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<SEC-DOCUMENT>0001125282-04-003795.txt : 20040812
<SEC-HEADER>0001125282-04-003795.hdr.sgml : 20040812
<ACCEPTANCE-DATETIME>20040812172217
ACCESSION NUMBER:		0001125282-04-003795
CONFORMED SUBMISSION TYPE:	SB-2/A
PUBLIC DOCUMENT COUNT:		10
FILED AS OF DATE:		20040812

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/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-116838
		FILM NUMBER:		04971212

	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/A
<SEQUENCE>1
<FILENAME>b332774_sb2a.htm
<DESCRIPTION>REGISTRATION STATEMENT
<TEXT>
<html>
<head><title>
Prepared and filed by St Ives Burrups
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<body bgcolor="#FFFFFF">
<div style="page-break-before:always"></div>
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<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td width="70%" align="left"><font size="2" face="serif">As filed with the
      Securities and Exchange Commission on August 12, 2004</font></td>
    <td align="right"><font size="2" face="serif"><b>Registration No. 333- 116838</b></font></td>
  </tr>
</table>

<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
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    <td height="4" valign="bottom" bgcolor="#000000"></td>
  </tr>
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    <td height="2" valign="top"></td>
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    <td height="1" valign="top" bgcolor="#000000"></td>
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<p align="center"><font size="4" face="serif"><b><font size="5">U.S. Securities
  and Exchange Commission</font></b></font><b><br>
  <font size="3" face="serif">Washington, D.C. 20549</font></b></p>

<p align="center"><font face="serif" size="3"><b>Amendment No.&nbsp;1<br>
<br>
to</b></font></p>
<p align="center"><b><font face="serif" size="5">FORM SB-2</font></b></p>

<p align="center"><b><font face="serif" size="3">REGISTRATION STATEMENT<br>
UNDER<br>
THE SECURITIES ACT OF 1933</font></b></p>
<p align="center"><b><font face="serif" size="4">Coffee Holding Co., Inc.</font></b><br>
<font face="serif" size="1">(Name of small business issuer in its charter)</font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td width="34%" align="center"><b><font size="2" face="serif">Nevada</font></b></td>
    <td width="34%" align="center"><b><font size="2" face="serif">2080</font></b></td>
    <td align="center"><b><font size="2" face="serif">11-2238111</font></b></td>
  </tr>
  <tr valign="top">
    <td align="center"><font size="2" face="serif"><font face="serif" size="1">(State
      or other jurisdiction of<br>
      incorporation or organization)</font></font></td>
    <td align="center"><font size="2" face="serif"><font face="serif" size="1">
      (Primary Standard Industrial<br>
      Classification Code Number)</font></font></td>
    <td align="center"><font face="serif" size="1">(I.R.S. Employer</font><br>
      <font face="serif" size="1">Identification No.)</font></td>
  </tr>
</table>
<p align="center"><font size="2" face="serif">4401 First Avenue, 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>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<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>
<tr valign="top">
<td><hr align="center" width="50%" size="1" noshade></td>
<td><hr align="center" width="50%" size="1" noshade></td>
</tr>
</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>

<table width="100%" border="1" align="center" cellpadding="4" cellspacing="0" bordercolor="#000000">
<tr valign="bottom" bgcolor="#FFFFFF">
<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 height="28"><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>
<tr valign="bottom" bgcolor="#ffffff">
<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"> $&nbsp;&nbsp;&nbsp;12,096,100</font></td>
<td align="center"><font size="2" face="serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$&nbsp;&nbsp;1,534(5)</font></td>
</tr>
</table>

<table width="100%" cellspacing="0" cellpadding="0" border="0">

  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%"><font face="serif" size="2">(1)</font></td>
    <td width="2%"><font size="2">&nbsp;</font></td>
    <td><font face="serif" size="2">Includes the maximum number of shares that
      may be issued in connection with this offering.</font> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%"><font face="serif" size="2">(2)</font></td>
    <td width="1%"><font size="2">&nbsp;</font></td>
    <td><font face="serif" size="2">Estimated solely for the purpose of calculating
      the registration fee.</font> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%"><font face="serif" size="2">(3)</font></td>
    <td width="1%"><font size="2">&nbsp;</font></td>
    <td><font face="serif" size="2">To be issued to the underwriter.</font> </td>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%"><font face="serif" size="2">(4)</font></td>
    <td width="1%"><font size="2">&nbsp;</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>
  </tr>
  <tr align="left" valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr align="left" valign="top">
    <td width="3%"><font face="serif" size="2">(5)</font></td>
    <td width="2%"><font size="2">&nbsp;</font></td>
    <td><font face="serif" size="2">Fee has been previously paid.</font> </td>
  </tr>
</table>

<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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    <td height="1" valign="top" bgcolor="#000000"></td>
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    <td height="2" valign="top" bgcolor="#FFFFFF"></td>
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    <td height="4" valign="bottom" bgcolor="#000000"></td>
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<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>Subject to Completion, Dated August 12, 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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Investing in our common stock involves a high degree of risk.  Please read the &#147;Risk Factors&#148; beginning on page 9.  You will experience immediate and substantial dilution.</b></font></p>

<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>
<tr valign="top">
<td align="left"><font size="2" face="serif">Underwriting discounts</font></td>
<td align="left"><font size="2" face="serif">$ </font></td>
</tr>
<tr valign="top">
<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maxim Group LLC expects to deliver the shares on or about <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>, 2004.</font></p>
<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 <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>, 2004</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="center">&nbsp;</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%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td align="left"><a href="#p1"><font size="2" face="serif">Prospectus Summary</font></a></td>
    <td align="right" width="6%"><a href="#p1"><font size="2" face="serif">1</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p9"><font size="2" face="serif">Risk Factors</font></a></td>
    <td align="right"><a href="#p9"><font size="2" face="serif">9</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p20"><font size="2" face="serif">Special Note Regarding Forward-Looking
      Statements</font></a></td>
    <td align="right"><a href="#p20"><font size="2" face="serif">20</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p21"><font size="2" face="serif">Use of Proceeds</font></a></td>
    <td align="right"><a href="#p21"><font size="2" face="serif">21</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p22"><font size="2" face="serif">Dilution</font></a></td>
    <td align="right"><a href="#p22"><font size="2" face="serif">22</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p23"><font size="2" face="serif">Capitalization</font></a></td>
    <td align="right"><a href="#p23"><font size="2" face="serif">23</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p24"><font size="2" face="serif">Dividend Policy</font></a></td>
    <td align="right"><a href="#p24"><font size="2" face="serif">24</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p25"><font size="2" face="serif">Selected Financial Information</font></a></td>
    <td align="right"><a href="#p25"><font size="2" face="serif">25</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p26"><font size="2" face="serif">Management&#146;s
      Discussion and Analysis of Financial Condition and Results of Operations</font></a></td>
    <td align="right"><a href="#p26"><font size="2" face="serif">26</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p37"><font size="2" face="serif">Business</font></a></td>
    <td align="right"><a href="#p37"><font size="2" face="serif">37</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p50"><font size="2" face="serif">Management</font></a></td>
    <td align="right"><a href="#p50"><font size="2" face="serif">50</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p56"><font size="2" face="serif">Security Ownership of Certain
      Beneficial Owners and Management</font></a></td>
    <td align="right"><a href="#p56"><font size="2" face="serif">56</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p57"><font size="2" face="serif">Certain Relationships and Related
      Transactions</font></a></td>
    <td align="right"><a href="#p57"><font size="2" face="serif">57</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p58"><font size="2" face="serif">Description of Capital Stock</font></a></td>
    <td align="right"><a href="#p58"><font size="2" face="serif">58</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p64"><font size="2" face="serif">Shares Eligible for Future Sale</font></a></td>
    <td align="right"><a href="#p64"><font size="2" face="serif">64</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p65"><font size="2" face="serif">Underwriting</font></a></td>
    <td align="right"><a href="#p65"><font size="2" face="serif">65</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p68"><font size="2" face="serif">Legal Matters</font></a></td>
    <td align="right"><a href="#p68"><font size="2" face="serif">68</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p68"><font size="2" face="serif">Experts</font></a></td>
    <td align="right"><a href="#p68"><font size="2" face="serif">68</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#p68"><font size="2" face="serif">Where You Can Find Additional
      Information</font></a></td>
    <td align="right"><a href="#p68"><font size="2" face="serif">68</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left"><a href="#f1"><font size="2" face="serif">Financial Statements</font></a></td>
    <td align="right"><a href="#f1"><font size="2" face="serif">F-1</font></a></td>
  </tr>
</table>

<p align="left"><font size="2" face="serif">Until <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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">&nbsp;</p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p1"></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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>This summary highlights selected material  information about us that is described more fully elsewhere in this prospectus. 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>

<p align="left"><font size="2" face="serif"><b>General Overview</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Products and Operations.</i></b>  We are an 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>

<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"><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>
<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="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>
  </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"><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>
  </tr>
</table>
<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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</font></p>
<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Financial Highlights.</i></b></font></p>
<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">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>
</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">We increased our overall annual coffee poundage
      volume from 13 million pounds in 1998 to 17.4 million pounds in 2003;</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">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>
  </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">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>
  </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">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>
  </tr>
</table>
<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><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.  These two facilities allow us to reduce our freight and shipping costs to the Western United States, thereby enabling us to be more competitive in bidding for</font></p>

<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">new business.  In addition, our presence in Colorado has increased the number of potential customers we have because of our proximity to the West Coast.</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>
<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">Retail branded coffee; </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">Retail private label coffee;</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">Wholesale specialty green and whole bean
      coffees; </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">Food service;</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">Instant coffees; and</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">Niche products.</font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Strong Wholesale Green Coffee Market Presence.</i></b>  As a large roaster/dealer of green coffee, we believe that 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.  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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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</font></p>

<p>&nbsp;</p>
<p align="center"><font size="2" face="serif">3</font></p>
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<p align="left"><font size="2" face="serif">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Management Has Extensive Experience in the Coffee Industry.</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 founder, 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.  We believe that 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>

<p align="left"><font size="2" face="serif"><b>Our Growth Strategy</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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</font></p>

<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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>
<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">Specialty blends;</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">Private label &#147;value&#148; blends
      and trial-sized mini-brick packages;</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">Specialty instant coffees;</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">Instant cappuccinos and hot chocolates; and</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">Tea line products. </font></td>
  </tr>
</table>
<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 size="2" face="serif"><b><i>The Offering</i></b></font></p>

<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <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>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <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>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <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, to expand our food service distribution
      and for general corporate purposes, including working capital and capital
      expenditures. 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>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <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>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <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
      9.</font></td>
  </tr>
  <tr valign="top">
    <td><hr align="left" width="25%" size="1" noshade></td>
    <td>&nbsp;</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">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>
</tr>
</table>
<p align="center"><font face="serif" size="2">7</font></p>
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<p align="center"><font size="2" face="serif"><b>Summary Financial Information</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="center" colspan="8"><font size="1" face="serif"><b>For the Year
      Ended</b></font><font size="2" face="serif">&nbsp;</font><font size="2" face="serif">&nbsp;</font><font size="2" face="serif">&nbsp;</font></td>
    <td align="center">&nbsp;</td>
    <td align="center" colspan="5"><font size="1" face="serif"><b>For the Six
      Months Ended</b></font><font size="2" face="serif">&nbsp;</font><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">&nbsp;</td>
    <td colspan="8" align="center"><hr noshade size="1"></td>
    <td align="center">&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="left">&nbsp;</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></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 align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td colspan="13" align="center"><font size="1" face="serif"><b>(Dollars in
      thousands, except per share data)</b></font></td>
    <td align="left">&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="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 sales</font></td>
    <td align="left" width="2%">&nbsp;</td>
    <td align="right" width="2%"><font size="2" face="serif">$</font></td>
    <td align="right" width="8%"><font size="2" face="serif"> 20,240</font></td>
    <td align="left" width="2%">&nbsp;</td>
    <td align="right" width="2%"><font size="2" face="serif">$</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" 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="left">&nbsp;</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></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="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">4,867</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">4,980</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">4,262</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">3,710</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">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="left">&nbsp;</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></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="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">874</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">1,475</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">1,100</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">1,408</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">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="left">&nbsp;</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></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="left">&nbsp;</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="left">&nbsp;</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></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="left">&nbsp;</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></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="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>
    <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">$</font></td>
    <td align="right"><font size="2" face="serif"> .07</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Book value per share</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</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>
<br>
<table width="100%" cellspacing="0" cellpadding="0" 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="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="center" 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">&nbsp;</td>
    <td colspan="7" align="center" valign="bottom"><hr noshade size="1"></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td colspan="4" align="center" valign="bottom"><hr noshade size="1"></td>
    <td align="center" 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">&nbsp;</td>
    <td align="center" valign="bottom"><font size="1" face="serif"><b>2003</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"><b>2002</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"><b>2001</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"><b>Actual</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"><b>As Adjusted(1)</b></font></td>
    <td align="center" 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 colspan="2" align="right"><hr noshade size="1"></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td colspan="2" align="center" valign="bottom"><hr noshade size="1"></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td colspan="2" align="center" valign="bottom"><hr noshade size="1"></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td colspan="2" align="center" valign="bottom"><hr noshade size="1"></td>
    <td align="center" valign="bottom">&nbsp;</td>
    <td colspan="2" align="center" valign="bottom"><hr noshade size="1"></td>
    <td align="center" 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">&nbsp;</td>
    <td colspan="13" align="center" valign="bottom"><font size="1" face="serif"><b>(Dollars
      in thousands)</b></font></td>
    <td align="center" valign="bottom">&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="left" width="2%">&nbsp;</td>
    <td width="1%" align="right">&nbsp;</td>
    <td width="8%" 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="8%" 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="8%" 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="8%" 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="8%" 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">Total assets</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 7,035</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 6,042</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 5,713</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 7,749</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 12,310</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Short-term debt</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 2,076</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="left">&nbsp;</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">$</font></td>
    <td align="right"><font size="2" face="serif"> 52</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Total liabilities</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</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="left">&nbsp;</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 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>
</table>
<p align="center"><font face="serif" size="2">8</font></p>
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<page>
<a name="p9"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<p align="center"><font size="2" face="serif"><b>RISK FACTORS</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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.  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>

<p align="center"><font size="2" face="serif"><b><i>Risk Factors Affecting Our
  Company</i></b></font></p>

<p align="left"><font size="2" face="serif"><b>Because our business is highly dependent upon a single commodity, coffee, any decrease in demand for coffee could materially adversely affect our revenues and profitability.</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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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<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 distribution of private label coffee;</font></td>
</tr>
</table>
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  <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 distribution
      of proprietary branded coffee; and</font></td>
  </tr>
</table>
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  <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 sale of wholesale specialty green coffee.</font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Demand for our products is affected by:</font></p>
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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">consumer tastes and preferences;</font></td>
</tr>
</table>
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  <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">national, regional and local economic conditions;</font></td>
  </tr>
</table>
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  <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">demographic trends; and</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">the type, number and location of competing
      products.</font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

