4, 2004 by and between Coffee Holding Co., Inc. and the City of La Junta, Colorado (incorporated herein by reference to the Quarterly Report on Form 10-QSB for the three months ended January 31, 2004).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">10.13</font></td>
<td align="left"><font size="2" face="serif">Trademark License Agreement dated February 4, 2004 between Del Monte Corporation and Coffee Holding Co, Inc. (incorporated herein by reference to the Quarterly Report on Form 10-QSB for the periods ended April 30, 2004) (confidential portions have been redacted and filed separately with the Commission).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="center"><font size="2" face="serif">10.14</font></td>
<td align="left"><font size="2" face="serif">Proposed employment agreement by and among Coffee Holding Co., Inc. and Andrew Gordon.</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">II-5</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<p><a name="pii6"></a></p>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#FFFFFF">
<td align="center" width="10%"><font size="2" face="serif">10.15</font></td>
<td align="left"><font size="2" face="serif">Proposed employment agreement by and among Coffee Holding Co., Inc. and David Gordon.</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="center"><font size="2" face="serif">10.16</font></td>
<td align="left"><font size="2" face="serif">Form of Lock-up Agreement.</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">23.1</font></td>
<td align="left"><font size="2" face="serif">Consent of Lazar Levine &amp; Felix LLP.</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="center"><font size="2" face="serif">23.2</font></td>
<td align="left"><font size="2" face="serif">Consent of Thacher Proffitt &amp; Wood LLP (incorporated by reference to Exhibit 5.1).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="center"><font size="2" face="serif">24.1</font></td>
<td align="left"><font size="2" face="serif">Powers of Attorney (Included in Signature Page of the initial filing of this Registration Statement).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="center">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="center"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td colspan="2" align="left"><font size="2" face="serif">* To be filed by amendment.</font></td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<p align="left">&nbsp;</p>
<p align="left"><font size="2" face="serif">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Statement Schedules.</font></p>
<p align="left"><font size="2" face="serif"><b>Item 28.</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Undertakings.</b></font></p>
<div style="text-indent: 3%">
<p align="left"><font size="2" face="serif">The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.</font></p>
<p align="left"><font size="2" face="serif">For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective and each post-effective amendment that contains a form of prospectus will be treated as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time will be treated as the initial bona fide offering of those
securities.</font></p>
<p align="left"><font size="2" face="serif">The undersigned Registrant may elect to request acceleration of the effective date of the registration statement under Rule 461 under the Securities Act.</font></p>
<p align="left"><font size="2" face="serif">Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the &#147;Act&#148;) may be permitted to directors, officers and controlling persons of the undersigned Registrant pursuant to the foregoing provisions, or otherwise, the undersigned Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.</font></p>
<p align="left"><font size="2" face="serif">In the event that a claim for indemnification against such liabilities (other than the payment by the undersigned Registrant  of expenses incurred or paid by a director, officer or controlling person of the undersigned Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the undersigned Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.</font></p>
</div>
<p align="center"><font face="serif" size="2">II-6</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pii7"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="center"><font size="2" face="serif"><b>SIGNATURES</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on June June 21, 2004.</font></p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.</b></font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td valign="bottom">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
</tr>
<tr valign="top">
<td width="50%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%" valign="bottom"><font size="2" face="serif">By:</font></td>
<td align="left" valign="bottom">
<font size="2" face="serif"> /s/ Andrew Gordon</font></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left"><hr align="left" width="250" size="1" noshade></td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Andrew Gordon, President and </font></td>
</tr>
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Chief Executive Officer</font></td>
</tr>
</table>
<p align="center"><font size="2" face="serif">POWER OF ATTORNEY</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Andrew Gordon, as their true and lawful attorney-in-fact in any and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities to sign the Form SB-2 Registration Statement and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or either one of his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates indicated.</font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top"> <td align="center"><b><font size="1" face="serif"><u>Name</u></font></b></td>
<td align="center"><b><font size="1" face="serif"><u>Title</u></font></b></td>
<td align="center"><b><font size="1" face="serif"><u>Date</u></font></b></td> </tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="center">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left" width="39%"><font size="2" face="serif">/s/ Andrew Gordon</font><br>
<hr align="left" width="250" size="1" noshade>
<font size="2" face="serif">Andrew Gordon</font></td>
<td align="left" width="35%"><font size="2" face="serif">Chief Executive Officer, President, Treasurer and Director (principal executive officer and principal financial and accounting officer)</font></td>
<td align="center"><font size="2" face="serif">June 21, 2004</font></td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="center">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">/s/ David Gordon</font><br>
<hr align="left" width="250" size="1" noshade>
<font size="2" face="serif">David Gordon</font></td>
<td align="left"><font size="2" face="serif">Executive Vice President &#151; Operations, Secretary and Director</font></td>
<td align="center"><font size="2" face="serif">June 21, 2004</font></td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="center">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">/s/ Gerard DeCapua</font><br>
<hr align="left" width="250" size="1" noshade>
<font size="2" face="serif">Gerard DeCapua</font></td>
<td align="left"><font size="2" face="serif">Director</font></td>
<td align="center"><font size="2" face="serif">June 21, 2004</font></td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="center">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">/s/</font> <font size="2" face="serif">Daniel
    Dwyer</font><br>
<hr align="left" width="250" size="1" noshade>
<font size="2" face="serif">Daniel Dwyer</font></td>
<td align="left"><font size="2" face="serif">Director</font></td>
<td align="center"><font size="2" face="serif">June 21, 2004</font></td>
</tr>
</table>
<p align="center">&nbsp;</p>
<hr noshade align="center" width="100%" size="2">
</body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>2
<FILENAME>b332774_ex4-1.txt
<DESCRIPTION>EX-4.1
<TEXT>
<PAGE>

                                                                     Exhibit 4.1


                            COFFEE HOLDING CO., INC.
                                  COMMON STOCK
               INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
                          Authorized Shares 20,000,000

                                                           CUSIP 192176 10 5 COM




THIS CERTIFIES THAT







is the registered owner of



                     FULLY PAID AND NONASSESSABLE SHARES OF
                   COMMON STOCK, $.001 PAR VALUE PER SHARE, OF

                            COFFEE HOLDING CO., INC.

         Transferable on the books of the Corporation in person or by attorney
upon surrender of this Certificate duly endorsed or assigned. This Certificate
and the shares represented hereby are subject to the laws of the State of
Nevada, and to the Certificate of Incorporation and Bylaws of the Corporation,
as now or hereafter amended. This Certificate is not valid until countersigned
by the Transfer Agent.

         IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by the facsimile signature of its duly authorized officers and has
caused a facsimile of its corporate seal to be hereunto affixed.


Dated:

By: /s/  David Gordon                  By: /s/  Andrew Gordon
    ----------------------------           -------------------------------------
    Corporate Secretary                    Andrew Gordon
                                           President and Chief Executive Officer


                                       OTR, Inc.
                                       Registrar and Transfer Agent


<PAGE>



                            COFFEE HOLDING CO., INC.

         The following abbreviations when used in the inscription on the face of
this Certificate shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S>                                                               <C>
TEN COM    -   as tenants in common                               UNIF TRANSFERS TO MIN ACT . . . Custodian
TEN ENT    -   as tenants by the entireties                       .  . . . . . . . . . . . . . . . . . . . .
JT TEN     -   as joint tenants with right of survivorship        (Cust)                    (Minor)
                and not as tenants in common                      .  . . . . . . . . . . . . . . . .
                                                                  (State)
</TABLE>

     Additional abbreviations may also be used though not in the above list

         For value received,
                             ---------------------------------------------------
hereby sell(s), assign(s) and transfer(s) unto
                                               ---------------------------------

- --------------------------------------------------------------------------------
shares of Common Stock evidenced by this Certificate, and do(es) hereby
irrevocably constitute(s) and appoint(s)
                                         ---------------------------------------
as Attorney, to transfer the said shares on the books of the herein named
Corporation, with full power of substitution.

Date: _________
                           Signature
                                      ------------------------------------------

                           Signature
                                      ------------------------------------------

                           NOTICE: The signature to this assignment must
                                   correspond with the name as written upon the
                                   face of the Certificate, in every particular,
                                   without alteration or enlargement, or any
                                   change whatsoever.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>3
<FILENAME>b332774_ex5-1.txt
<DESCRIPTION>EX-5.1
<TEXT>
<PAGE>

                                                                    Exhibit 5.1



                                                                  June 23, 2004



Coffee Holding Co., Inc.
4401 First Avenue
Brooklyn, New York 11232-0005

                  Re:      Coffee Holding Co., Inc.

Ladies and Gentlemen:

         We have acted as special counsel to Coffee Holding Co., Inc., a Nevada
corporation in organization (the "Company"), in connection with the proposed
registration under the Securities Act of 1933, as amended, by the Company of an
aggregate of 1,600,000 shares of common stock, $0.01 par value per share, of the
Company (the "Shares"), and the related preparation and filing by the Company
with the Securities and Exchange Commission of a Registration Statement on Form
SB-2 (the "Registration Statement"). In rendering the opinion set forth below,
we do not express any opinion concerning law other than the laws of the State of
Nevada and the federal law of the United States.

         We have examined originals or copies, certified or otherwise
identified, of such documents, corporate records and other instruments, and have
examined such matters of law, as we have deemed necessary or advisable for
purposes of rendering the opinion set forth below. As to matters of fact, we
have examined and relied upon the representations of the Company contained in
the Registration Statement and, where we have deemed appropriate,
representations or certificates of officers of the Company or public officials.
We have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents submitted to us as copies. In
making our examination of any documents, we have assumed that all parties, other
than the Company, had the corporate power and authority to enter into and
perform all obligations thereunder, and, as to such parties, we have also
assumed the due authorization by all requisite action, the due execution and
delivery of such documents, and the validity and binding effect and
enforceability thereof.


<PAGE>

                                                                         Page 2



         Based on the foregoing, we are of the opinion that the Shares have been
duly authorized and, when issued and sold as contemplated in the Registration
Statement, will be validly issued and outstanding, fully paid and
non-assessable.

         In rendering the opinion set forth above, we have not passed upon and
do not purport to pass upon the application of securities or "blue-sky" laws of
any jurisdiction (except federal securities laws).

         We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to our name in the Prospectus
contained in the Registration Statement under the heading "Legal Matters."


                                     Very truly yours,

                                     THACHER PROFFITT & WOOD LLP






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>4
<FILENAME>b332774_ex10-14.txt
<DESCRIPTION>EX-10.14
<TEXT>
<PAGE>

                                                                   Exhibit 10.14


                              EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement") is made and entered into this
__________ day of _______________, 2004 (the "Effective Date") by and between
ANDREW GORDON (the "Executive") and COFFEE HOLDING CO., INC., a Nevada
corporation (the "Company").

                                   BACKGROUND

         WHEREAS the Executive has and is expected to continue to make a major
contribution to the growth, profitability and financial strength of the Company;
and

         WHEREAS the Company desires to retain the services of the Executive,
and the Executive desires to be retained by the Company, on the terms and
conditions set forth below.

         NOW, THEREFORE, intending to be legally bound, and in consideration of
the premises and the mutual promises set forth in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1 Definitions. The following terms, when used in this
Agreement, shall have the following meanings, unless the context clearly
requires otherwise (such definitions to be equally applicable to both the
singular and plural of the defined terms):

                  (a) "Affiliate" means, (a) with respect to the Executive, any
         other Person directly or indirectly Controlling, Controlled by, or
         under common Control with the Executive and (b) with respect to the
         Company, (i) any Person which directly or indirectly beneficially owns
         (within the meaning of Rule 13d-3 promulgated under the Securities
         Exchange Act of 1934, as amended) securities or other equity interests
         possessing more than 50% of the aggregate voting power in the election
         of directors (or similar governing body) represented by all outstanding
         securities of the Company or (ii) any Person with respect to which the
         Company beneficially owns (within the meaning of Rule 13d promulgated
         under the Securities Exchange Act of 1934, as amended) securities or
         other equity interests possessing more than 50% of the aggregate voting
         power in the election of directors (or similar governing body)
         represented by, or more than 50% of the aggregate value of, all
         outstanding securities or other equity interests of such Person.

                  (b) "Base Salary" shall have the meaning set forth in section
         3.1.

                  (c) "Board" means the Board of Directors of the Company.

                  (d) "Cause" means an omission, act or action or series of
         omissions, acts or actions of the Executive which, in the determination
         of the Board, cause(s), constitute(s) or result(s) in:


                                       1
<PAGE>

                           (i) the Executive's material dishonesty including,
                  without limitation, theft, fraud, embezzlement, financial
                  misrepresentation or other similar behavior or action in his
                  dealings with or with respect to the Company or any Affiliate
                  thereof or entity with which the Company or any Affiliate
                  thereof, shall be engaged in or be attempting to engage in
                  commerce;

                           (ii) the conviction of the Executive for, or the
                  Executive's entry of a plea of guilty or nolo contendere to,
                  the commission of a felony;

                           (iii) the willful refusal of the Executive to follow
                  the lawful directives of the Board with respect to his duties
                  hereunder, which directives shall be consistent with his
                  duties and position as President of the Company, as set forth
                  in this Agreement, and which refusal is not cured by the
                  Executive within thirty (30) calendar days after written
                  notice from the Board of the Company to the Executive setting
                  forth with reasonable specificity the nature thereof; or

                           (iv) the material breach of any material provision of
                  this Agreement which is not cured by the Executive within
                  thirty (30) calendar days after written notice from the Board
                  to the Executive setting forth with reasonable specificity the
                  nature of such breach, unless the breach is of such nature
                  that it cannot be cured within such thirty (30) day period, in
                  which case such period will be extended by a reasonable amount
                  of time if, and only if (a) such breach is curable and (b)
                  during such thirty (30) day period the Executive commences
                  good faith efforts which can reasonably be expected to cure
                  such breach as promptly as is reasonably practicable.

                  (e) "Change in Control" shall mean any one of the following:

                           (i) the acquisition by any person or entity,
                  excluding, for this purpose, the Company, Sterling Gordon,
                  Rachelle Gordon and David Gordon, and any parent,
                  parent-in-law, spouse, child, sibling, brother-in-law,
                  sister-in-law, daughter-in-law and/or son-in-law of any of
                  them (each a "Group Member") and any employee benefit plan of
                  the Company, of Beneficial Ownership of 50% or more of the
                  combined voting power of the then outstanding securities
                  entitled to vote generally in the election of directors
                  ("Voting Securities"), of the Company; and

                           (ii) the approval by the stockholder or stockholders
                  of any of the Company of (a) a reorganization, merger,
                  consolidation or other business combination (other than any
                  reorganization, merger, consolidation or other business
                  combination with an Affiliate of the entity to be reorganized,
                  merged, consolidated or otherwise combined) of the Company
                  with respect to which the stockholder or stockholders of such
                  entity immediately prior to consummation of such
                  reorganization, merger, consolidation or other business
                  combination do not, immediately thereafter, own more than 50%
                  of the combined voting power of the outstanding Voting
                  Securities of the surviving corporation, or (b) the sale, to a
                  person or entity other than a Group Member, of all or
                  substantially all of the assets of the Company.


                                       2

<PAGE>

                  For purposes of this section 1.1(e):

                           "Affiliate" means a person or entity that directly,
                  or indirectly through one or more intermediaries, controls or
                  is controlled by, or is under common control with, the person
                  or entity specified.

                           "Beneficial Ownership" shall be determined within the
                  meaning of Rule 13d-3 promulgated under the Exchange Act.

                           "Person" shall include persons as that term is
                  understood under Sections 13(d)(3) and 14(d)(2) of the
                  Exchange Act.

                           "Voting Securities" shall be deemed to include all
                  outstanding securities of a corporation that are then
                  exchangeable or convertible into securities of that
                  corporation entitled to vote generally in the election of
                  directors, as if same shall have been exchanged or converted
                  into such voting securities.

                  (f) "Confidential Information" means:

                           (i) proprietary information, trade secrets and
                  know-how of the Company and its Affiliates;

                           (ii) confidential information relating to the
                  business, operations, systems, networks, services, data bases,
                  customer lists, pricing policies, business plans, marketing
                  plans, product development plans, strategies, inventions and
                  research of the Company or its Affiliates; and

                           (iii) confidential information relating to the
                  financial affairs and results of operations and forecasts or
                  projections of the Company or its Affiliates;

         provided that information shall not constitute Confidential Information
         if such information: (i) is generally known by Persons other than the
         Company or its Affiliates or Persons employed by, in control of or
         otherwise affiliated with the Company or its Affiliates, (ii) is known
         by Persons other than the Company or its Affiliates or Persons employed
         by, in control of or otherwise affiliated with the Company or its
         Affiliates by reason of the action of such Person or Persons other than
         the Executive or any Person acting at the Executive's direction or with
         the Executive's consent, (iii) was known by the Executive, by lawful
         means, prior to the date of the Executive's employment with the Company
         or (iv) is compelled to be disclosed by law, regulation or legal
         process.

                  (g) "Control" (including the terms "Controlled by" and "under
         common Control with") means the possession, directly or indirectly or
         as a trustee or executor, of the power to direct or cause the direction
         of the management of a Person, whether through the ownership of stock,
         as a trustee or executor, by contract or credit agreement or otherwise.

                  (h) "Disability" means any physical or mental condition which
         renders Executive incapable of performing his essential functions and
         duties hereunder as determined in good faith by the Board.


                                       3
<PAGE>

                  (i) "Effective Date" shall have the meaning set forth in the
         preamble.

                  (j) "Employment Term" shall have the meaning set forth in
         section 2.2.

                  (k) "Good Reason" means:

                           (i) the assignment to Executive, without Executive's
                  expressed written approval, of duties or responsibilities
                  materially inconsistent with the Executive's position of
                  President of the Company, or any material reduction in
                  Executive's duties, responsibilities or authority from those
                  in effect on the date hereof;

                           (ii) the Company's failure to continue in effect any
                  material benefit plan, program or policy in which Executive is
                  participating (other than any plan, program or policy which is
                  available to the salaried employees of the Company generally),
                  or the taking of any action by the Company that would
                  adversely affect Executive's participation in or materially
                  reduce Executive's benefits under any such benefit plan,
                  program or policy or that would deprive Executive of any
                  material fringe benefit enjoyed by Executive; provided,
                  however, that no Good Reason shall occur if the aggregate
                  value of the benefit plans, programs and policies in which the
                  Executive is participating remains substantially equivalent;

                           (iii) a relocation of the Executive's primary place
                  of employment to any location that is both (a) greater than 50
                  miles away from the location at which Executive is currently
                  working, and (b) greater than 50 miles away from the
                  Executor's primary residence, except for required travel by
                  Executive on the Company's business to an extent substantially
                  consistent with Executive's past business travel obligations;

                           (iv) any material breach of any material provision of
                  this Agreement by the Company; or

                           (v) the date three months after the occurrence of a
                  Change in Control;

         which, in any case described in Sections 1.1(k)(i), (ii), (iii) or
         (iv), is not cured by the Company within thirty (30) calendar days
         after written notice from the Executive to the Board setting forth with
         reasonable specificity the nature of such breach or event, unless the
         breach or event is of such nature that it cannot be cured within such
         thirty (30) day period, in which case such period will be extended by a
         reasonable amount of time if, and only if (a) such breach is curable
         and (b) during such thirty (30) day period the Company commences good
         faith efforts which can reasonably be expected to cure such breach as
         promptly as is reasonably practicable. For purposes of this Agreement,
         any action or inaction described in Sections 1.1(k)(i), (ii), (iii) or
         (iv) shall constitute Good Reason only if written notice thereof as
         contemplated by the preceding sentence is given within 180 days after
         the date on which such action or inaction first occurs (or, if later,
         the earliest date on which the Executive knows or reasonably should
         know of such action or inaction).


                                       4
<PAGE>

                  (l) "Initial Term" means the first period that this Agreement
         is in effect, as set forth in section 2.2.

                  (m) "Person" means an individual, corporation, partnership,
         association, limited liability company or partnership, trust,
         government, governmental agency or body, or any other group or entity,
         no matter how organized and whether or not for profit.

                  (n) "Renewal Term" shall have the meaning set forth in Section
         2.2.

                                   ARTICLE II

                              EMPLOYMENT AND TERM

         Section 2.1 Employment. The Company employs Executive and the Executive
hereby agrees to such employment by the Company during the Employment Term to
serve as Chief Executive Officer and President of the Company, with the
customary duties, authorities and responsibilities associated with such position
and such other duties, authorities and responsibilities relative to the Company
or its Affiliates that: (a) have been agreed upon by the Company and Executive
or (b) may from time to time be delegated to Executive by the Board.

         Section 2.2 Employment Term.

                  (a) Initial Term. The "Initial Term" of this Agreement shall
         commence on the Effective Date, and unless sooner terminated as
         provided in Article IV, shall continue until the fifth anniversary of
         such date.