<p align="left"><font size="2" face="serif"><b>If we are unable to geographically expand our branded and private label products, our growth will be impeded which could result in reduced sales and profitability. </b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business strategy emphasizes, among other things, geographic expansion of our branded and private label products as opportunities arise.  We may not be able to implement successfully this portion of our business strategy.  Our ability to implement this portion of our business strategy is dependent on our ability to: </font></p>

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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">market our products on a national scale;</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">increase our brand recognition on a national
      scale;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">9</font></p>
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  <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">enter into distribution and other strategic
      arrangements with third party retailers; and</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">manage growth in administrative overhead
      and distribution costs likely to result from the planned expansion of our
      distribution channels.</font></td>
  </tr>
</table>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our sales and profitability may be adversely affected if we fail to successfully expand the geographic distribution of our branded and private label products.  In addition, our expenses could increase and our profits could decrease as we implement our growth strategy.</font></p>
<p align="left"><font size="2" face="serif"><b>Any inability to successfully implement our strategy of growth through selective acquisitions, licensing arrangements and other strategic alliances could materially affect our revenues and profitability.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 result in increased expenditures and could materially adversely affect our revenues and profitability, including:</font></p>
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<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">such acquisitions, licensing arrangements or other strategic alliances may divert our management&#146;s attention from our existing operations;</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">we may not be able to successfully integrate
      the operations of any acquired coffee companies with our operations;</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">we may not be able to successfully integrate
      additional coffee brands with our existing coffee brands;</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">we may not be able to manage the contingent
      risks associated with the past operations of, and other unanticipated problems
      arising in, any acquired coffee company; and</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">we may face increased competition for acquisition,
      licensing and other business opportunities in the coffee market.</font></td>
  </tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td>&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif">&nbsp;</font><font size="2" face="serif">We
      may not be able to:</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">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>
  </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">successfully integrate any acquired coffee
      companies or new coffee brands into our existing business;</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">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>
  </tr>
</table>

<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">10</font></p>
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<p>&nbsp;</p>

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  <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">ensure that any strategic corporate partner
      will perform its obligations pursuant to any strategic alliance; and</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">control unanticipated costs associated with
      such acquisitions, licensing arrangements or strategic alliances.</font></td>
  </tr>
</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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<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">potentially dilutive issuances of our equity securities; and</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">the incurrence of additional debt.</font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.  We do not have long-term contracts
with these or any of our customers.  Accordingly, our customers can stop purchasing our products at any time without penalty and are free to purchase products from our competitors.  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>
<p align="left"><font size="2" face="serif"><b>If we lose our key personnel, including Andrew Gordon and David Gordon, our revenues and profitability could suffer.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our success depends to a large degree upon the services of Andrew Gordon, our President, Chief Executive Officer and Treasurer, and David Gordon, our Executive Vice President-Operations and Secretary.  We also depend to a large degree on the expertise of our coffee roasters.  We do not have employment contracts with 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</font></p>

<p>&nbsp;</p>
<p align="center"><font size="2" face="serif">11</font></p>
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<p>&nbsp;</p>

<p align="left"><font size="2" face="serif">individuals. As a result, our business and operating results would be adversely affected.  We may not be successful in obtaining and retaining a replacement for either Andrew Gordon or
David Gordon if they elect to stop working for us.  In addition, we do not have key-man insurance on the lives of Andrew Gordon or David Gordon.</font></p>

<p align="left"><font size="2" face="serif"><b>If our hedging policy is not effective, we may not be able to control our coffee costs, we may be forced to pay greater than market value for green coffee and our profitability may be reduced.</b></font></p>
<font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 may not be able
to pass price increases through to our customers in the future. Our hedging strategy
and the hedges that we enter into may not adequately offset the risks of coffee
bean price volatility and our hedges may 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 align="left"><font size="2" face="serif"><b>If our planned increase in marketing expenditures fails to promote and enhance our brands, the value of our brands could decrease and our revenues and profitability could be adversely affected.</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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</font></p>


<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">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>

<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.  If our competitive position is weakened, our revenues and profitability could be materially adversely affected.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>Our operating results may fluctuate significantly, which makes our results of operations difficult to predict and could cause our results of operations to fall short of expectations.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating results may fluctuate from quarter to quarter and year to year as a result of a number of factors, many of which are outside of our control.  These fluctuations could be caused by a number of factors including:</font></p>

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<font size="2" face="serif">fluctuations in purchase prices and supply of green coffee; </font></td>
</tr>
</table>
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  <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 the selling prices of our
      products;</font></td>
  </tr>
</table>
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  <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 level of marketing and pricing competition
      from existing or new competitors in the coffee industry;</font></td>
  </tr>
</table>
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  <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 retain existing customers
      and attract new customers; and</font></td>
  </tr>
</table>
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  <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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.  Accordingly, our operating results in future quarters may be below the expectations of public market analysts and investors.  In this event, the price of our common stock may decline.</font></p>
<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 relationship with</b></font></p>

<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif"><b>our customers, which could result in reduced revenues, increased operating expenses, a loss of customers or reduced profitability.</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 additional financing may not 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>
<p align="left"><font size="2" face="serif"><b>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 and we may not be able to service our customers in a timely manner, thereby reducing our revenues and earnings.</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>&nbsp;</p>
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<p align="center"><font size="2" face="serif"><b><i>Risk Factors Relating to the
  Coffee Industry</i></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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Coffee is a traded commodity and, in general, its price can fluctuate depending on:</font></p>
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<font size="2" face="serif">weather patterns in coffee-producing countries;</font></td>
</tr>
</table>
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    <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">economic and political conditions affecting
      coffee-producing countries, including acts of terrorism in such countries;</font></td>
  </tr>
</table>
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  <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">foreign currency fluctuations; and</font></td>
  </tr>
</table>
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    <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">trade regulations and restrictions between
      coffee-producing countries and the United States.</font></td>
  </tr>
</table>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 may not 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>
<p align="left"><font size="2" face="serif"><b>Disruptions in the supply of green coffee could result in a deterioration of our relationship
with our customers, decreased revenues or could impair our ability to grow our business.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Green coffee is a commodity and its supply is subject to volatility beyond our control. Supply is 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 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif"><b>The coffee industry is highly competitive and if we cannot compete successfully, we may lose our customers or experience reduced sales and profitability.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. If we are unable to
compete successfully against existing and new competitors, we may lose our customers
or experience reduced sales and profitability.</font></p>
<p align="left"><font size="2" face="serif"><b>Adverse public or medical opinion about caffeine may reduce our sales and profits.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 reduce our sales and profits.</font></p>

<p align="center"><font size="2" face="serif"><b><i>Risk Factors Related to this
  Offering</i></b></font></p>

<p align="left"><font size="2" face="serif"><b>The Gordon family effectively controls Coffee Holding, substantially reducing the influence of our other stockholders.</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p>&nbsp;</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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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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<td>
<font size="2" face="serif">establishing a classified board of directors requiring that members of the board be elected in different years;</font></td>
</tr>
</table>
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    <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">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>
  </tr>
</table>
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    <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">prohibiting cumulative voting in the election
      of directors, which would otherwise allow less than a majority of stockholders
      to elect director candidates;</font></td>
  </tr>
</table>
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    <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">limiting the ability of stockholders to call
      special meetings of stockholders;</font></td>
  </tr>
</table>
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    <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">prohibiting stockholder action by written
      consent and requiring all stockholder actions to be taken at a meeting of
      our stockholders; and</font></td>
  </tr>
</table>
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    <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">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>
  </tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 </font></p>

<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">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>

<p align="left"><font size="2" face="serif"><b>There has been no prior market for our common stock and if an active trading market for our stock does not develop or if our stock is delisted from the American Stock Exchange, you may have difficulty selling your stock.</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.  An active trading market for our securities might not develop or be sustained.  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>

<p align="left"><font size="2" face="serif"><b>The market price of our common stock may be volatile.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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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<font size="2" face="serif">Fluctuations in our results of operations;</font></td>
</tr>
</table>
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    <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">Minimal public float and lack of liquidity;</font></td>
  </tr>
</table>
<p>&nbsp;</p>
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    <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">Financial market and economic conditions;</font></td>
  </tr>
</table>
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    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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    <td width="3%"> <font size="2" face="serif">&#149;</font></td>
    <td> <font size="2" face="serif">Availability of a specialist for our common
      stock; and</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">Investor sentiment for coffee related companies.</font></td>
  </tr>
</table>

<p align="left"><font size="2" face="serif"><b>We will have discretion as to the use of the proceeds of this offering.  If we do not use the proceeds effectively, we may not be able to successfully implement our business strategy which could impede our growth and reduce our sales and profitability.</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>You will incur immediate and substantial dilution.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>


<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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>
<p>&nbsp;</p>
<p align="center"><font face="serif" size="2">19</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p20"></a>

<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

<p align="center"><font size="2" face="serif"><b>SPECIAL NOTE REGARDING FORWARD-LOOKING
  STATEMENTS</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus contains forward-looking statements.  Forward-looking statements typically are identified by use of terms such as &#147;may,&#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 above.</font></p>

<p align="center"><font face="serif" size="2">20</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p21"></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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 of approximately $880,000, or $1.0 million if the underwriter exercises its over-allotment option in full, and estimated offering expenses of approximately $580,000 payable by us.  </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, to expand our food service distribution and for general corporate purposes, including working capital and capital expenditures.  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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $2.8 million indebtedness that we intend to repay using proceeds of this offering includes approximately $2,326,406 of obligations under our revolving line of credit, approximately $294,000 of obligations under the term loan and approximately $158,236 of obligations under the 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.</font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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="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 ($3.56 per share assuming exercise of the underwriter&#146;s over-allotment option) to new investors purchasing shares of our common stock in this offering.  The following table illustrates this per share dilution:</font></p>
<table width="80%" border="0" align="center" cellpadding="0" cellspacing="0">
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left" valign="bottom"><font size="2" face="serif">Assumed public offering
      price per share (1)</font></td>
    <td width="2%" align="left" valign="bottom">&nbsp;</td>
    <td width="1%" align="right" valign="bottom">&nbsp;</td>
    <td width="13%" align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td width="2%" align="left" valign="bottom">&nbsp;</td>
    <td width="1%" align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td width="11%" align="right" valign="bottom"><font size="2" face="serif"> 5.50</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
    <td align="left" valign="bottom"><font size="2" face="serif">Net tangible book
      value per share at April 30, 2004</font></td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 0.71</font></td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
    <td align="left" valign="bottom"><font size="2" face="serif">Increase per share
      attributable to new investors</font></td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 1.11</font></td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom">
<hr noshade size="1"></td>
    <td valign="bottom">
<hr noshade size="1"></td>
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
    <td align="left" valign="bottom"><font size="2" face="serif">As adjusted net tangible
      book value per share<br>
      after the offering(2) </font></td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 1.82</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom">
<hr noshade size="1"></td>
    <td valign="bottom">
<hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
    <td align="left" valign="bottom"><font size="2" face="serif">Dilution per share
      to new investors</font></td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 3.68</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom"></td>
    <td valign="bottom">
<hr noshade size="2"></td>
    <td valign="bottom">
<hr noshade size="2"></td>
<td></td>
</tr>
</table>
<table width="80%" border="0" align="center" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td><hr align="left" width="25%" size="1" noshade></td>
  </tr>
</table>
<table width="80%" border="0" align="center" cellpadding="0" cellspacing="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="80%" border="0" align="center" cellpadding="0" cellspacing="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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<table width="100%" cellspacing="0" cellpadding="0" 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>Shares<br>Purchased</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="4" align="center"><font size="1" face="serif"><b>Total<br>Consideration</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>Average <br>Price</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>Number</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>Percent</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>Amount</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>Percent</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>Per Share</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="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 width="1%" align="right">&nbsp;</td>
<td width="8%" align="right"><font size="2" face="serif">3,999,650</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="11%" align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;71.4</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="8%" align="right"><font size="2" face="serif"> 871,887</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="8%" align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.0</font></td>
<td width="2%" align="left"><font size="2" face="serif">%</font></td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="8%" align="right"><font size="2" face="serif"> .22</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">New investors</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,600,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;28.6</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">8,800,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;91.0</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right"><font size="2" face="serif">$</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"><font size="2" face="serif">Total&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></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="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></td>
<td></td>
<td></td>
</tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="center"><font face="serif" size="2">22</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<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>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 width="100%" cellspacing="0" cellpadding="0" 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></td>
<td></td>
<td><hr noshade size="1"></td>
<td colspan="4"><hr noshade size="1"></td>
<td></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(1)</b></font></td>
<td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom">
    <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="bottom" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Short term debt:</font></td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="1%" align="right">&nbsp;</td>
    <td width="8%" 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="8%" align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td width="2%" align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td align="left">
      <div style="margin-left:6%; text-indent:-3%">
<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">$</font></td>
    <td align="right"><font size="2" face="serif"> 84,000</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;&#151;</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td align="left">
      <div style="margin-left:6%; text-indent:-3%">
<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;134,886</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;&#151;</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td align="left">
      <div style="margin-left:6%; text-indent:-3%">
<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">2,326,406</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;&#151;</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom">
    <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="bottom" bgcolor="#FFFFFF">
    <td align="left">
      <div style="margin-left:9%; text-indent:-3%">
<font size="2" face="serif">Total short term debt</font></div></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">2,545,292</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;&#151;</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom">
    <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="bottom" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Long term debt:</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="bottom" bgcolor="#FFFFFF">
    <td align="left">
      <div style="margin-left:6%; text-indent:-3%">
<font size="2" face="serif">Term loan, net of current portion</font></div></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">210,000</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="bottom" bgcolor="#FFFFFF">
    <td align="left">
      <div style="margin-left:6%; text-indent:-3%">
<font size="2" face="serif">Obligations under capital lease,
net of current portion</font></div></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">23,350</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="bottom" bgcolor="#FFFFFF">
    <td align="left">
      <div style="margin-left:6%; text-indent:-3%">
<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">&#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="bottom">
    <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="bottom" bgcolor="#FFFFFF">
    <td align="left">
      <div style="margin-left:9%; text-indent:-3%">
<font size="2" face="serif">Total long term debt</font></div></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">233,350</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="bottom">
    <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="bottom" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Other long term liabilities</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;52,000</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;52,000</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom">
    <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="bottom" 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="bottom" 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">&#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="bottom">
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
</tr>
  <tr valign="bottom" 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(2)</font></div></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">5,600</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom" 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">867,887</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">8,206,287</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom" 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">1,986,595</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;1,986,595</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom">
    <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="bottom" 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">2,858,482</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">10,198,482</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom">
    <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="bottom" 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"> 5,689,124</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">10,250,482</font></td>
    <td align="left">&nbsp;</td>
</tr>
  <tr valign="bottom">
    <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="25%" 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"> 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 face="serif" size="2">23</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<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>DIVIDEND POLICY</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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>SELECTED FINANCIAL INFORMATION</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td colspan="11" align="center"><font size="1" face="serif"><b>For the Year Ended</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="10" align="center"><font size="1" face="serif"><b>For the 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="left">&nbsp;</td>
<td colspan="11" align="center"><hr noshade size="1"></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="10" 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 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 colspan="4" 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" colspan="7"><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></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 colspan="4"><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td colspan="7"><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 align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="22" align="center"><font size="1" face="serif"><b>(Dollars in thousands, except per share data)</b></font></td>
<td align="left">&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="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%">&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%">&nbsp;</td>
<td colspan="4" align="left" width="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td colspan="7" align="left" width="8%"><font size="2" face="serif">&nbsp;</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>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Net sales</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 20,240</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 17,433</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td colspan="4" align="right"><font size="2" face="serif"> 20,327</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td colspan="7" align="right"><font size="2" face="serif"> 12,181</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"> 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="left">&nbsp;</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 colspan="4" align="right"><font size="2" face="serif">16,065</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="7" 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></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 colspan="4"><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td colspan="7"><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="left">&nbsp;</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 colspan="4" 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 colspan="7" align="right"><font size="2" face="serif">3,710</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">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="left">&nbsp;</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 colspan="4" align="right"><font size="2" face="serif">3,162</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="7" 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></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 colspan="4"><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td colspan="7"><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="left">&nbsp;</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 colspan="4" 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 colspan="7" align="right"><font size="2" face="serif">1,408</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">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="left">&nbsp;</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 colspan="4" 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 colspan="7" 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></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 colspan="4"><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td colspan="7"><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="left">&nbsp;</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 colspan="4" 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 colspan="7" align="right"><font size="2" face="serif">1,333</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">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="left">&nbsp;</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 colspan="4" align="right"><font size="2" face="serif">313</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="7" 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></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 colspan="4"><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td colspan="7"><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="left">&nbsp;</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 colspan="4" align="right"><font size="2" face="serif"> 518</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td colspan="7" align="right"><font size="2" face="serif"> 738</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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></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 colspan="4"><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td colspan="7"><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: 3%; text-indent: -3%"><font size="2" face="serif">Net income  per share &#150; basic and diluted</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .16</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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">$</font></td>
<td colspan="4" align="right"><font size="2" face="serif"> .13</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td colspan="7" align="right"><font size="2" face="serif"> .18</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .07</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Book value per share</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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 colspan="4" align="right"><font size="2" face="serif"> .19</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td colspan="7" align="right"><font size="2" face="serif"> .71</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .44</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<br><br>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr align="center" valign="bottom">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="7"><font size="1" face="serif"><b>At</b></font> <font size="1" face="serif"><b>October
      31,</b></font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="4"><font size="1" face="serif"><b>At April 30, 2004</b></font></td>
    <td>&nbsp;</td>
</tr>
  <tr align="center" valign="bottom">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td colspan="8"><hr noshade size="1"></td>
    <td>&nbsp;</td>
    <td colspan="5"><hr noshade size="1"></td>
    <td>&nbsp;</td>
</tr>