                  (b) Renewal Term. On the day after the Effective Date and on
         each day thereafter, the Employment Agreement shall be extended by one
         day, such that on any date the Employment Term will expire on the day
         before the fifth (5th) anniversary of such date. These extensions shall
         continue in perpetuity until discontinued by: (i) notice to the
         Executive given by the Company that they have elected to discontinue
         the extensions; (ii) notice by the Executive to the Company that he has
         elected to discontinue the extensions; or (iii) termination of the
         Executive's employment with the Company, whether by resignation,
         discharge or otherwise. On the date on which such a notice is deemed
         given, or on the effective date of a termination of the Executive's
         employment with the Company, the Employment Period shall be converted
         to a fixed period of five (5) years ending on the day before the fifth
         (5th) anniversary of such date. For all purposes of this Agreement, the
         term "Renewal Term" shall mean the period covered by any such
         extension.

                  (c) Employment Term. For all purposes of this Agreement, the
         term "Employment Term" shall mean the Initial Term and all Renewal
         Terms. Except as otherwise expressly provided in this Agreement, any
         reference in this Agreement to the term "Remaining Unexpired Employment
         Term" as of any date shall mean the period beginning on such date and
         ending on the last day of the Employment Term.

                  (d) Full Working Time. During the Employment Term, the
         Executive shall devote his ability and attention, all of his skill and
         experience and efforts during normal business hours and at such other
         times as the performance of his duties hereunder may reasonably require
         to the proper performance of his duties hereunder and to the business
         and affairs of the Company. During the Employment Term, the Executive,
         without the prior written approval of the Board, shall not, either
         directly or indirectly, actively participate in any other business or
         accept any employment or business office whatsoever, including, without
         limitation, serving as a director, from any other Person; provided,
         however, that the foregoing shall not preclude the Executive, subject
         to Article V, from:


                                       5
<PAGE>

                           (i) serving as a director of or actually
                  participating in any non-profit or charitable organization or

                           (ii) making an investment in any other business, so
                  long as the Executive does not actively participate in another
                  business referred to in Section 2.3 and such activity, whether
                  described in Section 2.3(i) or 2.3(ii), does not materially
                  interfere with the Executive's ability to perform his duties
                  hereunder and does not constitute a conflict of interest with
                  the Company in the reasonable opinion of the Board.

                                   ARTICLE III

                           COMPENSATION AND BENEFITS

         Section 3.1 Base Salary. During the Employment Term, as compensation
for services hereunder and in consideration for the protective covenants set
forth in Article V of this Agreement, Executive shall be paid an annual base
salary of Three Hundred Twenty-Five Thousand Dollars ($325,000) or such greater
amount as may from time to time be approved by the Compensation Committee of the
Board (the "Base Salary"). Base Salary shall be paid to Executive in accordance
with the Company's normal payroll practices.

         Section 3.2 Bonus. During the Employment Term, Executive shall be
eligible to receive an annual bonus that will be determined in accordance with
the bonus program established by the Board from time to time.

         Section 3.3 Benefits. To the maximum extent that he is eligible under
the terms of the applicable plan or program, the Executive shall participate in
any and all plans or programs maintained by the Company for its employees and/or
senior executives generally that provide insurance, medical benefits, retirement
benefits, or similar fringe benefits. In addition, the Executive shall be
entitled to four weeks of paid vacation each calendar year of the Employment
Term, which must be taken in accordance with the Company's vacation policy then
in effect.

         Section 3.4 Indemnification and Insurance.

                  (a) D&O Insurance. The Company shall cause the Executive to be
         covered by and named as an insured under any policy or contract of
         insurance obtained by it to insure its directors and officers against
         personal liability for acts or omissions in connection with service as
         an officer or director of the Company or service in other capacities at
         its request. The coverage provided to the Executive pursuant to this
         section shall be of the same scope and on the same terms and conditions
         as the coverage (if any) provided to other officers or directors of the
         Company and shall continue for so long as the Executive shall be
         subject to personal liability relating to such service to the extent
         permitted under the Nevada General Corporation Law.


                                       6
<PAGE>

                  (b) Indemnification. To the maximum extent permitted under
         applicable law, the Company shall indemnify the Executive against and
         hold him harmless from any costs, liabilities, losses and exposures to
         the fullest extent and on the most favorable terms and conditions that
         similar indemnification is offered to any director or officer of the
         Company or any subsidiary or Affiliate thereof and shall continue for
         so long as the Executive shall be subject to personal liability
         relating to such service to the extent permitted under the Nevada
         General Corporation Law.

         Section 3.5 Expenses. The Company shall pay or reimburse the Executive
for reasonable business expenses actually incurred or paid by the Executive
during the Employment Term, in the performance of his services hereunder;
provided, however, that such expenses are consistent with the Company policy.
Such payment or reimbursement is expressly conditioned upon presentation of
expense statements or vouchers or other supporting documentation by the
Executive in a manner that is acceptable to the Company and otherwise in
accordance with the Company policy then in effect.

         Section 3.6 Deductions. The Company shall deduct from all compensation
or benefits payable pursuant to this Agreement such payroll, withholding and
other taxes as may in the reasonable opinion of the Company be required by law
and any such additional amounts requested in writing by the Executive.

                                   ARTICLE IV


                                  TERMINATION

         Section 4.1 General. The Company shall have the right to terminate the
employment of the Executive at any time with or without Cause, and the Executive
shall have the right to resign at any time with or without Good Reason, but the
relative rights and obligations of the parties in the event of any such
termination or resignation shall be determined under this Agreement.

         Section 4.2 Termination Under Certain Circumstances.

                  (a) Termination Without Severance Benefits. In the event the
         Executive's employment with the Company is terminated prior to the
         expiration of the Employment Term by reason of (i) the Executive's
         resignation without Good Reason, (ii) the Executive's death or (iii)
         the Executive's discharge by the Company for Cause, this Agreement
         shall terminate including, without limitation, the Company's
         obligations to provide any compensation, benefits or severance to the
         Executive under Article IV of this Agreement or otherwise, other than
         the Standard Termination Entitlements (as defined in section 4.4).

                  (b) Disability. The Company may terminate the Executive's
         employment upon the Executive's Disability. In such event, in addition
         to the Standard Termination Entitlements (as defined in section 4.4),
         the Company shall continue to pay the Executive his Base Salary in
         accordance with the Company's normal payroll practices, at the annual
         rate in effect for him immediately prior to the termination of his
         employment, during a period ending on the earliest of: (i) the date on
         which long-term disability insurance benefits are first payable to him
         under any long-term disability insurance plan covering employees of the
         Company and providing an annual benefit for the Executive at least
         equal to 60% of Base Salary; and (ii) the date of his death; and (iii)
         the expiration of the Remaining Unexpired Employment Term. A
         termination of employment due to Disability under this section 4.2(b)
         shall be effected by notice of termination given to the Executive by
         the Company and shall take effect on the later of the effective date of
         termination specified in such notice or the date on which the notice of
         termination is deemed given to the Executive.


                                       7
<PAGE>

                  (c) Termination with Severance Benefits. In the event that the
         Executive's employment with the Company is terminated by the Executive
         prior to the expiration of the Employment Term for Good Reason or by
         the Company prior to the expiration of the Employment Term other than
         for Cause or Disability, the Company shall pay the Standard Termination
         Entitlements (as defined in section 4.4) and the Severance Benefits (as
         defined in section 4.5); provided, however, that any payment required
         by this section 4.2(c) is expressly conditioned upon:

                           (i) The Executive's compliance in all material
                  respects with the material terms of this Agreement, including,
                  without limitation, the applicable provisions of Article V;
                  and

                           (ii) The Executive's resignation from any and all
                  positions which he holds as an officer, director or committee
                  member with respect to the Company or any Affiliate thereof.

         Section 4.3 Liquidated Damages. The Company and Executive hereby
stipulate that the damages which may be incurred by the Executive as a
consequence of any such termination of employment are not capable of accurate
measurement as of the date first above written and that the liquidated damages
payments provided for in this Agreement constitute a reasonable estimate under
the circumstances of, and are in full satisfaction of, all damages sustained as
a consequence of any such termination of employment.

         Section 4.4 Standard Termination Entitlements. For all purposes of this
Agreement, the Executive's "Standard Termination Entitlements" shall mean and
include:

                  (a) the Executive's earned but unpaid compensation (including,
         without limitation, salary, bonus, and all other items which constitute
         wages under applicable law) as of the date of his termination of
         employment. This payment shall be made at the time and in the manner
         prescribed by law applicable to the payment of wages but in no event
         later than 30 days after the date of the Executive's termination of
         employment.

                  (b) the benefits, if any, due to the Executive (and the
         Executive's estate, surviving dependents or his designated
         beneficiaries) under the employee benefit plans and programs and
         compensation plans and programs (including stock option plans)
         maintained for the benefit of the officers and employees of the
         Company). The time and manner of payment or other delivery of these
         benefits and the recipients of such benefits shall be determined
         according to the terms and conditions of the applicable plans and
         programs.


                                       8
<PAGE>

         Section 4.5 Severance Benefits. For all purposes of this Agreement, the
Executive's "Severance Benefits" shall mean and include:

                  (a) During the Remaining Unexpired Employment Term, the
         Company shall provide for the Executive and his dependents continued
         group life, health (including hospitalization, medical and major
         medical), dental, accident and long-term disability insurance benefits
         on substantially the same terms and conditions (including any required
         premium-sharing arrangements, co-payments and deductibles) in effect
         for them immediately prior to the Executive's termination. The coverage
         provided under this section may, at the election of the Company, be
         secondary to the coverage provided as part of the Standard Termination
         Entitlements and to any employer-paid coverage provided by a subsequent
         employer or through Medicare, with the result that benefits under the
         other coverages will offset the coverage required by this section.

                  (b) The Company shall make a lump sum payment to the Executive
         (or, in the event of his death before payment, to his estate), in an
         amount (without discount for early payment) equal to the value of the
         salary that Executive would have earned if he had continued working for
         the Company during the Remaining Unexpired Employment Period at the
         highest annual rate of salary achieved during that portion of the
         Employment Period which is prior to Executive's termination of
         employment with the Company. Such lump sum shall be paid in lieu of all
         other payments of salary provided for under this Agreement in respect
         of the period following any such termination within thirty (30) days
         following the Executive's termination of employment.

                  (c) The Company shall make a lump sum payment to the Executive
         (or, in the event of his death before payment, to his estate), in an
         amount equal to the payments that would have been made to Executive
         under any cash bonus or long-term or short-term cash incentive
         compensation plan maintained by, or covering employees of, the Company
         if he had continued working for the Company during the Remaining
         Unexpired Employment Period and had earned the maximum bonus or
         incentive award in each calendar year that ends during the Remaining
         Unexpired Employment Period, such payments to be equal to the product
         of:

                           (i) the maximum percentage rate at which an award was
                  ever available to Executive under such incentive compensation
                  plan; multiplied by

                           (ii) the salary that would have been paid to
                  Executive during each such calendar year at the highest annual
                  rate of salary achieved during that portion of the Employment
                  Period which is prior to Executive's termination of employment
                  with the Company.

         Such payment shall be made (without discount for early payment) within
         thirty (30) days following the Executive's termination of employment.


                                       9
<PAGE>

                                   ARTICLE V


                              RESTRICTIVE COVENANTS

         Section 5.1 Proprietary Information. In the event that the Executive
leaves the employ of the Company due to the Company's discharge of the Executive
for Cause or the Executive's voluntary resignation from his employment hereunder
without Good Reason, the Executive shall deliver to the Company (and shall not
keep in his possession, recreate or deliver to anyone other than the Company or
its designee) any and all devices, records, data, notes, reports, proposals,
lists, correspondence, specifications, drawings, blueprints, sketches,
materials, equipment, other documents or property, together with all copies
thereof (in whatever medium recorded) belonging to the Company or any Affiliate
thereof or any of their respective successors or assigns.

         Section 5.2 Non-Competition. During his employment with the Company and
continuing for one year thereafter (but only if the Executive's employment
hereunder is terminated due to the Company's discharge of the Executive for
Cause, or the Executive's voluntary resignation from his employment hereunder
without Good Reason), the Executive agrees, and shall cause each Person
Controlled by him to agree, that any such Person shall not, directly or
indirectly, through any Person Controlled by the Executive, in any form or
manner in the State of New York: (a) engage in any activities competitive with
the business of the Company and its Affiliates for his or their own account or
for the account of any other Person, or (b) become interested in any Person
engaged in activities competitive with the business of the Company and its
Affiliates as a partner, shareholder, member, principal, agent, employee,
trustee, consultant or in any other relationship or capacity; provided, however,
that Executive may own, directly or indirectly, solely as a passive investment,
securities of any Person if the Executive (x) is not a Person in Control of, or
a member of a group that Controls, such Person and (y) does not, directly or
indirectly, own 5% or more of any voting class of securities of such Person. For
purposes of this section 5.2, the business of the Company and Affiliates shall
mean the roasting, blending, packaging and distribution of coffee for sale.

         Section 5.3 Non-Solicitation. During his employment with the Company
and for a period of one year thereafter (but only if the Executive's employment
hereunder is terminated due to the Company's discharge of the Executive for
Cause, or the Executive's voluntary resignation from his employment hereunder
without Good Reason), the Executive will not, directly or indirectly, use
proprietary knowledge or information relating to the Company or its Affiliates
obtained during the course of Executive's employment with the Company with the
intention to, or which a reasonable person would construe to (a) interfere with
or disrupt any present or prospective relationship, contractual or otherwise,
between the Company or its Affiliates and any customer, supplier, employee,
consultant or other person having business dealings with the Company or its
Affiliates, or (b) employ or solicit the employment or engagement by others of
any employee or consultant of the Company or its Affiliates who was such an
employee or consultant at the time of termination of the Executive's employment
hereunder or within one year prior thereto.


                                       10
<PAGE>

         Section 5.4 Non-Disclosure. Except with the prior written consent of
the Company in each instance or as may be reasonably necessary to perform the
Executive's services hereunder, the Executive shall not disclose, use, publish,
or in any other manner reveal, directly or indirectly, at any time during or
after his employment with the Company, any Confidential Information relating to
the Company or any Affiliate thereof acquired by him prior to, during the course
of, or incident to, his employment hereunder. In the event Executive is required
(by oral questions, interrogatories, requests for information or documents in
legal proceedings, subpoenas, civil investigative demand or similar process) to
disclose any such Confidential Information, the Executive shall provide the
Company with prompt written notice of such requirement so that the Company may
seek a protective order or other appropriate remedy and/or waive compliance with
the provisions of this Section. If, in the absence of such a protective order or
other remedy or receipt of a waiver by the Company, the Executive is nonetheless
advised by his legal counsel that he is legally compelled to disclose such
Confidential Information, the Executive may, without liability hereunder,
disclose only that portion of such Confidential Information which such counsel
advises in writing is legally required to be disclosed.

         Section 5.5 Reasonable Limitations. Executive acknowledges that given
the nature of the Company's business the covenants contained in this Article V
contain reasonable limitations as to time, geographical area and scope of
activity to be restrained, and do not impose a greater restraint than is
necessary to protect and preserve the Company's business and to protect the
Company's legitimate business interests. If, however, this Article V is
determined by any court of competent jurisdiction or any arbitrator to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographic area or by reason of its being too extensive in any other
respect, or for any other reason, it will be interpreted to extend only over the
longest period of time for which it may be enforceable and/or over the largest
geographical area as to which it may be enforceable and/or to the maximum extent
in all other aspects as to which it may be enforceable, all as determined by
such court or arbitrator in such action.

         Section 5.6 Remedies for Breach. Executive acknowledges that the legal
remedies for breach of the protective covenants hereunder are inadequate and
therefore agrees that, in addition to all of the remedies available to the
Company in the event of a breach or a threatened breach of any covenant
contained in this Article V, the Company may: (a) obtain temporary, preliminary,
and permanent injunctions and any other appropriate equitable relief against any
and all such actions, (b) cease as of the date of such breach or threatened
breach any and all further payments to Executive pursuant to this Agreement and
(c) recover from Executive monetary damages to the Company or any Affiliate
arising from such breach or threatened breach and all costs and expenses
(including reasonable attorneys' fees) incurred by the Company or any Affiliate
in the enforcement of such protective covenants.

         Section 5.7 Affiliates of the Company. The provisions of this Article V
shall benefit the business and proprietary rights of the Company's Affiliates
and shall be enforceable against Executive by each of such Affiliates as third
party beneficiaries.

         Section 5.8 Survival of Protective Covenants. Each covenant on the part
of Executive contained in this Article V shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement, and the existence of any claim or cause of action of Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenant.


                                       11
<PAGE>

                                   ARTICLE VI


                               GENERAL PROVISIONS

         Section 6.1 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:

         If to the Executive:       Andrew Gordon
                                    215 Meisner Avenue
                                    Staten Island, NY 10306



          If to the Company:        Coffee Holding Co, Inc.
                                    4401 First Avenue
                                    Brooklyn, NY  11232

                                    Attn:  Compensation Committee


         with copy to:              Thacher Proffitt & Wood LLP
                                    1700 Pennsylvania Avenue, NW, Suite 800
                                    Washington, DC  20006

                                    Attn:  Matthew Dyckman, Esq.

or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.

         Section 6.2 Entire Agreement. This Agreement shall constitute the
entire agreement between the Executive and the Company with respect to the
Company's employment of the Executive and supersedes any and all prior
agreements and understandings, written or oral, with respect thereto.

         Section 6.3 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by (a) an instrument in writing and signed by the party
against whom such amendment or waiver is sought to be enforced, and (b) in the
case of the Company, such amendment or waiver also must be duly authorized by an
appropriate resolution of the Board.

         Section 6.4 Successors and Assigns. The Company shall have the right to
assign this Agreement. The personal services of the Executive are the subject of
this Agreement and no part of his rights or obligations hereunder may be
assigned, transferred, pledged or encumbered by the Executive. This Agreement
shall inure to the benefit of, and be binding upon (a) the parties hereto, (b)
the heirs, administrators, executors and personal representatives of the
Executive and (c) the successors and assigns of the Company as provided herein.


                                       12
<PAGE>

         Section 6.5 Governing Law. This Agreement, including the validity
hereof and the rights and obligations of the parties hereunder, and all
amendments and supplements hereof and all waivers and consents hereunder, shall
be construed in accordance with and governed by the laws of the State of New
York without giving effect to any conflicts of law provisions or rule, that
would cause the application of the laws of any other jurisdiction.

         Section 6.6 Severability. If any provisions of this Agreement as
applied to any part or to any circumstance shall be adjudged by a court to be
invalid or unenforceable, the same shall in no way affect any other provision of
this Agreement, the application of such provision in any other circumstances or
the validity or enforceability of this Agreement.

         Section 6.7 No Conflicts. The Executive represents to the Company that
the execution, delivery and performance by the Executive of this Agreement does
not and will not conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under any
contract, agreement or understanding, whether oral or written, to which the
Executive is or was a party or of which the Executive is or should be aware.

         Section 6.8 Survival. The rights and obligations of the Company and
Executive pursuant to Articles IV, V and VII shall survive the termination of
the Executive's employment with the Company and the expiration of the Employment
Term.

         Section 6.9 Captions. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

         Section 6.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         Section 6.11 Non-duplication. In the event that the Executive shall
perform services for any Affiliate of the Company or any other direct or
indirect subsidiary or affiliate of the Company or any Affiliate, any
compensation or benefits provided to the Executive by such other employer shall
be applied to offset the obligations of the Company hereunder, it being intended
that this Agreement set forth the aggregate compensation and benefits payable to
the Executive for all services to the Company, its Affiliates and all of their
respective direct or indirect subsidiaries and affiliates.

                                  ARTICLE VII


                               TAX INDEMNIFICATION

         Section 7.1 Tax Indemnification.

                  (a) If the Executive's employment terminates under
         circumstances entitling him (or in the event of his death, his estate)
         to the Severance Benefits, the Company shall pay to the Executive (or
         in the event of his death, his estate) an additional amount intended to
         indemnify him against the financial effects of the excise tax imposed


                                       13
<PAGE>

         on excess parachute payments under section 280G of the Internal Revenue
         Code (the "Tax Indemnity Payment"). The Tax Indemnity Payment shall be
         determined under the following formula:

X     =                        E x P
            ---------------------------------------------
                 1 - [(FI x (1 - SLI)) + SLI + E + M]
   where
E     =     the percentage rate at which an excise tax is assessed under section
            4999 of the Internal Revenue Code ("Code");

P     =     the amount with respect to which such excise tax is assessed,
            determined without regard to this section 7.1;

FI    =     the highest marginal rate of income tax applicable to the Executive
            under the Code for the taxable year in question;

SLI   =     the sum of the highest marginal rates of income tax applicable to
            the Executive under all applicable state and local laws for the
            taxable year in question; and

M     =     the highest marginal rate of Medicare tax applicable to the
            Executive under the Code for the taxable year in question.