  <tr align="center" valign="bottom">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="1" face="serif"><b>2003</b></font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="1" face="serif"><b>2002</b></font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="1" face="serif"><b>2001</b></font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="1" face="serif"><b>Actual</b></font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font size="1" face="serif"><b>As Adjusted(1)</b></font></td>
    <td>&nbsp;</td>
</tr>
  <tr align="center" valign="bottom">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td colspan="2"><hr noshade size="1"></td>
    <td>&nbsp;</td>
    <td colspan="2"><hr noshade size="1"></td>
    <td>&nbsp;</td>
    <td colspan="2"><hr noshade size="1"></td>
    <td>&nbsp;</td>
    <td colspan="2"><hr noshade size="1"></td>
    <td>&nbsp;</td>
    <td colspan="2"><hr noshade size="1"></td>
    <td>&nbsp;</td>
</tr>

  <tr align="center" valign="bottom">
    <td><font size="1" face="serif">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="13"><font size="1" face="serif"><b>(Dollars in thousands)</b></font></td>
    <td>&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="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="8%" 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="8%" 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="8%" 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="8%" 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="8%" 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">Total assets</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 7,035</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 6,042</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 5,713</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 7,749</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 12,310</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Short-term debt</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,076</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="left">&nbsp;</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">$</font></td>
<td align="right"><font size="2" face="serif"> 52</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Total liabilities</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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="left">&nbsp;</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 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  shares of common stock offered by this prospectus.</font></td>
</tr>
</table>
<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>MANAGEMENT&#146;S DISCUSSION
  AND ANALYSIS OF FINANCIAL<br>
  CONDITION AND RESULTS OF OPERATIONS</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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>
<p align="left"><font size="2" face="serif"><b>Overview</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations have primarily focused on the following areas of the coffee industry:</font></p>
<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>
</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">the roasting, blending, packaging and sale
      of private label coffee; and</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">the roasting, blending, packaging and sale
      of our seven brands of coffee. </font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating results are affected by a number of factors including:</font></p>
<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 level of marketing and pricing competition from existing or new competitors in the coffee industry; </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">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>
</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">our ability to manage inventory and fulfillment
      operations and maintain gross margins. </font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;&#150; Overview &#150; 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 </font></p>

<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net sales are also affected by the price of green coffee.  We import green coffee from Colombia, Mexico, Kenya, Brazil and Uganda.  The supply and price of coffee beans are subject to volatility and are influenced by numerous factors which are beyond our control.  For example, coffee crops in Brazil, which produces one-third of the world&#146;s green coffee, are susceptible to frost in June and July and drought in September, October and November.  However, because we purchase coffee from a number of countries and are able to freely substitute one country&#146;s coffee for another in our products, price fluctuations in one country generally have not had a material impact on the price we pay for coffee.
Accordingly, price fluctuations in one country generally have not had a material effect on our results of operations, liquidity and capital resources.  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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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&#146;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 </font></p>

<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">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>
<p align="left"><font size="2" face="serif"><b>Critical Accounting Policies and Estimates</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
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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 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>
</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="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"> 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>
  </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="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>
  </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="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</font></td>
  </tr>
</table>
<p>&nbsp;</p>
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<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="3%"><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">balance sheet when it is determined that it is more likely than not
      that the asset will be realized.</font></td>
  </tr>
</table>

<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 of $162,820 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 in the amount of $607,220.  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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 higher green coffee prices during the period as prices increased $.10 per
  pound year to year, partially offset by net gains of $1,484,441 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>&nbsp;</p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 increases of $173,973 in shipping expenses, $102,219 in office salaries, $77,500 in depreciation expense, $68,032 in utilities, $39,308 in sales commissions, and $35,706 of increased professional fees
associated with the acquisition of assets from Premier Roasters.  </font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.  The increase in commissions 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 believe that these changes reflect our strategic decision to invest in measures that will increase net sales on a present and future basis.  The increase in office salaries reflects normal salary increases to non-officer employees in our New York facility and the addition of new personnel in our Colorado facility.  The increase in utilities
reflects the increased costs of operating two facilities.  The increase in depreciation expense is attributable to the acquisition of equipment from Premier Roasters. 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>&nbsp;</p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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;&#150;Liquidity and Capital Resources.&#148;</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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>
<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 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
    in the amount of $633,262 to current and new customers and an increase of
    $175,154 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 </font></p>


<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 shipping, 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.  This increase is mainly attributable to increases of $213,845 in office salaries, $206,115 in shipping expenses, $130,599 in sales commissions, $45,912 in depreciation expense, and $37,232 in travel expenses,
partially offset by a decrease of $219,363 in professional fees.  </font></p>

<p>&nbsp;</p>
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</p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    increase in commissions and travel expenses reflects the hiring of additional
    sales personnel and increased attendance at trade shows to promote our food
    service and private label coffee business. 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. The increase in office salaries reflects normal salary increases to
    non-officer employees in our New York facility and the addition of new sales
    personnel. 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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. Substantially all of
	this decrease was 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;&#150;Liquidity and Capital Resources.&#148;</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 of $487,561 in operating expenses and the increase of $2,920,414 in cost of goods sold as we focused on increasing market share in order to capitalize on increased prices in the future, offset by a $2,807,125 increase in net sales.</font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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>
<p align="left"><font size="2" face="serif"><b>Liquidity and Capital Resources</b></font></p>
<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>&nbsp;</p>
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<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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;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 $463,929 in increased net income, $429,686 in decreased accounts receivable and a $134,574 decrease in prepaid expenses and other current assets, offset in part by $642,493 in increased inventory levels and a $375,705 increase in income taxes payable.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>Market Risks</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market risks relating to our operations result primarily from changes in interest rates and commodity prices as further described below.</font></p>
<p align="left"><font size="2" face="serif"><b>Interest Rate Risks</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 </font></p>

<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">flows in fiscal 2004, although there can be no assurance that interest rates will not significantly change.</font></p>
<p align="left"><font size="2" face="serif"><b>Commodity Price Risks</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>Off-Balance Sheet Arrangements</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Products and Operations.</i></b> &nbsp;&nbsp;We are an 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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    <td> <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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    <td> <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>
  </tr>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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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    <td> <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>
  </tr>
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    <td> <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>
  </tr>
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    <td> <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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    <td> <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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Geographic Expansion.</i></b>&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>Our Industries</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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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    <td> <font size="2" face="serif">Specialty coffees, which include:</font></td>
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    <td> <font size="2" face="serif">Gourmet coffees (premium grade Arabica coffees
      sold in whole bean and ground form);</font></td>
  </tr>
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    <td>&nbsp;</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Specialty Green Coffee.</i></b>&nbsp;&nbsp;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>
<p>&nbsp;</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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    <td> <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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    <td> <font size="2" face="serif">Greater consumer awareness of specialty coffee
      as a result of its increasing availability;</font></td>
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    <td> <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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    <td> <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>&nbsp;&nbsp;</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>
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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">According to Information Resources Inc.,
      Spanish espresso beverages&#146; total volume sales increased by 12% from
      April 2003 to April 2004.</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">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>
  </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">According to Selig Center for Economics,
      the purchasing power of Hispanic consumers is expected to hit $925.1 billion
      by 2007.</font></td>
  </tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Coffee Commodity Market.</i></b>&nbsp;&nbsp;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%.</font></p>

<p>&nbsp;</p>
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<p align="left"><font size="2" face="serif">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 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>&nbsp;&nbsp;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.  These two facilities allow us to reduce our freight and shipping costs to the Western United States, thereby enabling us to be more competitive in bidding for new business.  In addition, our presence in Colorado has increased the number of potential customers we have because of our proximity to the West Coast.</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>&nbsp;&nbsp;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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<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">Retail branded coffee; </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">Retail private label coffee;</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">Wholesale specialty green and gourmet whole
      bean coffees; </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">Food service;</font></td>
  </tr>
</table>
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  <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">Instant coffees; and</font></td>
  </tr>
</table>
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  <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">Niche products.</font></td>
  </tr>
</table>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.  Premium price level coffee is high-quality gourmet coffee, such as AA Arabica coffee, which sells at a substantial premium over traditional retail canned coffee, while competitive and value price level coffee is mainstream or traditional canned coffee.  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>&nbsp;</p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Strong Wholesale Green Coffee Market Presence.</i></b>&nbsp;&nbsp;As a large roaster/dealer of green coffee, we believe that 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, although we do not have any formalized, material agreements or long-term contracts with it, we have a 13-year relationship with our largest wholesale
green coffee customer, Green Mountain Coffee Roasters.  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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Diverse Portfolio of Differentiated Branded Coffees.</i></b>&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Management Has Extensive Experience in the Coffee Industry.</i></b>&nbsp;&nbsp;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 founder, 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.  We believe that 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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Selectively Pursue Strategic Acquisitions and Alliances.</i></b>&nbsp;&nbsp;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.  We believe that 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 according to its website.  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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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 that we believe is 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Further Market Penetration of Our Niche Products.</i></b>&nbsp;&nbsp;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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<td>
<font size="2" face="serif">Specialty blends;</font></td>
</tr>
</table>
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  <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">Private label &#147;value&#148; blends and
      trial-sized mini-brick packages;</font></td>
  </tr>
</table>
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<p>&nbsp;</p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"></td>
<td width="3%">
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<td>
<font size="2" face="serif">Specialty instant coffees;</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">Instant cappuccinos and hot chocolates; and</font></td>
  </tr>
</table>
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  <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">Tea line products. </font></td>
  </tr>
</table>
<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Develop Our Food Service Business.</i></b>&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>Our Core Products </b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our core products can be divided into three categories:</font></p>
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<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></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"><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>
  </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"><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>
  </tr>
</table>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Wholesale Green Coffee.</i></b>&nbsp;&nbsp;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 a large roaster/dealer 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&#150;Trademarks.&#148; </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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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    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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<td>
<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>
</tr>
</table>
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  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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<td width="3%">
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<td>
<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&#146;d Roast and IL CLASSICO lines;</font></td>
</tr>
</table>
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  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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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>
</tr>
</table>
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    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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<td>
<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>
</tr>
</table>
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  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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<td width="3%">
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<td>
<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>
</tr>
</table>
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  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
<tr valign="top">
<td width="3%"></td>
<td width="3%">
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<td>
<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>
</tr>
</table>
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  <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"><b><i>Il CLASSICO</i></b> is an S&amp;W brand
      espresso product.</font></td>
  </tr>
</table>
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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">trial-sized mini-brick coffee 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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    <td>&nbsp;</td>
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    <td> <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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 have any formalized, material agreements or long-term contracts with any of these suppliers.  Rather, our purchases are typically made
pursuant to individual purchase orders.  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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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</font></p>
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<p align="left"><font size="2" face="serif">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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>Our Use of Derivatives</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#150; Commodity Price Risks.&#148;</font></p>
<p align="left"><font size="2" face="serif"><b>Trademarks</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>Customers</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although our agreements with wholesale customers generally contain only pricing terms, our contract with Supervalu also contains minimum and maximum purchase obligations at fixed</font></p>
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<p align="left"><font size="2" face="serif"> 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>
<p align="left"><font size="2" face="serif"><b>Marketing</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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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    <td> <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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    <td> <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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The coffee market is highly competitive.  We compete in the following areas: </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Wholesale Green Coffee.</i></b>&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Private Label Competition.</i></b>&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Branded Competition.</i></b>&nbsp;&nbsp;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</font></p>
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<p align="left"><font size="2" face="serif"> 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>
<p align="left"><font size="2" face="serif"><b>Government Regulation</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>Employees</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>


<p align="left"><font size="2" face="serif"><b>Description of Property</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.  We do not plan to extend the term of this lease.  Rather, we plan to enter into a new multi-year lease for a larger warehouse in Brooklyn.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="left"><font size="2" face="serif"><b>Legal Proceedings</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<p align="center"><font size="2" face="serif"><b>MANAGEMENT</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>