         Such computation shall be made at the expense of the Company by an
         attorney or a firm of independent certified public accountants selected
         by the Executive and reasonably satisfactory to the Company (the "Tax
         Advisor") and shall be based on the following assumptions: (i) that a
         change in ownership, a change in effective ownership or control, or a
         change in the ownership of a substantial portion of the assets, of the
         Company has occurred within the meaning of section 280G of the Code (a
         "280G Change of Control"); (ii) that all direct or indirect payments
         made to or benefits conferred upon the Executive on account of his
         termination of employment are "parachute payments" within the meaning
         of section 280G of the Code; and (iii) that no portion of such payments
         is reasonable compensation for services rendered prior to the
         Executive's termination of employment.

                  (b) With respect to any payment that is presumed to be a
         parachute payment for purposes of section 280G of the Code, the Tax
         Indemnity Payment shall be made to the Executive on the earlier of the
         date the Company or any direct or indirect subsidiary or affiliate of
         the Company is required to withhold such tax or the date the tax is
         required to be paid by the Executive, unless, prior to such date, the
         Company delivers to the Executive the written opinion, in form and
         substance reasonably satisfactory to the Executive, of the Tax Advisor
         or of an attorney or firm of independent certified public accountants
         selected by the Company and reasonably satisfactory to the Executive,
         to the effect that the Executive has a reasonable basis on which to
         conclude that (i) no 280G Change in Control has occurred, or (ii) all
         or part of the payment or benefit in question is not a parachute
         payment for purposes of section 280G of the Code, or (iii) all or a
         part of such payment or benefit constitutes reasonable compensation for
         services rendered prior to the 280G Change of Control, or (iv) for some
         other reason which shall be set forth in detail in such letter, no
         excise tax is due under section 4999 of the Code with respect to such
         payment or benefit (the "Opinion Letter"). If the Company delivers an
         Opinion Letter, the Tax Advisor shall recompute, and the Company shall
         make, the Tax Indemnity Payment in reliance on the information
         contained in the Opinion Letter.


                                       14
<PAGE>

                  (c) In the event that the Executive's liability for the excise
         tax under section 4999 of the Code for a taxable year is subsequently
         determined to be different than the amount with respect to which the
         Tax Indemnity Payment is made, the Executive or the Company, as the
         case may be, shall pay to the other party at the time that the amount
         of such excise tax is finally determined, an appropriate amount, plus
         interest, such that the payment made under section 7.1(b), when
         increased by the amount of the payment made to the Executive under this
         section 7.1(c), or when reduced by the amount of the payment made to
         the Company under this section 7.1(c), equals the amount that should
         have properly been paid to the Executive under section 7.1(a). The
         interest paid to the Company under this section 7.1(c) shall be
         determined at the rate provided under section 1274(b)(2)(B) of the
         Code. The payment made to the Executive shall include such amount of
         interest as is necessary to satisfy any interest assessment made by the
         Internal Revenue Service and an additional amount equal to any monetary
         penalties assessed by the Internal Revenue Service on account of an
         underpayment of the excise tax. To confirm that the proper amount, if
         any, was paid to the Executive under this section 7.1, the Executive
         shall furnish to the Company a copy of each tax return which reflects a
         liability for an excise tax, at least 20 days before the date on which
         such return is required to be filed with the Internal Revenue Service.
         Nothing in this Agreement shall give the Company any right to control
         or otherwise participate in any action, suit or proceeding to which the
         Executive is a party as a result of positions taken on his federal
         income tax return with respect to his liability for excise taxes under
         section 4999 of the Code.


                                       15


<PAGE>



         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.



ATTEST:




By:
    --------------------------------            --------------------------------
    Name:                                       ANDREW GORDON
    Title:




ATTEST:                                         COFFEE HOLDING CO., INC.



By:
    --------------------------------            --------------------------------
    Name:                                       Name:
    Title:                                      Title:


                                       16



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>5
<FILENAME>b332774_ex10-15.txt
<DESCRIPTION>EX-10.15
<TEXT>
<PAGE>

                                                                   Exhibit 10.15

                              EMPLOYMENT AGREEMENT

         This Employment Agreement ("Agreement") is made and entered into this
__________________ day of ______________________, 2004 (the "Effective Date") by
and between DAVID GORDON (the "Executive") and COFFEE HOLDING CO., INC., a
Nevada corporation (the "Company").

                                   BACKGROUND

         WHEREAS the Executive has and is expected to continue to make a major
contribution to the growth, profitability and financial strength of the Company;
and

         WHEREAS the Company desires to retain the services of the Executive,
and the Executive desires to be retained by the Company, on the terms and
conditions set forth below.

         NOW, THEREFORE, intending to be legally bound, and in consideration of
the premises and the mutual promises set forth in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1 Definitions. The following terms, when used in this
Agreement, shall have the following meanings, unless the context clearly
requires otherwise (such definitions to be equally applicable to both the
singular and plural of the defined terms):

                  (a) "Affiliate" means, (a) with respect to the Executive, any
         other Person directly or indirectly Controlling, Controlled by, or
         under common Control with the Executive and (b) with respect to the
         Company, (i) any Person which directly or indirectly beneficially owns
         (within the meaning of Rule 13d-3 promulgated under the Securities
         Exchange Act of 1934, as amended) securities or other equity interests
         possessing more than 50% of the aggregate voting power in the election
         of directors (or similar governing body) represented by all outstanding
         securities of the Company or (ii) any Person with respect to which the
         Company beneficially owns (within the meaning of Rule 13d promulgated
         under the Securities Exchange Act of 1934, as amended) securities or
         other equity interests possessing more than 50% of the aggregate voting
         power in the election of directors (or similar governing body)
         represented by, or more than 50% of the aggregate value of, all
         outstanding securities or other equity interests of such Person.

                  (b) "Base Salary" shall have the meaning set forth in section
         3.1.

                  (c) "Board" means the Board of Directors of the Company.

                  (d) "Cause" means an omission, act or action or series of
         omissions, acts or actions of the Executive which, in the determination
         of the Board, cause(s), constitute(s) or result(s) in:


<PAGE>

                           (i) the Executive's material dishonesty including,
                  without limitation, theft, fraud, embezzlement, financial
                  misrepresentation or other similar behavior or action in his
                  dealings with or with respect to the Company or any Affiliate
                  thereof or entity with which the Company or any Affiliate
                  thereof, shall be engaged in or be attempting to engage in
                  commerce;

                           (ii) the conviction of the Executive for, or the
                  Executive's entry of a plea of guilty or nolo contendere to,
                  the commission of a felony;

                           (iii) the willful refusal of the Executive to follow
                  the lawful directives of the Board with respect to his duties
                  hereunder, which directives shall be consistent with his
                  duties and position as President of the Company, as set forth
                  in this Agreement, and which refusal is not cured by the
                  Executive within thirty (30) calendar days after written
                  notice from the Board of the Company to the Executive setting
                  forth with reasonable specificity the nature thereof; or

                           (iv) the material breach of any material provision of
                  this Agreement which is not cured by the Executive within
                  thirty (30) calendar days after written notice from the Board
                  to the Executive setting forth with reasonable specificity the
                  nature of such breach, unless the breach is of such nature
                  that it cannot be cured within such thirty (30) day period, in
                  which case such period will be extended by a reasonable amount
                  of time if, and only if (a) such breach is curable and (b)
                  during such thirty (30) day period the Executive commences
                  good faith efforts which can reasonably be expected to cure
                  such breach as promptly as is reasonably practicable.

                  (e) "Change in Control" shall mean any one of the following:

                           (i) the acquisition by any person or entity,
                  excluding, for this purpose, the Company, Sterling Gordon,
                  Rachelle Gordon and Andrew Gordon, and any parent,
                  parent-in-law, spouse, child, sibling, brother-in-law,
                  sister-in-law, daughter-in-law and/or son-in-law of any of
                  them (each a "Group Member") and any employee benefit plan of
                  the Company, of Beneficial Ownership of 50% or more of the
                  combined voting power of the then outstanding securities
                  entitled to vote generally in the election of directors
                  ("Voting Securities"), of the Company; and

                           (ii) the approval by the stockholder or stockholders
                  of any of the Company of (a) a reorganization, merger,
                  consolidation or other business combination (other than any
                  reorganization, merger, consolidation or other business
                  combination with an Affiliate of the entity to be reorganized,
                  merged, consolidated or otherwise combined) of the Company
                  with respect to which the stockholder or stockholders of such
                  entity immediately prior to consummation of such
                  reorganization, merger, consolidation or other business
                  combination do not, immediately thereafter, own more than 50%
                  of the combined voting power of the outstanding Voting
                  Securities of the surviving corporation, or (b) the sale, to a
                  person or entity other than a Group Member, of all or
                  substantially all of the assets of the Company.


                                       2
<PAGE>

                  For purposes of this section 1.1(e):

                           "Affiliate" means a person or entity that directly,
                  or indirectly through one or more intermediaries, controls or
                  is controlled by, or is under common control with, the person
                  or entity specified.

                           "Beneficial Ownership" shall be determined within the
                  meaning of Rule 13d-3 promulgated under the Exchange Act.

                           "Person" shall include persons as that term is
                  understood under Sections 13(d)(3) and 14(d)(2) of the
                  Exchange Act.

                           "Voting Securities" shall be deemed to include all
                  outstanding securities of a corporation that are then
                  exchangeable or convertible into securities of that
                  corporation entitled to vote generally in the election of
                  directors, as if same shall have been exchanged or converted
                  into such voting securities.

                  (f) "Confidential Information" means:

                           (i) proprietary information, trade secrets and
                  know-how of the Company and its Affiliates;

                           (ii) confidential information relating to the
                  business, operations, systems, networks, services, data bases,
                  customer lists, pricing policies, business plans, marketing
                  plans, product development plans, strategies, inventions and
                  research of the Company or its Affiliates; and

                           (iii) confidential information relating to the
                  financial affairs and results of operations and forecasts or
                  projections of the Company or its Affiliates;

         provided that information shall not constitute Confidential Information
         if such information: (i) is generally known by Persons other than the
         Company or its Affiliates or Persons employed by, in control of or
         otherwise affiliated with the Company or its Affiliates, (ii) is known
         by Persons other than the Company or its Affiliates or Persons employed
         by, in control of or otherwise affiliated with the Company or its
         Affiliates by reason of the action of such Person or Persons other than
         the Executive or any Person acting at the Executive's direction or with
         the Executive's consent, (iii) was known by the Executive, by lawful
         means, prior to the date of the Executive's employment with the Company
         or (iv) is compelled to be disclosed by law, regulation or legal
         process.

                  (g) "Control" (including the terms "Controlled by" and "under
         common Control with") means the possession, directly or indirectly or
         as a trustee or executor, of the power to direct or cause the direction
         of the management of a Person, whether through the ownership of stock,
         as a trustee or executor, by contract or credit agreement or otherwise.