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<td align="left"><font size="2" face="serif"><b>Name</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="5%" align="center"><font size="2" face="serif"><b>Age</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="45%" align="center"><font size="2" face="serif"><b>Position</b></font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left"><hr align="left" width="10%" size="1" noshade></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="left"><hr align="center" width="25%" size="1" noshade></td>
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<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Andrew Gordon</font></td>
<td align="left">&nbsp;</td>
<td align="center"><font size="2" face="serif">42</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Chief Executive Officer, President, Treasurer and Director</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="center"><font size="2" face="serif">39</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Executive Vice President &#150; Operations, Secretary and Director</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Richard E. Pino</font></td>
<td align="left">&nbsp;</td>
<td align="center"><font size="2" face="serif">38</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Chief Financial Officer</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="center"><font size="2" face="serif">42</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director</font></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="center"><font size="2" face="serif">47</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Barry Knepper</font></td>
<td align="left">&nbsp;</td>
<td align="center"><font size="2" face="serif">54</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director(1)</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Sal Reda, CPA</font></td>
<td align="left">&nbsp;</td>
<td align="center"><font size="2" face="serif">40</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director(1)</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Robert M. Williams</font></td>
<td align="left">&nbsp;</td>
<td align="center"><font size="2" face="serif">45</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director(1)</font></td>
</tr>
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  <td>&nbsp;</td>
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  </td>
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<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Effective upon completion of the offering.</font></td>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Andrew Gordon</b> has been our Chief Executive Officer, President, Treasurer and one of our directors since 1997.  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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>David Gordon</b> has been our Executive Vice President &#150; Operations, Secretary and one of our directors since 1995.  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.  He is a charter member of the Specialty</font></p>

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<p align="left"><font size="2" face="serif"> 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Richard
      E. Pino,</b> age 38, has served as our Chief Financial Officer since July
      2004.&nbsp; Mr. Pino has more than 17 years of experience in the communications
      industry and investment banking industry, where he worked for both public
      and private companies. From August 2001 through July 2004, Mr. Pino served
      as Chief Financial Officer
      for Frontline Communications International Inc., a carrier&#146;s carrier.
	  He served as Chief Financial Officer for Ocean Records, Inc., an independent
       record label from August 2000 to August 2001 and as Vice President
      of Finance &amp; Administration at Eagle Communications, Inc.,
	  a competitive local exchange carrier (CLEC), from August 1999 to August
      2000. His career began at Mellon Securities and Merrill Lynch Capital Markets.
      He holds
      a BA in Economics from St. Francis College, and an MBA in Corporate Finance
      and Investment from Adelphi University.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Gerard DeCapua</b> 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Daniel Dwyer</b> has served as a director of Coffee Holding since 1998.  Mr Dwyer 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we intend to appoint the following persons to our Board of Directors upon completion of the offering:</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Barry Knepper</b> will become a director concurrently with the completion of the offering.  Mr. Knepper has been the Chief Financial Officer for TruFoods Corporation, a growth oriented franchise management company since April 2001.  From January 2000 through March 2001 he was the Chief Financial Officer of Offline Entertainment, an early stage television and motion picture production company.  From 1982 through 1999 he served as the Chief Financial Officer of Unitel Video, Inc., a publicly traded nationwide high tech service company in the television, film and new media fields.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Sal
      Reda, CPA</b> will become a director concurrently with the completion of
      the offering. Mr. Reda has been a partner at Citrin Cooperman &amp; Company,
      LLP, a certified public accounting and business consulting firm, since
      1994. Mr. Reda has extensive audit and accounting experience and helps
      business owners acquire financing and prepare budgets and forecasts to
      monitor current operations. He also provides strategic planning advice
      to small business owners. He is a member of both the New York State CPA
      Society and the American Institute of CPAs. He received his Bachelor of
      Business Administration from Baruch College and earned his CPA designation
      in 1996.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Robert M. Williams</b> will become a director concurrently with the completion of the offering.  Mr. Williams has been a principal of R. Madison, Inc., a national sales, distribution, sourcing and business development firm, since 2003.  From 2002 to 2003, he was the Executive Vice President, Sales &amp; Marketing for Lodis Corporation, a fine leather goods manufacturer.  From May 2001 to January 2002, he was the Vice President of Sales, Central &amp; Eastern North America, of Hartmann, Inc., the leather and luggage goods division of Brown-Forman Corporation, and from 1997 to May 2001 he served as its Director, Personal Leather Goods &amp; Accessories.  Mr. Williams received a Bachelor of Science, Business
Administration, Marketing from the University of South Carolina, Columbia in 1981.</font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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</font></p>
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<p align="left"><font size="2" face="serif">serves until his or her successor
          is duly appointed, or until his or her earlier death, resignation or removal.</font></p>


<p align="left"><font size="2" face="serif"><b>Committees of the Board of Directors</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Audit Committee.</i>&nbsp;&nbsp;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.
Directors DeCapua, Knepper, and Reda will serve as members of the Audit Committee upon completion of the offering.  We believe that Director Knepper and Director Reda each qualifies as an Audit Committee Financial Expert as that term is defined by SEC regulations.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Compensation</i><b><i></i></b><i>
  Committee</i>.&nbsp;&nbsp;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. Directors Knepper, Reda and Williams will serve as members of the
  Compensation Committee upon completion of the offering.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Nominating
      and Corporate Governance Committee</i>.&nbsp;&nbsp;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</font></p>

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<p align="left"><font size="2" face="serif">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. Directors DeCapua, Reda and
            Williams will serve as members of the Nominating and Corporate Governance
            Committee upon completion of the offering.</font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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>
<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" 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="7%" 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"><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 width="2%" align="left">&nbsp;</td>
  <td width="1%" align="right">&nbsp;</td>
  <td width="10%" align="center">&nbsp;</td>
  <td width="2%" align="left">&nbsp;</td>
  <td width="1%" align="right"><hr noshade size="1"></td>
  <td width="10%" align="center"><hr noshade size="1"></td>
  <td width="2%" 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 width="2%" 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 width="2%" align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left" valign="bottom"><font size="2" face="serif"><b><font size="1">Name and</font></b></font><font size="1"><br>
    <font face="serif"><b>Principal Position</b></font></font></td>
<td align="left" width="2%">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Fiscal<br>
  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>($)</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Bonus <br>($) (1)</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>All Other<br>
  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="center"><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="center"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150;</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="center"><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="center"><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="center"><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="center"><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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150;</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="center"><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>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td colspan="2"><hr align="left" width="100" 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 $224,400.  Once established, the Compensation Committee will determine the salaries and bonuses of Andrew Gordon, David Gordon and our other executive officers.</font></p>
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<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>
<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</font></p>
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<p align="left"><font size="2" face="serif">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>
<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</font></p>
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<p align="left"><font size="2" face="serif">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>
<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 July 31, 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>

<p align="center"><font size="2" face="serif">56</font></p>
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<table width="100%" cellspacing="0" cellpadding="0" 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%">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Number
      of Shares<br>
      Owned Before<br>
      Offering</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Percentage <br>
  Owned Before<br>
  Offering</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td colspan="2" align="center" valign="bottom"><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 align="left" width="50%" size="1" noshade></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 width="1%" align="right">&nbsp;</td>
<td width="15%" align="right"><font size="2" face="serif">619,500</font></td>
<td align="left">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="15%" align="right"><font size="2" face="serif">15.5</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td width="1%" align="right">&nbsp;</td>
<td width="15%" 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">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">Richard E. Pino</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">0</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">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>
</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 colspan="2"><hr align="left" width="100" size="1" noshade>
    </td>
  </tr>
<tr valign="top">
  <td><font size="2" face="serif">*</font></td>
  <td align="left"> <font size="2" face="serif"> Less than 1%.</font></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 owned by Rachelle Gordon&#146;s husband, Sterling A. Gordon.  Pursuant to the terms of Rachelle L. Gordon 2002 Grantor Retained Annuity Trust, Mrs. Gordon will receive annual distributions of common stock based on the appraised value of our common stock through 2004.  Any shares remaining in the trust after such distribution will be distributed in equal amounts to Andrew Gordon and David 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 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.  Pursuant to the terms of Sterling A. Gordon 2002 Grantor Retained Annuity Trust, Mr. Gordon will receive annual distributions of common stock based on the appraised value of our common stock through 2004.  Any shares remaining in the trust after such distribution will be distributed in equal amounts to Andrew Gordon and David Gordon.  Mr. Gordon is the father of Andrew Gordon and David Gordon.</font></td>
</tr>
</table>

<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 bearing interest at an annual rate of 6% 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</font></p>
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<p align="left"><font size="2" face="serif">$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 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>
<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>
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<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>
<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</font></p>
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<p align="left"><font size="2" face="serif">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>
<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 align="left">
<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>
</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="3%"><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">&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>
</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="3%"><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">&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>
<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>
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<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">make a tender offer or exchange offer for any of our outstanding equity securities;</font></td>
</tr>
</table>
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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">merge or consolidate us with another corporation or entity; or</font></td>
</tr>
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<td width="3%"></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>
<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</font></p>
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<p align="left"><font size="2" face="serif">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>
<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;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>
<table align="center" width="60%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td><b><font size="1" face="serif"><u>Underwriter</u></font></b></td>
    <td width="10%" align="center"><b><font size="1" face="serif"><u>Number of
      Shares</u></font></b></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
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    <td><font size="2" face="serif">Maxim Group LLC</font></td>
    <td>______________</td>
  </tr>
  <tr>
    <td><font size="2" face="serif">Total</font></td>
    <td align="center"><font size="2" face="serif">1,600,000</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td><hr noshade size="2"></td>
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</table>
<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;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;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 $[ ],
respectively.</font></p>
<p align="left"><font size="2" face="serif"><b>Conduct of the Offering</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows the per share and total underwriting discounts and commissions to be paid by us in connection with this offering.  These amounts are shown assuming both no exercise and full exercise of the underwriter&#146;s over-allotment option.</font></p>
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  <tr>
    <td>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="20%"><font size="2" face="serif">&nbsp;<b><u><font size="1">Without Option</font></u></b></font></td>
    <td width="2%">&nbsp;</td>
    <td width="20%"><font size="1" face="serif"><b><u>With Option</u></b></font></td>
  </tr>
  <tr>
    <td><font size="2" face="serif">Per Share</font></td>
    <td><font size="2" face="serif">$</font></td>
    <td>&nbsp;</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>
  </tr>
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    <td><font size="2" face="serif">Total</font></td>
    <td>&nbsp;</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;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 ($50,000 of which has been previously advanced to the underwriter), 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 offering by us for a period of 15 months following this
offering.  Following this offering, we will enter into a financial advisory agreement with the underwritter, the terms of which have not been determined.</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</font></p>
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<p align="left"><font size="2" face="serif">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although certain principals of Maxim Group have extensive experience in the securities industry, Maxim Group itself is newly formed and has acted as an underwriter in a limited number of public offerings.  Maxim Group was formed in October 2002 and is a member of the National Association of Securities Dealers and the Securities Investor Protection Corporation.</font></p>

<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 representing approximately 3,540,000 shares of our common stock, 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.  The
underwriter could waive the nine-month lock-up period if, for example, the underwriter determines that the market price and trading volume of our common stock has reached a sufficiently stable point that it could bear the sale of shares subject to the lock-ups.</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;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>
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<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>
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<table width="100%" cellspacing="0" cellpadding="0" border="0">
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<td width="3%"></td>
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<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>
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<td width="3%"></td>
<td width="3%"></td>
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<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"><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 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;http://www.sec.gov.&#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</font></p>
<p align="center"><font size="2" face="serif">68</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p69"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p align="left"><font size="2" face="serif">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="center"><font face="serif" size="2">70</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="f1"></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>INDEX TO FINANCIAL STATEMENTS </b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><div align="center"><font size="2" face="serif"><b><u>PAGE(S)</u></b></font></div></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td colspan="2"><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="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&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">REPORT OF INDEPENDENT REGISTERED
    PUBLIC ACCOUNTING FIRM </font></td>
<td width="10%"align="left"><div align="center"><font size="2" face="serif">F-2</font></div></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left"><div align="center"></div></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 align="left"><font size="2" face="serif">BALANCE SHEETS</font></td>
<td width="10%"align="left"><div align="center"><font size="2" face="serif">F-3</font></div></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</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 align="left"><font size="2" face="serif">STATEMENTS OF INCOME</font></td>
<td width="10%"align="left"><div align="center"><font size="2" face="serif">F-4</font></div></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</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 align="left"><font size="2" face="serif">STATEMENTS OF CHANGES IN STOCKHOLDERS&#146;
    EQUITY</font></td>
<td width="10%"align="left"><div align="center"><font size="2" face="serif">F-5</font></div></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</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 align="left"><font size="2" face="serif">STATEMENTS OF CASH FLOWS</font></td>
<td width="10%"align="left"><div align="center"><font size="2" face="serif">F-6</font></div></td>
</tr>
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</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 align="left"><font size="2" face="serif">NOTES TO FINANCIAL STATEMENTS</font></td>
<td width="10%"align="left"><div align="center"><font size="2" face="serif">F-7 &#150; F-
    18</font></div></td>
</tr>
</table>
<p align="center"><font face="serif" size="2">F-1</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="f2"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<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>
<p align="left">&nbsp;</p>

<div style="margin-left: 60%"><font size="2" face="serif"><b><br><u>&nbsp;&nbsp;&nbsp;&nbsp;/s/ LAZAR LEVINE &amp; FELIX LLP&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LAZAR LEVINE &amp; FELIX LLP</b></font></div>

<p align="left">&nbsp;</p>
<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>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="f3"></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>BALANCE SHEETS</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">

<tr valign="top">
  <td width="3%" align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="center"><font size="1" face="serif"><b>April 30,<br>
  </b><b>2004</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="center"><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="left">&nbsp;</td>
  <td align="right"><div align="left"></div></td>
  <td align="center"><hr size="1" noshade></td>
  <td align="left">&nbsp;</td>
  <td align="right"><div align="left"></div></td>
  <td align="center"><hr size="1" noshade></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"><div align="left"></div></td>
<td align="center"><font size="1" face="serif"><b>(unaudited)</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td colspan="8" align="left"><div align="center"><font size="2" face="serif"><b>- ASSETS -</b></font></div></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td colspan="2"align="left"><font size="2" face="serif"><b>CURRENT ASSETS:</b></font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="2%" align="right"><div align="left"></div></td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Cash</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"><b>$</b><b>196,885</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Due from broker</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Accounts receivable, net of allowance for doubtful accounts of $119,435</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Inventories</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Prepaid expenses and other current assets</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Deferred tax asset</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><b><font size="2" face="serif">TOTAL
    CURRENT ASSETS</font></b></div>  <b></b></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><font size="2" face="serif">Property and equipment, at cost, net of accumulated depreciation of $3,209,469 and $2,991,206</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b></b><b>2,165,376</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">1,579,294</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Deposits and other assets</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b></b><b>33,496</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">16,796</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Loans to related parties</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b></b><b>11,158</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"><b>7,748,858</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif">7,035,284</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td colspan="8" align="left"><div align="center"><font size="2" face="serif"><b>- LIABILITIES AND STOCKHOLDERS&#146; EQUITY -</b></font></div></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td colspan="2" align="left"><font size="2" face="serif"><b>CURRENT LIABILITIES:</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Current portion of term loan</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"><b>84,000</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Current portion of obligations under capital lease</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Line of credit borrowings</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">Accounts payable and accrued expenses</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Income taxes payable &#150; current</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><b><font size="2" face="serif">TOTAL
    CURRENT LIABILITIES</font></b></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><font size="2" face="serif">Term loan, net of current portion</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<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"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Line of credit borrowings</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>&#151;&nbsp;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Loans from related parties</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>&#151;&nbsp;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Income taxes payable &#150; deferred</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></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 LIABILITIES</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td colspan="2" align="left"><font size="2" face="serif"><b>COMMITMENTS AND CONTINGENCIES</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td colspan="2" align="left"><font size="2" face="serif"><b>STOCKHOLDERS&#146; EQUITY: </b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><font size="2" face="serif">Preferred stock, par value $.001 per share; 10,000,000 shares authorized; none issued</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>&#151;&nbsp;&nbsp;</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">&#151;&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: 3%; text-indent: -3%"><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"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b></b><b>4,000</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">4,000</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">Additional paid-in capital</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Retained earnings</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left: 6%; text-indent: -3%">
  <div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif"><b>TOTAL
      STOCKHOLDERS&#146; EQUITY </b></font></div>
</div>  <b></b></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></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"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"><b>7,748,858</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></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></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 size="2" face="Times New Roman, Times, serif">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="f4"></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" border="0">

<tr valign="top">
  <td width="3%" align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td rowspan="2" align="right"><div align="left"></div></td>
<td colspan="4" rowspan="2" align="center" valign="bottom"><font size="1" face="serif"><b>Six Months Ended</b></font><br>  <font size="1" face="serif"><b>April 30</b>,</font><br>
  <font size="1" face="serif"><b>(Unaudited)</b></font></td>
<td rowspan="2" align="left">&nbsp;</td>
<td rowspan="2" align="right"><div align="left"></div></td>
<td colspan="4" rowspan="2" align="center" valign="bottom"><font size="1" face="serif">For
    the Years Ended</font><br><font size="1" face="serif">October 31,</font></td>
<td rowspan="2" 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>
</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"><div align="left"></div></td>
<td align="right"><div align="center"><font size="1" face="serif"><b>2004</b></font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif">2003</font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="left"></div></td>
<td align="right"><div align="center"><font size="1" face="serif">2003</font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif">2002</font></div></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 align="left" size="1" noshade></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 align="left" size="1" noshade></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 colspan="2"align="left"><font size="2" face="serif"><b>NET SALES</b></font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="2%" align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></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="2%" align="right">&nbsp;</td>
<td width="10%" align="right"><font size="2" face="serif">$9,573,756</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right"><div align="left"><font size="2" face="serif">$</font></div></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="2%" 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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 colspan="2" align="left"><font size="2" face="serif"><b>COST OF SALES</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></td>
<td><hr align="left" size="1" noshade></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 align="left" size="1" noshade></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 colspan="2" align="left"><font size="2" face="serif"><b>GROSS PROFIT</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></td>
<td><hr align="left" size="1" noshade></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 align="left" size="1" noshade></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 colspan="2" align="left"><font size="2" face="serif"><b>OPERATING EXPENSES:</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><font size="2" face="serif">Selling and administrative</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Officers&#146; salaries</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></td>
<td><hr align="left" size="1" noshade></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 align="left" size="1" noshade></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"><div style="margin-left: 6%; text-indent: -3%"><b><font size="2" face="serif">TOTALS</font></b></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></td>
<td><hr align="left" size="1" noshade></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 align="left" size="1" noshade></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 colspan="2" align="left"><font size="2" face="serif"><b>INCOME FROM OPERATIONS</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></td>
<td><hr align="left" size="1" noshade></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 align="left" size="1" noshade></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 colspan="2" align="left"><font size="2" face="serif"><b>OTHER INCOME (EXPENSE)</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><font size="2" face="serif">Interest income</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Other income</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">Interest expense</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b></b><b>(81,596</b></font></td>
<td align="left"><div align="left"><font size="2" face="serif"><b>)</b></font></div></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(72,482</font></td>
<td align="left"><div align="left"><font size="2" face="serif">)</font></div></td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">(146,607</font></td>
<td align="left"><div align="left"><font size="2" face="serif">)</font></div></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></td>
<td><hr align="left" size="1" noshade></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 align="left" size="1" noshade></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"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b></b><b>(75,093</b></font></td>
<td align="left"><div align="left"><font size="2" face="serif"><b>)</b></font></div></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">(67,652</font></td>
<td align="left"><div align="left"><font size="2" face="serif">)</font></div></td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">(135,967</font></td>
<td align="left"><div align="left"><font size="2" face="serif">)</font></div></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></td>
<td><hr align="left" size="1" noshade></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 align="left" size="1" noshade></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 colspan="2" align="left"><font size="2" face="serif"><b>INCOME BEFORE INCOME TAXES</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><font size="2" face="serif">Provision for income taxes</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></td>
<td><hr align="left" size="1" noshade></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 align="left" size="1" noshade></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 colspan="2" align="left"><font size="2" face="serif"><b>NET INCOME</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"><b>738,003</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif">274,074</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif">622,082</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> 755,375</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td colspan="2" align="left"><font size="2" face="serif">Basic and diluted earnings per share</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"> <b>.18</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> .07</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> .16</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></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></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">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 colspan="2" align="left"><font size="2" face="serif">Weighted average common shares outstanding</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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></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 size="2" face="Times New Roman, Times, serif">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="f5"></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>
<p align="center">&nbsp;</p>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td colspan="4" align="right" valign="bottom"><div align="center"><font size="1" face="serif"><u>Common
            Stock<br>
    $.001 Par Value</u></font></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"><font size="1" face="serif">Number of Shares</font></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"><font size="1" face="serif">Amount</font></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"><font size="1" face="serif">Additional Paid-in Capital</font></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"><font size="1" face="serif">Retained Earnings (Accumulated
        Deficit)</font></div></td>
    <td align="left" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"></div></td>
    <td align="right" valign="bottom"><div align="center"><font size="1" face="serif">Total</font></div></td>
    <td align="left"><div align="center"></div></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">&nbsp;</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="2%" align="right">&nbsp;</td>
    <td width="8%" align="right"><font size="2" face="serif">3,999,650</font></td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="2%" align="right"><font size="2" face="serif">$</font></td>
    <td width="8%" align="right"><font size="2" face="serif"> 4,000</font></td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="2%" align="right"><font size="2" face="serif">$</font></td>
    <td width="8%" align="right"><font size="2" face="serif"> 867,887</font></td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="2%" align="right"><font size="2" face="serif">$</font></td>
    <td width="8%" 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="2%" align="right"><font size="2" face="serif">$</font></td>
    <td width="8%" 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">&#151;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&#151;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&#151;</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">&#151;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&#151;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&#151;</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">&#151;</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"><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>
  <tr valign="top">
    <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>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td></td>
  </tr>
</table>
<p align="center">&nbsp;</p>
<p align="center"><font size="2" face="Times New Roman, Times, serif">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="f6"></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" border="0">

<tr valign="top">
<td align="left" valign="bottom"><font size="1" face="serif">&nbsp;</font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><div align="left"></div></td>
<td colspan="4" align="center" valign="bottom"><font size="1" face="serif"><b>For the Six Months Ended</b></font><br>
  <font size="1" face="serif"><b>April 30,</b></font><br><font size="1" face="serif"><b>(Unaudited)</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><div align="left"></div></td>
<td colspan="4" align="center" valign="bottom"><font size="1" face="serif">For the Years Ended</font><br>
  <font size="1" face="serif">October 31,</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr align="left" size="1" noshade></td>
  <td colspan="4" align="center" valign="bottom"><hr size="1" noshade></td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr align="left" size="1" noshade></td>
  <td colspan="4" align="center" valign="bottom"><hr size="1" noshade></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"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif"><b>2004</b></font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif">2003</font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif">2003</font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif">2002</font></div></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="2%" align="right"><div align="center">
  <hr size="1" noshade>
</div></td>
<td width="10%" align="left"><div align="center">
  <hr size="1" noshade>
</div></td>
<td width="2%" align="left"><div align="center"></div></td>
<td width="2%" align="right"><div align="center">
  <hr size="1" noshade>
</div></td>
<td width="10%" align="left"><div align="center">
  <hr size="1" noshade>
</div></td>
<td width="2%" align="left"><div align="center"></div></td>
<td width="2%" align="right"><div align="center">
  <hr size="1" noshade>
</div></td>
<td width="10%" align="left"><div align="center">
  <hr size="1" noshade>
</div></td>
<td width="2%" align="left"><div align="center"></div></td>
<td width="2%" align="right"><div align="center">
  <hr size="1" noshade>
</div></td>
<td width="10%" align="left"><div align="center">
  <hr size="1" noshade>
</div></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 4%; text-indent: -3%"><font size="2" face="serif">Net
    income</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"> <b>738,003</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> 274,074</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> 622,082</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></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: 6%; text-indent: -3%"><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"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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: -3%"><font size="2" face="serif">Depreciation
    and amortization</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>230,424</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">152,924</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">299,774</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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: 9%; text-indent: -3%"><font size="2" face="serif">Bad
    debts (recovery)</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -3%"><font size="2" face="serif">Deferred
    taxes</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>12,200</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Changes
    in operating assets and liabilities:</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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: -3%"><font size="2" face="serif">(Increase)
    decrease in due from broker</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>103,252</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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: 9%; text-indent: -3%"><font size="2" face="serif">(Increase)
    decrease in accounts receivable</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>429,686</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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: 9%; text-indent: -3%"><font size="2" face="serif">(Increase)
    in inventories</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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: 9%; text-indent: -3%"><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"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>134,574</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">(81,421</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">(348,165</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">(42,378</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: 9%; text-indent: -3%"><font size="2" face="serif">(Decrease)
    increase in accounts payable and accrued expenses</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>(177,418</b></font></td>
<td align="left"><font size="2" face="serif"><b>)</b></font></td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">111,605</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">(190,015</font></td>
<td align="left"><font size="2" face="serif">)</font></td>
<td align="right"><div align="left"></div></td>
<td align="right"><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: 9%; text-indent: -3%"><font size="2" face="serif">(Decrease)
    increase in income taxes payable</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>375,705</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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 align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -3%"><b><font size="2" face="serif">Net
    cash provided by (used in) operating activities</font></b></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>1,202,933</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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 align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></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"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</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"><div align="left"></div></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"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -3%"><b><font size="2" face="serif">Net
    cash (used in) investing activities</font></b></div>  <b></b></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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 align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></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"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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: 3%; text-indent: -3%"><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"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><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"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>13,255,484</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">10,206,597</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">21,358,723</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right">&#151;</td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></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"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">2,798</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></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 align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left: 9%; text-indent: -3%"><b><font size="2" face="serif">Net
    cash (used in) provided by financing activities</font></b></div>  <b></b></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">515,178</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">837,248</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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 align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></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"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>123,053</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">63,015</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">30,264</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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"><div style="margin-left: 4%; text-indent: -3%"><font size="2" face="serif">Cash,
    beginning of year</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif"><b>73,832</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">43,568</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="right"><font size="2" face="serif">43,568</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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 align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr align="left" size="1" noshade></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"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"> <b>196,885</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> 106,583</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> 73,832</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></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 align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr align="left" size="2" noshade></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"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"></div></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: -3%"><font size="2" face="serif">Interest
    paid</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"> <b>81,596</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> 72,482</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> 143,682</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></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 align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr align="left" size="2" noshade></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: -3%"><font size="2" face="serif">Income
    taxes paid</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif"><b>$</b></font></div></td>
<td align="right"><font size="2" face="serif"> <b>7,449</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> 305,430</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></td>
<td align="right"><font size="2" face="serif"> 396,295</font></td>
<td align="left">&nbsp;</td>
<td align="right"><div align="left"><font size="2" face="serif">$</font></div></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 align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr align="left" size="2" noshade></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<p align="center">&nbsp;</p>
<p align="center"><font size="2" face="Times New Roman, Times, serif">See notes
to Condensed 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="f7"></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="8%"><font size="2" face="serif"><b>NOTE 1 -</b></font></td>
<td align="left"><font size="2" face="serif"><b>BUSINESS ACTIVITIES AND REVERSE
    ACQUISITION:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="8%"><font size="2" face="serif">&nbsp;<b>NOTE 2 -</b></font></td>
<td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES:</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="8%"><font size="2" face="serif">&nbsp;</font></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 align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="8%"><font size="2" face="serif">&nbsp;</font></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 align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Inventories:</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="8%"><font size="2" face="serif">&nbsp;</font></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>
</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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Property and equipment:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Hedging:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
<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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="f8"></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="8%"><font size="2" face="serif">&nbsp;<b>NOTE 2&nbsp; -</b></font></td>
<td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES (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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Hedging (Continued):</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</table>
<table width="80%" cellspacing="0" cellpadding="0" border="0">

<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom">&nbsp;</td>
  <td colspan="4" align="left" 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" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td colspan="4" align="left" valign="bottom"><div align="center"><font size="1" face="serif"><b>Six Months Ended April 30,</b></font></div></td>
<td align="left" valign="bottom">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr size="1" noshade></td>
  <td colspan="4" align="left" valign="bottom"><hr size="1" noshade></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" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><div align="center"><font size="1" face="serif"><b>2004</b></font></div></td>
<td align="left" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><div align="center"><font size="1" face="serif">2003</font></div></td>
<td align="left" valign="bottom">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr size="1" noshade></td>
  <td align="right" valign="bottom"><hr size="1" noshade></td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr size="1" noshade></td>
  <td align="right" valign="bottom"><hr size="1" noshade></td>
  <td align="left" valign="bottom">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Realized Gain and (losses)</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="2%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="10%" align="right"><font size="2" face="serif"> <b>1,484,441</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right"><font size="2" face="serif">$</font></td>
<td width="10%" align="right"><font size="2" face="serif"> 574,923</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
<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>
</tr>
</table>
<p> </p>
<table width="80%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td width="2%" align="left"><div align="center"></div>
    </td>
    <td width="2%" align="right"><div align="center"></div>
    </td>
    <td colspan="4" align="left"><div align="center"><font size="1" face="serif">Years
          Ended October 31,</font></div>
    </td>
    <td width="2%" align="left"><div align="center"></div>
    </td>
  </tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><hr size="1" noshade>
    </td>
    <td colspan="4" align="left"><hr size="1" noshade>
    </td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="bottom" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><div align="center"></div>
    </td>
    <td align="right"><div align="center"></div>
    </td>
    <td width="10%" align="right"><div align="center"><font size="1" face="serif">2003</font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="1"></font></div>
    </td>
    <td width="2%" align="right"><div align="center"><font size="1"></font></div>
    </td>
    <td width="10%" align="right"><div align="center"><font size="1" face="serif">2002</font></div>
    </td>
    <td align="left"><div align="center"></div>
    </td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><hr size="1" noshade>
    </td>
    <td align="right"><hr size="1" noshade>
    </td>
    <td align="left">&nbsp;</td>
    <td align="right"><hr size="1" noshade>
    </td>
    <td align="right"><hr size="1" noshade>
    </td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Realized Gain and (losses)</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$1,116,694</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 776,580</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Unrealized Gain and (losses)</font></td>
    <td align="left">&nbsp;</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>
<p> </p>
<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">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Advertising:</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="3%"><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 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="f9"></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="8%"><font size="2" face="serif">&nbsp;<b>NOTE 2&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES (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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Income taxes:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Stock options:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Earnings (loss) per share:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</table>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Fair value of financial instruments:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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="f10"></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="8%"><font size="2" face="serif">&nbsp;<b>NOTE 2&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES (Continued):</b></font></td>
</tr>
</table>