                  (h) "Disability" means any physical or mental condition which
         renders Executive incapable of performing his essential functions and
         duties hereunder as determined in good faith by the Board.


                                       3
<PAGE>

                  (i) "Effective Date" shall have the meaning set forth in the
         preamble.

                  (j) "Employment Term" shall have the meaning set forth in
         section 2.2.

                  (k) "Good Reason" means:

                           (i) the assignment to Executive, without Executive's
                  expressed written approval, of duties or responsibilities
                  materially inconsistent with the Executive's position of
                  President of the Company, or any material reduction in
                  Executive's duties, responsibilities or authority from those
                  in effect on the date hereof;

                           (ii) the Company's failure to continue in effect any
                  material benefit plan, program or policy in which Executive is
                  participating (other than any plan, program or policy which is
                  available to the salaried employees of the Company generally),
                  or the taking of any action by the Company that would
                  adversely affect Executive's participation in or materially
                  reduce Executive's benefits under any such benefit plan,
                  program or policy or that would deprive Executive of any
                  material fringe benefit enjoyed by Executive; provided,
                  however, that no Good Reason shall occur if the aggregate
                  value of the benefit plans, programs and policies in which the
                  Executive is participating remains substantially equivalent;

                           (iii) a relocation of the Executive's primary place
                  of employment to any location that is both (a) greater than 50
                  miles away from the location at which Executive is currently
                  working, and (b) greater than 50 miles away from the
                  Executor's primary residence, except for required travel by
                  Executive on the Company's business to an extent substantially
                  consistent with Executive's past business travel obligations;

                           (iv) any material breach of any material provision of
                  this Agreement by the Company; or

                           (v) the date three months after the occurrence of a
                  Change in Control;

         which, in any case described in Sections 1.1(k)(i), (ii), (iii) or
         (iv), is not cured by the Company within thirty (30) calendar days
         after written notice from the Executive to the Board setting forth with
         reasonable specificity the nature of such breach or event, unless the
         breach or event is of such nature that it cannot be cured within such
         thirty (30) day period, in which case such period will be extended by a
         reasonable amount of time if, and only if (a) such breach is curable
         and (b) during such thirty (30) day period the Company commences good
         faith efforts which can reasonably be expected to cure such breach as
         promptly as is reasonably practicable. For purposes of this Agreement,
         any action or inaction described in Sections 1.1(k)(i), (ii), (iii) or
         (iv) shall constitute Good Reason only if written notice thereof as
         contemplated by the preceding sentence is given within 180 days after
         the date on which such action or inaction first occurs (or, if later,
         the earliest date on which the Executive knows or reasonably should
         know of such action or inaction).


                                       4
<PAGE>

                  (l) "Initial Term" means the first period that this Agreement
         is in effect, as set forth in section 2.2.

                  (m) "Person" means an individual, corporation, partnership,
         association, limited liability company or partnership, trust,
         government, governmental agency or body, or any other group or entity,
         no matter how organized and whether or not for profit.

                  (n) "Renewal Term" shall have the meaning set forth in Section
         2.2.

                                   ARTICLE II

                               EMPLOYMENT AND TERM

         Section 2.1 Employment. The Company employs Executive and the Executive
hereby agrees to such employment by the Company during the Employment Term to
serve as Executive Vice President-Operations of the Company, with the customary
duties, authorities and responsibilities associated with such position and such
other duties, authorities and responsibilities relative to the Company or its
Affiliates that: (a) have been agreed upon by the Company and Executive or (b)
may from time to time be delegated to Executive by the Board.

         Section 2.2 Employment Term.

                  (a) Initial Term. The "Initial Term" of this Agreement shall
         commence on the Effective Date, and unless sooner terminated as
         provided in Article IV, shall continue until the fifth anniversary of
         such date.

                  (b) Renewal Term. On the day after the Effective Date and on
         each day thereafter, the Employment Agreement shall be extended by one
         day, such that on any date the Employment Term will expire on the day
         before the fifth (5th) anniversary of such date. These extensions shall
         continue in perpetuity until discontinued by: (i) notice to the
         Executive given by the Company that they have elected to discontinue
         the extensions; (ii) notice by the Executive to the Company that he has
         elected to discontinue the extensions; or (iii) termination of the
         Executive's employment with the Company, whether by resignation,
         discharge or otherwise. On the date on which such a notice is deemed
         given, or on the effective date of a termination of the Executive's
         employment with the Company, the Employment Period shall be converted
         to a fixed period of five (5) years ending on the day before the fifth
         (5th) anniversary of such date. For all purposes of this Agreement, the
         term "Renewal Term" shall mean the period covered by any such
         extension.

                  (c) Employment Term. For all purposes of this Agreement, the
         term "Employment Term" shall mean the Initial Term and all Renewal
         Terms. Except as otherwise expressly provided in this Agreement, any
         reference in this Agreement to the term "Remaining Unexpired Employment
         Term" as of any date shall mean the period beginning on such date and
         ending on the last day of the Employment Term.

                  (d) Full Working Time. During the Employment Term, the
         Executive shall devote his ability and attention, all of his skill and
         experience and efforts during normal business hours and at such other
         times as the performance of his duties hereunder may reasonably require
         to the proper performance of his duties hereunder and to the business
         and affairs of the Company. During the Employment Term, the Executive,
         without the prior written approval of the Board, shall not, either
         directly or indirectly, actively participate in any other business or
         accept any employment or business office whatsoever, including, without
         limitation, serving as a director, from any other Person; provided,
         however, that the foregoing shall not preclude the Executive, subject
         to Article V, from:


                                       5
<PAGE>

                           (i) serving as a director of or actually
                  participating in any non-profit or charitable organization or

                           (ii) making an investment in any other business, so
                  long as the Executive does not actively participate in another
                  business referred to in Section 2.3 and such activity, whether
                  described in Section 2.3(i) or 2.3(ii), does not materially
                  interfere with the Executive's ability to perform his duties
                  hereunder and does not constitute a conflict of interest with
                  the Company in the reasonable opinion of the Board.

                                   ARTICLE III

                            COMPENSATION AND BENEFITS

         Section 3.1 Base Salary. During the Employment Term, as compensation
for services hereunder and in consideration for the protective covenants set
forth in Article V of this Agreement, Executive shall be paid an annual base
salary of Three Hundred Thousand Dollars ($300,000) or such greater amount as
may from time to time be approved by the Compensation Committee of the Board
(the "Base Salary"). Base Salary shall be paid to Executive in accordance with
the Company's normal payroll practices.

         Section 3.2 Bonus. During the Employment Term, Executive shall be
eligible to receive an annual bonus that will be determined in accordance with
the bonus program established by the Board from time to time.

         Section 3.3 Benefits. To the maximum extent that he is eligible under
the terms of the applicable plan or program, the Executive shall participate in
any and all plans or programs maintained by the Company for its employees and/or
senior executives generally that provide insurance, medical benefits, retirement
benefits, or similar fringe benefits. In addition, the Executive shall be
entitled to four weeks of paid vacation each calendar year of the Employment
Term, which must be taken in accordance with the Company's vacation policy then
in effect.

         Section 3.4 Indemnification and Insurance.

                  (a) D&O Insurance. The Company shall cause the Executive to be
         covered by and named as an insured under any policy or contract of
         insurance obtained by it to insure its directors and officers against
         personal liability for acts or omissions in connection with service as
         an officer or director of the Company or service in other capacities at
         its request. The coverage provided to the Executive pursuant to this
         section shall be of the same scope and on the same terms and conditions
         as the coverage (if any) provided to other officers or directors of the
         Company and shall continue for so long as the Executive shall be
         subject to personal liability relating to such service to the extent
         permitted under the Nevada General Corporation Law.


                                       6
<PAGE>

                  (b) Indemnification. To the maximum extent permitted under
         applicable law, the Company shall indemnify the Executive against and
         hold him harmless from any costs, liabilities, losses and exposures to
         the fullest extent and on the most favorable terms and conditions that
         similar indemnification is offered to any director or officer of the
         Company or any subsidiary or Affiliate thereof and shall continue for
         so long as the Executive shall be subject to personal liability
         relating to such service to the extent permitted under the Nevada
         General Corporation Law.

         Section 3.5 Expenses. The Company shall pay or reimburse the Executive
for reasonable business expenses actually incurred or paid by the Executive
during the Employment Term, in the performance of his services hereunder;
provided, however, that such expenses are consistent with the Company policy.
Such payment or reimbursement is expressly conditioned upon presentation of
expense statements or vouchers or other supporting documentation by the
Executive in a manner that is acceptable to the Company and otherwise in
accordance with the Company policy then in effect.

         Section 3.6 Deductions. The Company shall deduct from all compensation
or benefits payable pursuant to this Agreement such payroll, withholding and
other taxes as may in the reasonable opinion of the Company be required by law
and any such additional amounts requested in writing by the Executive.

                                   ARTICLE IV

                                   TERMINATION

         Section 4.1 General. The Company shall have the right to terminate the
employment of the Executive at any time with or without Cause, and the Executive
shall have the right to resign at any time with or without Good Reason, but the
relative rights and obligations of the parties in the event of any such
termination or resignation shall be determined under this Agreement.

         Section 4.2 Termination Under Certain Circumstances.

                  (a) Termination Without Severance Benefits. In the event the
         Executive's employment with the Company is terminated prior to the
         expiration of the Employment Term by reason of (i) the Executive's
         resignation without Good Reason, (ii) the Executive's death or (iii)
         the Executive's discharge by the Company for Cause, this Agreement
         shall terminate including, without limitation, the Company's
         obligations to provide any compensation, benefits or severance to the
         Executive under Article IV of this Agreement or otherwise, other than
         the Standard Termination Entitlements (as defined in section 4.4).

                  (b) Disability. The Company may terminate the Executive's
         employment upon the Executive's Disability. In such event, in addition
         to the Standard Termination Entitlements (as defined in section 4.4),
         the Company shall continue to pay the Executive his Base Salary in
         accordance with the Company's normal payroll practices, at the annual
         rate in effect for him immediately prior to the termination of his
         employment, during a period ending on the earliest of: (i) the date on
         which long-term disability insurance benefits are first payable to him
         under any long-term disability insurance plan covering employees of the
         Company and providing an annual benefit for the Executive at least
         equal to 60% of Base Salary; and (ii) the date of his death; and (iii)
         the expiration of the Remaining Unexpired Employment Term. A
         termination of employment due to Disability under this section 4.2(b)
         shall be effected by notice of termination given to the Executive by
         the Company and shall take effect on the later of the effective date of
         termination specified in such notice or the date on which the notice of
         termination is deemed given to the Executive.