<table width="100%" border="0" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="8%"><font size="2" face="serif">&nbsp;</font></td>

<td align="left"><font size="2" face="serif"><b><i>Revenue recognition:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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.</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The Company sells its products without the right of return.  Returns and allowances are recorded when a customer claims receipt of damaged goods.  The Company in turn seeks reimbursement from the shipper.</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><u>Slotting fees</u>:  Certain retailers require the payment of slotting fees in order to obtain space for the corporation&#146;s products on the retailer&#146;s store shelves.  The cost of these fees is recognized at the earlier of the date cash is paid or a liability to the retailer is created.  These amounts are included in the determination of net sales.</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><u>Discounts and rebates</u>:  The cost of these incentives are recognized at the later of the date at which the related sale is recognized or the date at which the incentive is offered.  These amounts are included in the determination of net sales.  Incentives in the form of free product are included in the determination of cost of sales.</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><u>Volume-based incentives</u>:  These incentives typically involve rebates or refunds of a specific amount of cash consideration that are redeemable only if the reseller completes a specified cumulative level of sales transactions.  Under incentive programs of this nature, the corporation estimates the anticipated cost of the rebate to each underlying sales transaction with the customer.</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><u>Cooperative advertising</u>:  Under these arrangements, the Corporation will agree to reimburse the reseller for a portion of the costs incurred by the reseller to advertise and promote certain of the Corporation&#146;s products.  The Corporation will recognize the cost of cooperative advertising programs in the period in which the advertising and promotional activity first takes place.  The costs of these incentives will generally be included in the determination of net sales.</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Merchandise costs:  </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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">In addition to the product costs, net of discounts; inbound freight charges; warehousing costs and certain production and operational costs are included in the cost of sales line item of the statements of income.</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">Included in the selling and administrative line item of the statements of income are office salaries; commissions; freight out; promotion; insurance; professional fees; other selling expenses and other administrative expenses.</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="f11"></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="8%"><font size="2" face="serif">&nbsp;<b>NOTE 2&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES (Continued):</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Shipping and handling fees and costs:  </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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">In accordance with EITF No. 00-10 &#147;Accounting for Shipping and Handling Fees and Costs&#148;, revenue received from shipping and handling fees is reflected in net sales.  Costs associated with shipping product to customers aggregating approximately $568,000 and $394,000 for the six month periods ended April&nbsp;30, 2004 and 2003, respectively and $877,000 and $671,000 for the years ended October 31, 2003 and 2002, respectively is included in selling and administrative expenses.</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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Recent accounting pronouncements:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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-11</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="f12"></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="8%"><b><font size="2" face="serif">NOTE 2 -</font></b></td>
<td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Recent accounting pronouncements (Continued):</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="8%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif"><b><i>Reclassifications:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="8%"><font size="2" face="serif">&nbsp;<b>NOTE 3&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>INVENTORIES:</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="8%"><font size="2" face="serif">&nbsp;</font></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>
</table>
<table width="80%" cellspacing="0" cellpadding="0" border="0">

<tr valign="top">
  <td align="left">&nbsp;</td>
  <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">&nbsp;</td>
  <td align="center">&nbsp;</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" valign="bottom">&nbsp;</td>
<td colspan="2" align="right" valign="bottom"><div align="center"><font size="1" face="serif"><b>April 30, 2004</b></font></div>
</td>
<td align="left" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><font size="1" face="serif">October 31, 2003</font></td>
<td align="right" valign="bottom">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td colspan="2" align="right" valign="bottom"><hr size="1" noshade></td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr size="1" noshade></td>
  <td align="right" valign="bottom">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td width="10%"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="2%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="12%" align="right"><font size="2" face="serif"> <b>610,799</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right"><font size="2" face="serif">$</font></td>
<td width="12%" align="right"><font size="2" face="serif"> 213,062</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">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 align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="8%"><font size="2" face="serif"><b>NOTE 4&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>PROPERTY AND EQUIPMENT:</b></font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td height="17">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
    <td width="8%" height="17"><font size="2" face="serif">&nbsp;</font></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>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">

<tr valign="top">
  <td align="left">&nbsp;</td>
  <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">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="center">&nbsp;</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" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif">Estimated <br>
  Useful Life</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>April 30, <br>
  2004</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">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="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr noshade size="1"></td>
  <td align="center" valign="bottom"><hr noshade size="1"></td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr noshade size="1"></td>
  <td align="center" valign="bottom"><hr noshade size="1"></td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr noshade size="1"></td>
  <td align="center" valign="bottom"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td width="8%" 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="2%" align="right">&nbsp;</td>
<td width="10%" align="center"><font size="2" face="serif">30 years</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="10%" align="right"><font size="2" face="serif"> <b>1,257,251</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right">&nbsp;</td>
<td width="10%" 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"><font size="2" face="serif">Less accumulated depreciation (including $121,828 and $91,372, respectively arising from capital leases)</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" valign="bottom"><font size="2" face="serif"><b>3,209,469</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">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="3%"><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">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-12</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="f13"></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="8%"><font size="2" face="serif">&nbsp;<b>NOTE 5&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>CREDIT FACILITY AND OTHER BORROWINGS:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">The credit facility contains covenants that place restrictions on the Company&#146;s operations.  Among other things, these covenants:  require that the Company maintain a certain minimum cumulative net income; require that a portion of the Company&#146;s cash flow from operations be dedicated to servicing its debt; limit the Company&#146;s ability to obtain additional capital through financings without the consent of the lender; limit the Company&#146;s ability to pay dividends or make other distributions to stockholders and acquire or retire common stock without the consent of the lender; and prohibit the Company from forming or acquiring subsidiaries, merging with or into other companies or selling all or substantially all of its assets
without the consent of the lender.</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">A breach by the Company of any financial or negative covenant constitutes an event of default under the credit facility.  The credit facility and the Company&#146;s capital lease contain cross-default provisions.  The Company is currently in compliance with all covenants contained in the credit facility and intends to renegotiate the terms of the credit facility, including the covenants, prior to its expiration in November 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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</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="f14"></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="8%"><font size="2" face="serif">&nbsp;<b>NOTE 6&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>LOANS TO/FROM RELATED PARTIES:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
<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="8%"><font size="2" face="serif">&nbsp;<b>NOTE 7&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>INCOME TAXES:</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</table>
<table width="80%" cellspacing="0" cellpadding="0" border="0">

<tr>
  <td align="left" valign="top">&nbsp;</td>
  <td align="left" valign="top">&nbsp;</td>
  <td align="left" valign="top">&nbsp;</td>
  <td align="right" valign="top">&nbsp;</td>
  <td align="center" valign="bottom">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom">&nbsp;</td>
  <td align="center" valign="bottom">&nbsp;</td>
  <td align="left" valign="top">&nbsp;</td>
</tr>
<tr>
  <td align="left" valign="top">&nbsp;</td>
<td align="left" valign="top"><font size="1" face="serif">&nbsp;</font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top">&nbsp;</td>
<td align="center" valign="bottom"><font size="1" face="serif"><b>April 30, 2004</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">October 31, 2003</font></td>
<td align="left" valign="top">&nbsp;</td>
</tr>
<tr>
  <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="center"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr bgcolor="#FFFFFF">
  <td width="10%"align="left" valign="top">&nbsp;</td>
<td align="left" valign="top"><font size="2" face="serif">Deferred tax assets:</font></td>
<td width="2%" align="left" valign="top">&nbsp;</td>
<td width="2%" align="right" valign="top">&nbsp;</td>
<td width="12%" align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left" valign="bottom">&nbsp;</td>
<td width="2%" align="right" valign="bottom">&nbsp;</td>
<td width="12%" align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left" valign="top">&nbsp;</td>
</tr>
<tr bgcolor="#FFFFFF">
  <td align="left" valign="top">&nbsp;</td>
<td align="left" valign="top"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Accounts
    receivable</font></div></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top"><font size="2" face="serif"><b>$</b></font></td>
<td align="right" valign="top"><font size="2" face="serif"> <b>55,200</b></font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top"><font size="2" face="serif">$</font></td>
<td align="right" valign="top"><font size="2" face="serif"> 49,100</font></td>
<td align="left" valign="top">&nbsp;</td>
</tr>
<tr bgcolor="#FFFFFF">
  <td align="left" valign="top">&nbsp;</td>
<td align="left" valign="top"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="Times New Roman, Times, serif">Inventory</font></div>  <font size="2" face="serif">&nbsp;</font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top">&nbsp;</td>
<td align="right" valign="top"><font size="2" face="serif"><b>49,100</b></font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top">&nbsp;</td>
<td align="right" valign="top"><font size="2" face="serif">54,600</font></td>
<td align="left" valign="top">&nbsp;</td>
</tr>
<tr>
  <td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"><hr noshade size="1"></td>
<td valign="top"><hr noshade size="1"></td>
<td valign="top"></td>
<td valign="top"><hr noshade size="1"></td>
<td valign="top"><hr noshade size="1"></td>
<td valign="top"></td>
</tr>
<tr bgcolor="#FFFFFF">
  <td align="left" valign="top">&nbsp;</td>
<td align="left" valign="top"><font size="2" face="serif">&nbsp;</font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top"><font size="2" face="serif"><b>$</b></font></td>
<td align="right" valign="top"><font size="2" face="serif"> <b>104,300</b></font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top"><font size="2" face="serif">$</font></td>
<td align="right" valign="top"><font size="2" face="serif"> 103,700</font></td>
<td align="left" valign="top">&nbsp;</td>
</tr>
<tr>
  <td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"><hr noshade size="2"></td>
<td valign="top"><hr noshade size="2"></td>
<td valign="top"></td>
<td valign="top"><hr noshade size="2"></td>
<td valign="top"><hr noshade size="2"></td>
<td valign="top"></td>
</tr>
<tr bgcolor="#FFFFFF">
  <td align="left" valign="top">&nbsp;</td>
<td align="left" valign="top"><font size="2" face="serif">Deferred tax liability:</font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top">&nbsp;</td>
<td align="left" valign="top"><font size="2" face="serif">&nbsp;</font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top">&nbsp;</td>
<td align="left" valign="top"><font size="2" face="serif">&nbsp;</font></td>
<td align="left" valign="top">&nbsp;</td>
</tr>
<tr bgcolor="#FFFFFF">
  <td align="left" valign="top">&nbsp;</td>
<td align="left" valign="top"><font size="2" face="serif">Fixed assets</font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top"><font size="2" face="serif"><b>$</b></font></td>
<td align="right" valign="top"><font size="2" face="serif"> <b>52,000</b></font></td>
<td align="left" valign="top">&nbsp;</td>
<td align="right" valign="top">&nbsp;</td>
<td align="right" valign="top"><font size="2" face="serif">$39,200</font></td>
<td align="left" valign="top">&nbsp;</td>
</tr>
<tr>
  <td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"><hr noshade size="2"></td>
<td valign="top"><hr noshade size="2"></td>
<td valign="top"></td>
<td valign="top"><hr noshade size="2"></td>
<td valign="top"><hr noshade size="2"></td>
<td valign="top"></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="8%"><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>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">

<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left"><div align="center"></div></td>
  <td align="right"><div align="center"></div></td>
  <td colspan="4" align="center"><div align="center"></div></td>
  <td align="left"><div align="center"></div></td>
  <td align="right"><div align="center"></div></td>
  <td colspan="4" align="center"><div align="center"></div></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"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td colspan="4" align="center"><div align="center"><font size="1" face="serif"><b>Six Months Ended April 30,</b></font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td colspan="4" align="center"><div align="center"><font size="1" face="serif">Years Ended October 31, </font></div></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 colspan="4" align="center"><hr noshade size="1"></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">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif"><b>2004</b></font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif">2003</font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif">2003</font></div></td>
<td align="left"><div align="center"></div></td>
<td align="right"><div align="center"></div></td>
<td align="right"><div align="center"><font size="1" face="serif">2002</font></div></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">&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="8%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Federal</font></td>
<td align="left" width="2%">&nbsp;</td>

<td width="2%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="10%" align="right"><font size="2" face="serif"> <b>400,000</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right"><font size="2" face="serif">$</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="2%" align="right">&nbsp;</td>
<td width="10%" align="right"><font size="2" face="serif"><b>$</b>150,004</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right"><font size="2" face="serif">$</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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">*
    Includes prior year over accrual of state franchise taxes.</font></div></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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">

<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><div align="center"></div></td>
<td colspan="5" align="center" valign="bottom"><div align="center"><font size="1" face="serif"><b>Six Months Ended April 30,</b></font></div></td>
<td align="left" valign="bottom"><div align="center"></div></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><div align="center"></div></td>
<td colspan="5" align="center" valign="bottom"><div align="center"><font size="1" face="serif">Years Ended October 31,</font></div></td>
<td align="left" valign="bottom"><div align="center"></div></td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr noshade size="1"></td>
  <td colspan="5" align="center" valign="bottom"><hr noshade size="1"></td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr noshade size="1"></td>
  <td colspan="5" align="center" valign="bottom"><hr noshade size="1"></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" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><div align="center"><font size="1" face="serif"><b>2004</b></font></div></td>
<td align="left" valign="bottom"><div align="center"></div></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><div align="center"><font size="1" face="serif">2003</font></div></td>
<td align="left" valign="bottom"><div align="center"></div></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><div align="center"><font size="1" face="serif">2003</font></div></td>
<td align="left" valign="bottom"><div align="center"></div></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom"><div align="center"></div></td>
<td align="right" valign="bottom"><div align="center"><font size="1" face="serif">2002</font></div></td>
<td align="left" valign="bottom"><div align="center"></div></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">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="right"><hr noshade size="1"></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="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">US Federal income tax statutory rate</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="2%" align="right">&nbsp;</td>
<td width="8%" 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="2%" align="left">&nbsp;</td>
<td width="2%" align="right">&nbsp;</td>
<td width="8%" align="right"><font size="2" face="serif">30</font></td>
<td width="2%" align="left"><font size="2" face="serif">%</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right">&nbsp;</td>
<td width="8%" align="right"><font size="2" face="serif">34</font></td>
<td width="2%" align="left"><font size="2" face="serif">%</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right">&nbsp;</td>
<td width="8%" 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"><font size="2" face="serif">State income taxes, net of federal tax benefit</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>9</b></font></td>
<td align="left"><font size="2" face="serif"><b>%</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">8</font></td>
<td align="left"><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">8</font></td>
<td align="left"><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">8</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">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="left">&nbsp;</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="left">&nbsp;</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="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right">&#151;</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><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></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><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<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="left">&nbsp;</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="left">&nbsp;</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="left">&nbsp;</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><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></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="f15"></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><b><font size="2" face="serif">OCTOBER 31, 2003 AND 2002<br>
</font></b><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="8%"><font size="2" face="serif">&nbsp;<b>NOTE 8&nbsp;-</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="8%"><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>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="4%"></td>
<td width="4%"></td>
<td width="4%">
<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>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><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="80%" cellspacing="0" cellpadding="0" border="0">