                                       7
<PAGE>

                  (c) Termination with Severance Benefits. In the event that the
         Executive's employment with the Company is terminated by the Executive
         prior to the expiration of the Employment Term for Good Reason or by
         the Company prior to the expiration of the Employment Term other than
         for Cause or Disability, the Company shall pay the Standard Termination
         Entitlements (as defined in section 4.4) and the Severance Benefits (as
         defined in section 4.5); provided, however, that any payment required
         by this section 4.2(c) is expressly conditioned upon:

                           (i) The Executive's compliance in all material
                  respects with the material terms of this Agreement, including,
                  without limitation, the applicable provisions of Article V;
                  and

                           (ii) The Executive's resignation from any and all
                  positions which he holds as an officer, director or committee
                  member with respect to the Company or any Affiliate thereof.

         Section 4.3 Liquidated Damages. The Company and Executive hereby
stipulate that the damages which may be incurred by the Executive as a
consequence of any such termination of employment are not capable of accurate
measurement as of the date first above written and that the liquidated damages
payments provided for in this Agreement constitute a reasonable estimate under
the circumstances of, and are in full satisfaction of, all damages sustained as
a consequence of any such termination of employment.

         Section 4.4 Standard Termination Entitlements. For all purposes of this
Agreement, the Executive's "Standard Termination Entitlements" shall mean and
include:

                  (a) the Executive's earned but unpaid compensation (including,
         without limitation, salary, bonus, and all other items which constitute
         wages under applicable law) as of the date of his termination of
         employment. This payment shall be made at the time and in the manner
         prescribed by law applicable to the payment of wages but in no event
         later than 30 days after the date of the Executive's termination of
         employment.


                                       8
<PAGE>

                  (b) the benefits, if any, due to the Executive (and the
         Executive's estate, surviving dependents or his designated
         beneficiaries) under the employee benefit plans and programs and
         compensation plans and programs (including stock option plans)
         maintained for the benefit of the officers and employees of the
         Company). The time and manner of payment or other delivery of these
         benefits and the recipients of such benefits shall be determined
         according to the terms and conditions of the applicable plans and
         programs.

         Section 4.5 Severance Benefits. For all purposes of this Agreement, the
Executive's "Severance Benefits" shall mean and include:

                  (a) During the Remaining Unexpired Employment Term, the
         Company shall provide for the Executive and his dependents continued
         group life, health (including hospitalization, medical and major
         medical), dental, accident and long-term disability insurance benefits
         on substantially the same terms and conditions (including any required
         premium-sharing arrangements, co-payments and deductibles) in effect
         for them immediately prior to the Executive's termination. The coverage
         provided under this section may, at the election of the Company, be
         secondary to the coverage provided as part of the Standard Termination
         Entitlements and to any employer-paid coverage provided by a subsequent
         employer or through Medicare, with the result that benefits under the
         other coverages will offset the coverage required by this section.

                  (b) The Company shall make a lump sum payment to the Executive
         (or, in the event of his death before payment, to his estate), in an
         amount (without discount for early payment) equal to the value of the
         salary that Executive would have earned if he had continued working for
         the Company during the Remaining Unexpired Employment Period at the
         highest annual rate of salary achieved during that portion of the
         Employment Period which is prior to Executive's termination of
         employment with the Company. Such lump sum shall be paid in lieu of all
         other payments of salary provided for under this Agreement in respect
         of the period following any such termination within thirty (30) days
         following the Executive's termination of employment.

                  (c) The Company shall make a lump sum payment to the Executive
         (or, in the event of his death before payment, to his estate), in an
         amount equal to the payments that would have been made to Executive
         under any cash bonus or long-term or short-term cash incentive
         compensation plan maintained by, or covering employees of, the Company
         if he had continued working for the Company during the Remaining
         Unexpired Employment Period and had earned the maximum bonus or
         incentive award in each calendar year that ends during the Remaining
         Unexpired Employment Period, such payments to be equal to the product
         of:

                           (i) the maximum percentage rate at which an award was
                  ever available to Executive under such incentive compensation
                  plan; multiplied by

                           (ii) the salary that would have been paid to
                  Executive during each such calendar year at the highest annual
                  rate of salary achieved during that portion of the Employment
                  Period which is prior to Executive's termination of employment
                  with the Company.


                                       9
<PAGE>

         Such payment shall be made (without discount for early payment) within
         thirty (30) days following the Executive's termination of employment.


                                    ARTICLE V

                              RESTRICTIVE COVENANTS

         Section 5.1 Proprietary Information. In the event that the Executive
leaves the employ of the Company due to the Company's discharge of the Executive
for Cause or the Executive's voluntary resignation from his employment hereunder
without Good Reason, the Executive shall deliver to the Company (and shall not
keep in his possession, recreate or deliver to anyone other than the Company or
its designee) any and all devices, records, data, notes, reports, proposals,
lists, correspondence, specifications, drawings, blueprints, sketches,
materials, equipment, other documents or property, together with all copies
thereof (in whatever medium recorded) belonging to the Company or any Affiliate
thereof or any of their respective successors or assigns.

         Section 5.2 Non-Competition. During his employment with the Company and
continuing for one year thereafter (but only if the Executive's employment
hereunder is terminated due to the Company's discharge of the Executive for
Cause, or the Executive's voluntary resignation from his employment hereunder
without Good Reason), the Executive agrees, and shall cause each Person
Controlled by him to agree, that any such Person shall not, directly or
indirectly, through any Person Controlled by the Executive, in any form or
manner in the State of New York: (a) engage in any activities competitive with
the business of the Company and its Affiliates for his or their own account or
for the account of any other Person, or (b) become interested in any Person
engaged in activities competitive with the business of the Company and its
Affiliates as a partner, shareholder, member, principal, agent, employee,
trustee, consultant or in any other relationship or capacity; provided, however,
that Executive may own, directly or indirectly, solely as a passive investment,
securities of any Person if the Executive (x) is not a Person in Control of, or
a member of a group that Controls, such Person and (y) does not, directly or
indirectly, own 5% or more of any voting class of securities of such Person. For
purposes of this section 5.2, the business of the Company and Affiliates shall
mean the roasting, blending, packaging and distribution of coffee for sale.

         Section 5.3 Non-Solicitation. During his employment with the Company
and for a period of one year thereafter (but only if the Executive's employment
hereunder is terminated due to the Company's discharge of the Executive for
Cause, or the Executive's voluntary resignation from his employment hereunder
without Good Reason), the Executive will not, directly or indirectly, use
proprietary knowledge or information relating to the Company or its Affiliates
obtained during the course of Executive's employment with the Company with the
intention to, or which a reasonable person would construe to (a) interfere with
or disrupt any present or prospective relationship, contractual or otherwise,
between the Company or its Affiliates and any customer, supplier, employee,
consultant or other person having business dealings with the Company or its
Affiliates, or (b) employ or solicit the employment or engagement by others of
any employee or consultant of the Company or its Affiliates who was such an
employee or consultant at the time of termination of the Executive's employment
hereunder or within one year prior thereto.


                                       10
<PAGE>

         Section 5.4 Non-Disclosure. Except with the prior written consent of
the Company in each instance or as may be reasonably necessary to perform the
Executive's services hereunder, the Executive shall not disclose, use, publish,
or in any other manner reveal, directly or indirectly, at any time during or
after his employment with the Company, any Confidential Information relating to
the Company or any Affiliate thereof acquired by him prior to, during the course
of, or incident to, his employment hereunder. In the event Executive is required
(by oral questions, interrogatories, requests for information or documents in
legal proceedings, subpoenas, civil investigative demand or similar process) to
disclose any such Confidential Information, the Executive shall provide the
Company with prompt written notice of such requirement so that the Company may
seek a protective order or other appropriate remedy and/or waive compliance with
the provisions of this Section. If, in the absence of such a protective order or
other remedy or receipt of a waiver by the Company, the Executive is nonetheless
advised by his legal counsel that he is legally compelled to disclose such
Confidential Information, the Executive may, without liability hereunder,
disclose only that portion of such Confidential Information which such counsel
advises in writing is legally required to be disclosed.

         Section 5.5 Reasonable Limitations. Executive acknowledges that given
the nature of the Company's business the covenants contained in this Article V
contain reasonable limitations as to time, geographical area and scope of
activity to be restrained, and do not impose a greater restraint than is
necessary to protect and preserve the Company's business and to protect the
Company's legitimate business interests. If, however, this Article V is
determined by any court of competent jurisdiction or any arbitrator to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographic area or by reason of its being too extensive in any other
respect, or for any other reason, it will be interpreted to extend only over the
longest period of time for which it may be enforceable and/or over the largest
geographical area as to which it may be enforceable and/or to the maximum extent
in all other aspects as to which it may be enforceable, all as determined by
such court or arbitrator in such action.

         Section 5.6 Remedies for Breach. Executive acknowledges that the legal
remedies for breach of the protective covenants hereunder are inadequate and
therefore agrees that, in addition to all of the remedies available to the
Company in the event of a breach or a threatened breach of any covenant
contained in this Article V, the Company may: (a) obtain temporary, preliminary,
and permanent injunctions and any other appropriate equitable relief against any
and all such actions, (b) cease as of the date of such breach or threatened
breach any and all further payments to Executive pursuant to this Agreement and
(c) recover from Executive monetary damages to the Company or any Affiliate
arising from such breach or threatened breach and all costs and expenses
(including reasonable attorneys' fees) incurred by the Company or any Affiliate
in the enforcement of such protective covenants.

         Section 5.7 Affiliates of the Company. The provisions of this Article V
shall benefit the business and proprietary rights of the Company's Affiliates
and shall be enforceable against Executive by each of such Affiliates as third
party beneficiaries.

         Section 5.8 Survival of Protective Covenants. Each covenant on the part
of Executive contained in this Article V shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement, and the existence of any claim or cause of action of Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of such covenant.


                                       11
<PAGE>



                                   ARTICLE VI

                               GENERAL PROVISIONS

         Section 6.1 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:

         If to the Executive:       David Gordon
                                    22 Barclay Avenue
                                    Edgemont, NY 10583



          If to the Company:        Coffee Holding Co, Inc.
                                    4401 First Avenue
                                    Brooklyn, NY  11232

                                    Attn:  Compensation Committee


         with copy to:              Thacher Proffitt & Wood LLP
                                    1700 Pennsylvania Avenue, NW, Suite 800
                                    Washington, DC  20006

                                    Attn:  Matthew Dyckman, Esq.

or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.

         Section 6.2 Entire Agreement. This Agreement shall constitute the
entire agreement between the Executive and the Company with respect to the
Company's employment of the Executive and supersedes any and all prior
agreements and understandings, written or oral, with respect thereto.