<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td width="12%" align="left"><div align="center"><font size="2" face="serif">October 31,</font></div></td>
<td align="left" width="2%">&nbsp;</td>
<td width="2%" 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">&nbsp;</td>
  <td align="left"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="left">&nbsp;</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">2004</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> &#151;&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">2005</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">83,411</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">2006</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100,093</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">2007</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100,093</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">2008</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100,093</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Thereafter</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,526,418</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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="8%"><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>
</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="4%"><font size="2" face="serif">&nbsp;</font></td>
<td width="4%"><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, 2003 and 2002 and $30,458 for each of the six months ended April&nbsp;30, 2004 and 2003.</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="8%"><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>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">

<tr valign="top">
  <td align="left">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</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>April 30, 2004</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">October 31, 2003</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr noshade size="1"></td>
  <td align="center" valign="bottom"><hr noshade size="1"></td>
  <td align="left" valign="bottom">&nbsp;</td>
  <td align="right" valign="bottom"><hr noshade size="1"></td>
  <td align="center" valign="bottom"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td width="8%"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="2%" align="right"><font size="2" face="serif"><b>$</b></font></td>
<td width="12%" align="right"><font size="2" face="serif"> <b>426,404</b></font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="2%" align="right"><font size="2" face="serif">$</font></td>
<td width="12%" align="right"><font size="2" face="serif"> 426,404</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">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>
<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="f16"></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>
NOTES TO FINANCIAL STATEMENTS<br>
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="8%"><font size="2" face="serif"><b>NOTE 8&nbsp;-</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="8%"><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>
</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="5%"><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">Minimum annual future lease payments under the capital lease for each of the next two years and in the aggregate are:</font></td>
</tr>
</table>
<p>&nbsp;</p>
<table width="100%" cellspacing="0" cellpadding="0" 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="8%" 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="2%" 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"><div style="margin-left: 6%; text-indent: -6%"><font size="2" face="serif">Total minimum lease payments</font></div></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"><div style="margin-left: 6%; text-indent: -6%"><font size="2" face="serif">Less:  amount representing interest</font></div></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"><div style="margin-left: 6%; text-indent: -6%"><font size="2" face="serif">Present value of minimum lease payments</font></div></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"><div style="margin-left: 6%; text-indent: -6%"><font size="2" face="serif">Less:  current portion</font></div></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"><div style="margin-left: 6%; text-indent: -6%"><font size="2" face="serif">Long-term portion</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif"><b>$</b></font></td>
<td align="right"><font size="2" face="serif"> <b>23,350</b></font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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>
<div style="margin-left: 8%">
<p><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></p></div>
<div style="margin-left: 8%"><p align="left"><font size="2" face="serif"><b><i>Legal proceedings:</i></b></font></p>
<p 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></p>
</div>

<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="8%"><font size="2" face="serif"><b>NOTE 9&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>CONCENTRATIONS OF CREDIT RISK:</b></font></td>
</tr>
</table>
<div style="margin-left: 8%"><p><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></p>
<p><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></p>
<p><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></p>
</div>
<p align="center"><font face="serif" size="2">F-16</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="f17"></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="10%"><font size="2" face="serif"><b>NOTE 9&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>CONCENTRATIONS OF CREDIT RISK (Continued):</b></font></td>
</tr>
</table>
<div style="margin-left: 10%"><p><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></p>
<p><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></p>
<p><font size="2" face="serif">Management does not believe that credit risk was
significant for any of the periods presented herewith.</font></p>
</div>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="10%"><font size="2" face="serif"><b>NOTE 10&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>STOCK OPTION PLAN:</b></font></td>
</tr>
</table>
<div style="margin-left: 10%"><p><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></p>
<p><font size="2" face="serif">No options have
been granted under the Plan.</font></p>
</div>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="10%"><font size="2" face="serif"><b>NOTE 11&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>MAJOR VENDORS/RELATED PARTY:</b></font></td>
</tr>
</table>
<div style="margin-left: 10%"><p><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></p>
<p><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></p>
<p><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></p>
<p><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></p>
</div>
<p align="center"><font face="serif" size="2">F-17</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="f18"></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="10%"><font size="2" face="serif"><b>NOTE 11&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>MAJOR VENDORS/RELATED PARTY (Continued):</b></font></td>
</tr>
</table>
<div style="margin-left: 10%"><p><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></p>
</div>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td width="10%"><font size="2" face="serif"><b>NOTE 12&nbsp;-</b></font></td>
    <td><font size="2" face="serif"><b>CONSULTING AGREEMENT:</b></font></td>
  </tr>
</table>

<div style="margin-left: 10%"><p 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></p>
</div><table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="10%"><font size="2" face="serif"><b>NOTE 13&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>PURCHASE OF ASSETS:</b></font></td>
</tr>
</table>
<div style="margin-left: 10%"><p 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></p>
<p 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></p>
</div>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="10%"><font size="2" face="serif"><b>NOTE 14&nbsp;-</b></font></td>
<td align="left"><font size="2" face="serif"><b>SUBSEQUENT EVENTS:</b></font></td>
</tr>
</table>
<div style="margin-left: 10%"><p 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></p>
</div>
<p align="center"><font face="serif" size="2">F-18</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="f19"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
  <tr>
    <td height="4" valign="bottom" bgcolor="#000000"></td>
  </tr>
  <tr>
    <td height="2" valign="top"></td>
  </tr>
  <tr>
    <td height="1" valign="top" bgcolor="#000000"></td>
  </tr>
</table>
<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">&#150;&#150;&#150;&#150;&#150;&#150;&#150;&#150;&#150;</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="left">&nbsp;</p>
<p align="center">&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.&nbsp;&nbsp;&nbsp;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 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">&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 indemnity 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.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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</font></p>
<p align="center"><font size="2" face="serif">II-2</font></p>
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<p align="left"><font size="2" face="serif"> 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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 those executives to be covered by and named as an insured under any policy or contract of insurance obtained by us to insure our 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 those 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 those 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 those 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 those executives shall be subject to personal liability relating to such service to the extent permitted under the Nevada Revised Statutes.</font></p>

<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 25.&nbsp;&nbsp;&nbsp;Other Expenses of Issuance and Distribution</b>.</font></p>

<table width="100%" cellspacing="0" cellpadding="0" border="0">

<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">SEC Registration Fee (1)</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="10%" align="right"><font size="2" face="serif"> 1,534</font></td>
<td width="10%" align="left">&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="left">&nbsp;</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="left">&nbsp;</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="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>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Legal fees and expenses</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;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 (2)</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;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="left">&nbsp;</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="left">&nbsp;</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="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">5,256</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>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>TOTAL</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"> 580,000</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>
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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>
</tr>
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<table width="100%" cellspacing="0" cellpadding="0" border="0">
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<td width="3%"><font size="2" face="serif">(2)</font></td>
<td align="left">
<font size="2" face="serif">The non-accountable expense allowance will be
$303,600 if the over-allotment option is exercised in full.</font></td>
</tr>
</table>

<p align="left"><font size="2" face="serif"><b>Item 26.&nbsp;&nbsp;&nbsp;Recent Sales of Unregistered Securities.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.</font></p>
<p align="center"><font face="serif" size="2">II-4</font></p>
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<p align="left"><font size="2" face="serif"><b>Item 27.&nbsp;&nbsp;&nbsp;Exhibits and Financial Statement Schedules.</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exhibits and financial statement schedules filed as a part of this Registration Statement are as follows:</font></p>
<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><font size="2" face="serif">&nbsp;</font></p>

<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top" bgcolor="#FFFFFF">
  <td width="10%" align="left"><font size="2" face="serif"><b><u>Exhibit No.</u></b></font></td>
  <td width="2%" align="left">&nbsp;</td>
  <td align="left"><font size="2" face="serif">&nbsp;<b><u>Description</u></b></font></td>
  </tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">1.1</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="left"><font size="2" face="serif">Form of Underwriting Agreement.*</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">2.1</font></td>
<td align="left">&nbsp;</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>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">2.2</font></td>
<td align="left">&nbsp;</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 Exhibit 2.1 to the Current Report on Form 8-K dated February 4, 2004 as filed with the SEC on February 20, 2004.)</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">3.1</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Articles of Incorporation of Coffee Holding Co., Inc., as amended (incorporated herein by reference to Exhibit 3.1 to the Coffee Holding Co., Inc.  Annual  Report on Form  10-KSB for the fiscal  year ended October 31, 2002).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">3.2</font></td>
<td align="left">&nbsp;</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 the Coffee Holding Co., Inc. Quarterly Report on Form 10-Q for the quarter ended April 30, 1998).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">3.3</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">By-Laws of Coffee Holding Co., Inc., as amended (incorporated herein by reference to Exhibit 3.3 to the Coffee Holding Co., Inc. Quarterly Report on Form 10-Q for the quarter ended April 30, 1998).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">4.1</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Form of Stock Certificate of Coffee Holding Co., Inc. (incorporated herein by reference to the initial filing of this Registration Statement, filed with the Securities and Exchange Commission on June 24, 2004).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">4.2</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Form of Warrant Certificate.*</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">5.1</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Opinion of Thacher Proffitt &amp; Wood
    LLP as to legality of securities being offered (incorporated herein by reference
    to the initial filing of this Registration Statement, filed with the Securities
    and Exchange Commission on June 24, 2004).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.1</font></td>
<td align="left">&nbsp;</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 the Coffee Holding Co., Inc. Quarterly Report on Form 10-Q for the quarter ended April 30, 1998).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.2</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">1998 Stock Option Plan (incorporated
    herein by reference to Exhibit 10.2 to the Coffee Holding Co., Inc. Quarterly
    Report on Form 10-Q for the quarter ended April 30, 1998).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.3</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Loan and Security Agreement dated
    as of November 21, 1997 between Coffee Holding Co., Inc. and NationsCredit
    Commercial Corporation (incorporated herein by reference to Exhibit 10.3
	to the Coffee Holding Co., Inc. Annual Report on Form 10-K for the fiscal
	year ended October 31, 2000).</font></td>
</tr>
</table>

<p align="center"><font size="2" face="serif">II-5</font></p>
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<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top" bgcolor="#FFFFFF">
<td width="10%" align="left"><font size="2" face="serif">10.4</font></td>
<td width="2%" align="left">&nbsp;</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 Co., Inc. and NationsCredit
    Commercial Corporation (incorporated herein by reference to Exhibit 10.4
	to the Coffee Holding Co., Inc. Annual Report on Form 10-K for the fiscal
	year ended October 31, 2000).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.5</font></td>
<td align="left">&nbsp;</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 Co., Inc.
    and Wells Fargo Business Credit, Inc., as assignee (incorporated herein by
    reference to Exhibit 10.5 to the Coffee Holding Co., Inc. Annual Report on
    Form 10-K for the fiscal year ended October 31, 2000).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.6</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Term Note dated as of November 29,
    2000 made by Coffee Holding Co., Inc. in favor of Wells Fargo Business Credit,
    Inc., in the principal amount of $600,000 (incorporated herein by reference
    to Exhibit 10.6 to the Coffee Holding Co., Inc. Annual Report on Form 10-K
    for the fiscal year ended October 31, 2000).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.7</font></td>
<td align="left">&nbsp;</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 Co., Inc. and Wells Fargo Business Credit, Inc., as assignee.</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.8</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Term Note dated as of October 1,
    2002 made by Coffee Holding Co., Inc. in favor of Wells Fargo Business Credit,
    Inc., in the principal amount of $750,000 (incorporated herein by reference to Exhibit 10.8
	to the Coffee Holding Co., Inc. Annual Report on Form 10-KSB for the fiscal
	year ended October 31, 2002).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.9</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Capital Lease Agreement with HSBC Business Credit (USA), Inc.</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.10</font></td>
<td align="left">&nbsp;</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 the Coffee Holding Co., Inc. 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>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.11</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Sales contract with Shurfine Central (incorporated herein by reference to Exhibit 10.11 to the Coffee Holding Co., Inc. 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>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.12</font></td>
<td align="left">&nbsp;</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.</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.13</font></td>
<td align="left">&nbsp;</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.</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.14</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Proposed employment agreement by and among Coffee Holding Co., Inc. and Andrew Gordon (incorporated herein by reference to the initial filing of this Registration Statement, filed with the Securities and Exchange Commission on June 24, 2004).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.15</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Proposed employment agreement by and among Coffee Holding Co., Inc. and David Gordon (incorporated herein by reference to the initial filing of this Registration Statement, filed with the Securities and Exchange Commission on June 24, 2004).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">10.16</font></td>
  <td align="left">&nbsp;</td>
  <td align="left"><font size="2" face="serif">Form of Lock-up Agreement (incorporated
      herein by reference to the initial filing of this Registration Statement,
    filed with the Securities and Exchange Commission on June 24, 2004).</font></td>
</tr>
</table>

<p align="center"><font size="2" face="serif">II-6</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pii-7"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top" bgcolor="#FFFFFF">
<td width="10%" align="left"><font size="2" face="serif">10.17</font></td>
<td width="2%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Corporate Brands Agreement dated as of March 30, 2004 by and between Albertson&#146;s, Inc. and Coffee Holding Co., Inc. (confidential portions have been redacted and filed separately with the Commission).</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">23.1</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Consent of Lazar Levine &amp; Felix LLP.</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">23.2</font></td>
<td align="left">&nbsp;</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>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">24.1</font></td>
<td align="left">&nbsp;</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>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">99.1</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Consent of Barry Knepper.</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">99.2</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Consent of Sal Reda.</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <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">99.3</font></td>
<td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Consent of Robert M. Williams.</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td colspan="3" align="left"><hr align="left" width="100" size="1" noshade>
  </td>
  </tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td colspan="3" align="left"><font size="2" face="serif">* To be filed by amendment.</font></td>
  </tr>
</table>

<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.&nbsp;&nbsp;&nbsp;Undertakings.</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned Registrant hereby undertakes to provide to the underwriter at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of determining any liability under the Securities Act of 1933 (the &#147;Act&#148;), 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 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned Registrant may elect to request acceleration of the effective date of the registration statement under Rule 461 under the Act.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar as indemnification for liabilities arising under the Act 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="center"><font size="2" face="serif">II-7</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pii-8"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Act and will be governed by the final adjudication of such
issue.</font></p>
<p align="center"><font face="serif" size="2">II-8</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="pii-9"></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 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 August 10, 2004.</font></p>

<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td width="47%" align="left"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.</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">By:</font></td>
<td align="left">
<font size="2" face="serif"> <u>  /s/ Andrew Gordon&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></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">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 and in his 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
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"><font size="1" face="serif"><u>Name</u></font></td>
<td align="center"><font size="1" face="serif"><u>Title</u></font></td>
<td align="center"><font size="1" face="serif"><u>Date</u></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" width="39%"><font size="2" face="serif"><u>/s/ Andrew Gordon</u></font><br><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)</font></td>
<td align="center"><font size="2" face="serif">August 10, 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"><u>/s/ David Gordon</u></font><br><font size="2" face="serif">David Gordon</font></td>
<td align="left"><font size="2" face="serif">Executive Vice President &#150; Operations, Secretary and Director</font></td>
<td align="center"><font size="2" face="serif">August 10, 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"><u>/s/ Richard E. Pino</u></font><br>
<font size="2" face="serif">Richard E. Pino</font></td>
<td align="left"><font size="2" face="serif">Chief Financial Officer (principal
financial and accounting officer)</font></td>
<td align="center"><font size="2" face="serif">August 10, 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"><u>/s/ Gerard DeCapua</u></font><br><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">August 10, 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"><u>/s/ Daniel Dwyer</u></font><br><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">August 10, 2004</font></td>
</tr>
</table>

<p align="center">&nbsp;</p>
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</body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>2
<FILENAME>b332774ex10_7.txt
<DESCRIPTION>THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
<TEXT>
<PAGE>
                                                                    Exhibit 10.7

                                                                       EXECUTION
                                                                            COPY

      THIRD AMENDMENT,  dated as of October 1, 2002 (this "Amendment"),  to LOAN
AND SECURITY AGREEMENT,  dated as of November 21, 1997 (as amended,  modified or
supplemented  through the date  hereof,  the "Loan  Agreement"),  by and between
COFFEE HOLDING CO. INC.  ("Borrower") and WELLS FARGO BUSINESS CREDIT,  INC., as
assignee of Banc of America Commercial Finance Corporation,  f/k/a NationsCredit
Commercial Corporation ("Lender"). Terms which are capitalized in this Amendment
and not otherwise  defined shall have the meanings  given such terms in the Loan
Agreement.