         Section 6.3 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by (a) an instrument in writing and signed by the party
against whom such amendment or waiver is sought to be enforced, and (b) in the
case of the Company, such amendment or waiver also must be duly authorized by an
appropriate resolution of the Board.

         Section 6.4 Successors and Assigns. The Company shall have the right to
assign this Agreement. The personal services of the Executive are the subject of
this Agreement and no part of his rights or obligations hereunder may be
assigned, transferred, pledged or encumbered by the Executive. This Agreement
shall inure to the benefit of, and be binding upon (a) the parties hereto, (b)
the heirs, administrators, executors and personal representatives of the
Executive and (c) the successors and assigns of the Company as provided herein.


                                       12
<PAGE>

         Section 6.5 Governing Law. This Agreement, including the validity
hereof and the rights and obligations of the parties hereunder, and all
amendments and supplements hereof and all waivers and consents hereunder, shall
be construed in accordance with and governed by the laws of the State of New
York without giving effect to any conflicts of law provisions or rule, that
would cause the application of the laws of any other jurisdiction.

         Section 6.6 Severability. If any provisions of this Agreement as
applied to any part or to any circumstance shall be adjudged by a court to be
invalid or unenforceable, the same shall in no way affect any other provision of
this Agreement, the application of such provision in any other circumstances or
the validity or enforceability of this Agreement.

         Section 6.7 No Conflicts. The Executive represents to the Company that
the execution, delivery and performance by the Executive of this Agreement does
not and will not conflict with or result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under any
contract, agreement or understanding, whether oral or written, to which the
Executive is or was a party or of which the Executive is or should be aware.

         Section 6.8 Survival. The rights and obligations of the Company and
Executive pursuant to Articles IV, V and VII shall survive the termination of
the Executive's employment with the Company and the expiration of the Employment
Term.

         Section 6.9 Captions. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

         Section 6.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         Section 6.11 Non-duplication. In the event that the Executive shall
perform services for any Affiliate of the Company or any other direct or
indirect subsidiary or affiliate of the Company or any Affiliate, any
compensation or benefits provided to the Executive by such other employer shall
be applied to offset the obligations of the Company hereunder, it being intended
that this Agreement set forth the aggregate compensation and benefits payable to
the Executive for all services to the Company, its Affiliates and all of their
respective direct or indirect subsidiaries and affiliates.

                                   ARTICLE VII

                               TAX INDEMNIFICATION

         Section 7.1 Tax Indemnification.

                  (a) If the Executive's employment terminates under
         circumstances entitling him (or in the event of his death, his estate)
         to the Severance Benefits, the Company shall pay to the Executive (or
         in the event of his death, his estate) an additional amount intended to
         indemnify him against the financial effects of the excise tax imposed


                                       13
<PAGE>

         on excess parachute payments under section 280G of the Internal Revenue
         Code (the "Tax Indemnity Payment"). The Tax Indemnity Payment shall be
         determined under the following formula:

X     =                       E x P
            --------------------------------------------
                  1 - [(FI x (1 - SLI)) + SLI + E + M]

     where

E     =     the percentage rate at which an excise tax is assessed under section
            4999 of the Internal Revenue Code ("Code");

P     =     the amount with respect to which such excise tax is assessed,
            determined without regard to this section 7.1;

FI    =     the highest marginal rate of income tax applicable to the Executive
            under the Code for the taxable year in question;

SLI   =     the sum of the highest marginal rates of income tax applicable to
            the Executive under all applicable state and local laws for the
            taxable year in question; and

M     =     the highest marginal rate of Medicare tax applicable to the
            Executive under the Code for the taxable year in question.

         Such computation shall be made at the expense of the Company by an
         attorney or a firm of independent certified public accountants selected
         by the Executive and reasonably satisfactory to the Company (the "Tax
         Advisor") and shall be based on the following assumptions: (i) that a
         change in ownership, a change in effective ownership or control, or a
         change in the ownership of a substantial portion of the assets, of the
         Company has occurred within the meaning of section 280G of the Code (a
         "280G Change of Control"); (ii) that all direct or indirect payments
         made to or benefits conferred upon the Executive on account of his
         termination of employment are "parachute payments" within the meaning
         of section 280G of the Code; and (iii) that no portion of such payments
         is reasonable compensation for services rendered prior to the
         Executive's termination of employment.

                  (b) With respect to any payment that is presumed to be a
         parachute payment for purposes of section 280G of the Code, the Tax
         Indemnity Payment shall be made to the Executive on the earlier of the
         date the Company or any direct or indirect subsidiary or affiliate of
         the Company is required to withhold such tax or the date the tax is
         required to be paid by the Executive, unless, prior to such date, the
         Company delivers to the Executive the written opinion, in form and
         substance reasonably satisfactory to the Executive, of the Tax Advisor
         or of an attorney or firm of independent certified public accountants
         selected by the Company and reasonably satisfactory to the Executive,
         to the effect that the Executive has a reasonable basis on which to
         conclude that (i) no 280G Change in Control has occurred, or (ii) all
         or part of the payment or benefit in question is not a parachute
         payment for purposes of section 280G of the Code, or (iii) all or a
         part of such payment or benefit constitutes reasonable compensation for
         services rendered prior to the 280G Change of Control, or (iv) for some
         other reason which shall be set forth in detail in such letter, no
         excise tax is due under section 4999 of the Code with respect to such
         payment or benefit (the "Opinion Letter"). If the Company delivers an
         Opinion Letter, the Tax Advisor shall recompute, and the Company shall
         make, the Tax Indemnity Payment in reliance on the information
         contained in the Opinion Letter.


                                       14
<PAGE>

                  (c) In the event that the Executive's liability for the excise
         tax under section 4999 of the Code for a taxable year is subsequently
         determined to be different than the amount with respect to which the
         Tax Indemnity Payment is made, the Executive or the Company, as the
         case may be, shall pay to the other party at the time that the amount
         of such excise tax is finally determined, an appropriate amount, plus
         interest, such that the payment made under section 7.1(b), when
         increased by the amount of the payment made to the Executive under this
         section 7.1(c), or when reduced by the amount of the payment made to
         the Company under this section 7.1(c), equals the amount that should
         have properly been paid to the Executive under section 7.1(a). The
         interest paid to the Company under this section 7.1(c) shall be
         determined at the rate provided under section 1274(b)(2)(B) of the
         Code. The payment made to the Executive shall include such amount of
         interest as is necessary to satisfy any interest assessment made by the
         Internal Revenue Service and an additional amount equal to any monetary
         penalties assessed by the Internal Revenue Service on account of an
         underpayment of the excise tax. To confirm that the proper amount, if
         any, was paid to the Executive under this section 7.1, the Executive
         shall furnish to the Company a copy of each tax return which reflects a
         liability for an excise tax, at least 20 days before the date on which
         such return is required to be filed with the Internal Revenue Service.
         Nothing in this Agreement shall give the Company any right to control
         or otherwise participate in any action, suit or proceeding to which the
         Executive is a party as a result of positions taken on his federal
         income tax return with respect to his liability for excise taxes under
         section 4999 of the Code.


                                       15
<PAGE>



         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.



ATTEST:




By:
    --------------------------------            --------------------------------
    Name:                                       DAVID GORDON
    Title:




ATTEST:                                         COFFEE HOLDING CO., INC.



By:
    --------------------------------            --------------------------------
    Name:                                       Name:
    Title:                                      Title:



                                       16


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>6
<FILENAME>b332774_ex10-16.txt
<DESCRIPTION>EX-10.16
<TEXT>
<PAGE>

                                                                   Exhibit 10.16

                            LOCK-UP LETTER AGREEMENT
         [FORM OF LETTER TO BE SIGNED BY DIRECTORS, OFFICERS AND CERTAIN
                    STOCKHOLDERS OF COFFEE HOLDING CO., INC.]

Maxim Group LLC
405 Lexington Avenue
New York, NY 10174

Dear Sirs:

The undersigned understands that Maxim Group LLC (the "Underwriter") proposes to
enter into an Underwriting Agreement (the "Underwriting Agreement") with Coffee
Holding Co., Inc., a Nevada corporation (the "Company"), providing for the
initial public offering by the Underwriter of Common Stock, par value $.01 per
share (the "Common Stock"), of the Company (the "Initial Public Offering").

In consideration of the execution of the Underwriting Agreement by the
Underwriter, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of the
Underwriter, the undersigned will not, directly or indirectly, (1) offer for
sale, sell, pledge, or otherwise dispose of (or enter into any transaction or
device that is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock
(including, without limitation, shares of Common Stock that may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Common Stock
that may be issued upon exercise of any option or warrant) or securities
convertible into or exchangeable for Common Stock or any substantially similar
securities now owned or hereafter acquired by the undersigned, or sell or grant
options, rights or warrants with respect to any shares of Common Stock or
substantially similar securities or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, for a period of nine (9)
months after the effective date of the Registration Statement relating to the
Initial Public Offering.

In furtherance of the foregoing, the Company and its Transfer Agent are hereby
authorized to decline to make any transfer of securities if such transfer would
constitute a violation or breach of this Lock-Up Letter Agreement.

It is understood that, if the Company notifies the undersigned that it does not
intend to proceed with the Initial Public Offering, if the Underwriting
Agreement does not become effective, or if the Underwriting Agreement (other
than the provisions thereof which survive termination) shall terminate or be
terminated prior to payment for and delivery of any shares of Common Stock by
the Underwriter and the Company, the undersigned will be released from the
undersigned's obligations under this Lock-Up Letter Agreement.


<PAGE>

Maxim Group LLC
Page 2

The undersigned understands that the Company and the Underwriter will proceed
with the Initial Public Offering in reliance on this Lock-Up Letter Agreement.

Whether or not the Initial Public Offering actually occurs depends on a number
of factors, including market conditions. The Initial Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation among the Company and the Underwriter.

The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this Lock-Up Letter Agreement and that, upon
request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.

Very truly yours,


By:_________________________________
   Name:
   Title:


Dated:__________________________


                                      -2-



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>b332774_ex23-1.txt
<DESCRIPTION>EX-23.1
<TEXT>
<PAGE>

                                                                    Exhibit 23.1



               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


We hereby consent to the reference to our firm under the caption "Experts" and
to the use of our report dated December 10, 2003 in the registration statement
on Form SB-2 of Coffee Holding Co., Inc. to be submitted to the Securities and
Exchange Commission on June 24, 2004.



                                               /s/ Lazar Levine & Felix LLP
                                               ----------------------------
                                               LAZAR LEVINE & FELIX LLP




New York, NY
June 24, 2004


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