      WHEREAS,  the Borrower has  requested the Lender to consider (i) extending
the  maturity  date of the  credit  facility  established  pursuant  to the Loan
Agreement and (ii) modifying  certain of the terms and  provisions  contained in
the Loan Agreement, and the Lender is willing to agree to the foregoing, subject
to the terms and conditions set forth herein;

      NOW  THEREFORE,  in  consideration  of the premises and mutual  agreements
herein contained, the parties hereto agree as follows:

      Section One. Amendment to Loan Agreement. On the Third Amendment Effective
Date, the Loan Agreement is hereby amended as follows:

      (a) Section 2.2(b) Facility Fees.  Section 2.2(b) of the Loan Agreement is
amended by deleting it in its  entirety  and  substituting  in lieu  thereof the
following:

            "(b) Facility Fees. In addition to any facility fee previously  paid
            to the Lender, a facility fee for the Initial Term in the amount set
            forth in  Section  6(b)(i)  of  Schedule A (which fee shall be fully
            earned as of the Third Amendment Effective Date and shall be payable
            in two  installments,  the first of which shall be in the amount set
            forth in Section 6 (b)(i)(A)  of Schedule A, and shall be payable on
            November  20,  2002,  and the second of which shall be in the amount
            set forth in Section  6(b)(i)(B) of Schedule A, and shall be payable
            on November 20,  2003),  and a facility fee for each Renewal Term in
            the amount set forth in Section  6(b)(ii)  of  Schedule A (which fee
            shall be fully  earned as of the first day of the  Renewal  Term and
            shall be  payable  in equal  installments  on the  first  day of the
            Renewal Term and on the  one-year  anniversary  thereof);  provided,
            that if the Loan  Agreement  is  terminated,  or the maturity of the
            Loans is accelerated in accordance with the terms of Section 8.2, in
            either  case (x) before the last day of the Initial  Term,  then the
            entire unpaid balance of the facility fee for the Initial Term shall
            be due and payable in


<PAGE>

            full upon such termination or  acceleration,  or (y) before the last
            day of the applicable  Renewal Term,  then the unpaid balance of the
            facility  fee for such  Renewal  Period  shall be due and payable in
            full upon such termination or acceleration."

      (b) Section 4.1.  Section 4.1 of the Loan Agreement is amended by deleting
the last sentence thereof and replacing it with the following sentence:

            "However,  for  purposes of computing  interest on the  Obligations,
            such items shall be deemed applied by Lender two Business Days after
            Lender's receipt of advice of deposit thereof at Lender's Bank."

      (c) Section 7.1.  Section 7.1 of the Loan Agreement is amended by deleting
the fist sentence thereof in its entirety,  and by substituting the following in
lieu thereof:

            "7.1  Maturity  Date.  Lender's  Obligations  to make Loans,  and to
            provide Credit  Accommodations  under this Agreement shall initially
            continue  in effect  until the  Initial  Maturity  Date set forth in
            Section 7(a) of Schedule A (the "Initial Term"); provided, that such
            date shall  automatically be extended (the Initial Maturity Date, as
            it may be so extended, being referred to as the "Maturity Date") for
            successive  additional  terms of two years  (each a "Renewal  Term")
            unless one party gives  written  notice to the other,  not less than
            sixty (60) days prior to the  Maturity  Date that such party  elects
            not to extend the Maturity Date."

      (d) Schedule A of the Loan Agreement  shall be amended and restated in its
entirety to read as set forth in Schedule A attached hereto.

      (e)  Schedule  B of the Loan  Agreement  shall be  amended  by adding  the
following defined terms in the appropriate place in alphabetical order:

            "Third Amendment" means the Third Amendment to this Agreement, dated
            as of October 1, 2002"

            "Third Amendment  Effective Date" means the date on which all of the
            conditions  precedent to the  effectiveness  of the Third  Amendment
            shall have been satisfied or waived in writing by the Lender."

      Section Two. Representations and Warranties. To induce the Lender to enter
into this  Amendment,  the  Borrower  warrants and  represents  to the Lender as
follows:


                                      B-2
<PAGE>

      (a)  All of the  representations  and  warranties  contained  in the  Loan
Agreement and each other Loan Document to which the Borrower is a party continue
to be true and  correct  in all  material  respects  as of the  Third  Amendment
Effective Date, as if repeated as of the Third Amendment  Effective Date, except
for such  representations and warranties which, by their terms, are only made as
of a previous date;

      (b) The  execution,  delivery  and  performance  of this  Amendment by the
Borrower  are within its  corporate  powers,  have been duly  authorized  by all
necessary corporate action, and the Borrower has received all necessary consents
and  approvals (if any shall be required) for the execution and delivery of this
Amendment;

      (c) Upon its execution,  this Amendment shall constitute the legal,  valid
and binding  obligation  of the  Borrower,  enforceable  against the Borrower in
accordance with its terms,  except as such  enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) general principles of equity;

      (d) The Borrower is not in default under any indenture,  mortgage, deed of
trust, or other material agreement or material instrument to which it is a party
or by  which  it may be  bound.  Neither  the  execution  and  delivery  of this
Amendment,  nor the consummation of the transactions  contemplated  herein,  nor
compliance  with the  provisions  hereof will (i) violate any law or  regulation
applicable  to it, (ii) cause a violation by the Borrower of any order or decree
of any court or  government  instrumentality  applicable  to it, (iii)  conflict
with, or result in the breach of or constitute a default  under,  any indenture,
mortgage,  deed of trust, or other material agreement or material  instrument to
which the  Borrower  is a party or by which it may be bound,  (iv) result in the
creation or  imposition  of any lien,  charge,  or  encumbrance  upon any of the
property  of the  Borrower,  except  in  favor  of the  Lender,  to  secure  the
Obligations,  or (v) violate any provision of the Certificate of  Incorporation,
By-Laws or any capital stock provisions of the Borrower;

      (e) No Event of Default has occurred and is continuing; and

      (f) Since the date of the Lender's receipt of the financial  statements of
the Borrower  for the  six-month  period  ended on April 30, 2002,  no change or
event has  occurred  which has had or is  reasonably  likely to have a  material
adverse effect on the Borrower's business,  operations,  condition (financial or
otherwise) or prospects (a "Material Adverse Effect").

      Section Three. Conditions Precedent. This Amendment shall become effective
upon the date that the last of the following  events shall have occurred or been
waived in writing by the Lender (the "Third Amendment Effective Date"):

      (a) The Lender shall have  received this  Amendment,  duly executed by the
Borrower.

      (b) No Default shall have occurred and be continuing which  constitutes an
Event of Default  or would  constitute  an Event of  Default  upon the giving of
notice or lapse of time or both, and no event or development which has had or is
reasonably likely


                                      B-3
<PAGE>

to have a Material  Adverse Effect shall have  occurred,  in each case since the
date  of  delivery  to  the  Lender  of the  Borrower's  most  recent  financial
statements.

      (c) The Lender shall have received (i) an officer's certificate,  executed
by the chief  financial  officer or chief  executive  officer  of the  Borrower,
confirming  the  truth  and  accuracy  of  the  representations  and  warranties
contained in Section Two and Section  Three (b) hereof,  and (ii) a  secretary's
certificate,  executed  by the  corporate  secretary  of the  Borrower,  in form
reasonably satisfactory to the Lender.

      (d) The Lender shall have received a confirmation of Guaranty from each of
David Gordon and Andrew  Gordon,  duly  executed by each of them, in the form of
Exhibit A to this Agreement.

      Section Four. General Provisions.

      (a) Upon the Lender's receipt and satisfactory  review of the appraisal of
the Borrower's  Equipment  currently being performed (the "Appraisal"),  and the
satisfaction of the condition  precedent  hereinafter  described,  so long as no
Event of Default shall have occurred and shall then be continuing,  Lender shall
make an  Equipment  Advance to the  Borrower in an amount equal to the lesser of
$750,000 and 85% of the appraised auction sale value of the Borrowers'  Eligible
Equipment,  based on the Appraisal,  minus the unpaid  principal  balance of the
Term Loan then outstanding.  Upon the making of such Equipment Advance, the term
"Term Loan", as used in the Loan Agreement,  shall include the principal  amount
of such  Equipment  Advance.  As a  condition  precedent  to the  making of such
Equipment Advance,  the Borrower shall have executed and delivered to the Lender
a  promissory  note in the form of  Exhibit B  attached  hereto,  with all blank
spaces  duly and  accurately  completed,  and  Lender  shall  promptly  mark the
promissory note evidencing the Term Loan,  dated as of November 29, 2000, in the
principal amount of $600,000 "canceled", and return it to the Borrower.

      (b) Except as herein expressly  amended,  the Loan Agreement and all other
agreements,  documents,  instruments  and  certificates  executed in  connection
therewith,  are ratified and  confirmed in all respects and shall remain in full
force and effect in accordance with their respective terms.

      (c) All  references to "the Loan  Agreement" in the Loan  Agreement  shall
mean the Loan Agreement as amended as of the Third Amendment Effective Date, and
as amended hereby and as hereafter amended,  supplemented and modified from time
to time.

      (d) This Amendment  shall be governed by and construed in accordance  with
the internal laws of The State of New York,  without  regard to the conflicts of
law principles thereof.

      (e) To the extent not already  obtained,  the  Borrower  agrees to use its
reasonable  best efforts to obtain from (i) each  warehouseman,  bailee or other
Person that has  possession  or control  from time to time of any  Inventory  or
Equipment  of the  Borrower  a  written  acknowledgement  by such  Person of the
Lender's security interest


                                      B-4
<PAGE>

therein and right to obtain  access  thereto and (ii) T & O  Management  Corp. a
landlord's  waiver of lien in favor of the Lender,  containing  such other terms
and conditions as the Lender may reasonably require.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      B-5
<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized and delivered at
New York, New York as of the date first above written.

                                       COFFEE HOLDING CO. INC.

                                       By: /s/ Andrew Gordon
                                           _____________________________________
                                           Name:  Andrew Gordon
                                           Title: President/CEO

                                       WELLS  FARGO  BUSINESS CREDIT,  INC.,  as
                                       assignee  of  Banc  of America Commercial
                                       Finance Corporation, f/k/a  NationsCredit
                                       Commercial Corporation

                                       By: /s/ Michael J. Eggenberg
                                           _____________________________________
                                           Name:  Michael J. Eggenberg
                                           Title: Officer


                                      B-6
<PAGE>

                                   Schedule A

                          Description of Certain Terms

      This Schedule is an integral part of the Loan and Security Agreement dated
as of November 21, 1997 (as amended through the date hereof,  the  "Agreement"),
between  COFFEE  HOLDING  CO.,  INC (the  "Borrower")  and WELLS FARGO  BUSINESS
CREDIT,  INC. (as assignee of Banc of America  Commercial  Finance  Corporation,
f/k/a NationsCredit Commercial Corporation, in such capacity, the "Lender").

      1.    Loan Limits for Revolving Loans:

            (a)   Maximum Facility Amount: $5,000,000

            (b)   Advance Rates:

                  (i)   Accounts                   85%;  provided,  that  if the
                        Advance Rate:              Dilution  Percentage  exceeds
                                                   4%, such advance rate will be
                                                   reduced by the number of full
                                                   or partial  percentage points
                                                   of such excess

                  (ii)  Inventory
                        Advice
                        Rate(s):

                  (A)   Finished goods:            60%

                  (B)   Raw materials:             60%

                  (C)   Work in process:           Not Applicable

                  (iii) Cash Collateral            Not Applicable

            (c)   Accounts Sublimit                Not Applicable

            (d)   Inventory Sublimit(s):

                  (i)   Overall sublimit on        $1,000,000  or,  if less, the
                        advance against Eligible   aggregate  advances   against
                        Inventory                  Accounts   at   any  time  of
                                                   determination

                  (ii)  Sublimit on advances       Not Applicable
                        against finished goods


<PAGE>

                  (iii) Sublimit on advances       Not Applicable
                        against raw materials

            (e)         Credit                     $500,000
                        Accommodation
                        Limit:

            (f)         Permanent Reserve Amount:  Not Applicable

            (g)         Overadvance Amount:        Not Applicable

      2.    Loan Limits for Term Loan:

            (a)   Principal Amount:

                  (i)   Equipment                  The  lesser  of  $750,000 and
                        Advance                    85% of the  appraised auction
                                                   sale   value  of   Borrower's
                                                   Eligible Equipment, as of the
                                                   most     recent     appraisal
                                                   performed  subsequent  to the
                                                   Third   Amendment   Effective
                                                   Date

                  (iv)  Real Property              Not Available
                        Advance:

            (b)   Repayment Schedule:

                  (i)   Equipment                  The  Equipment  Advance shall
                        Advance:                   be repaidconsisting  based on
                                                   an  amortization  schedule of
                                                   60    months,     in    equal
                                                   consecutive           monthly
                                                   installments,  payable on the
                                                   first  day of  each  calendar
                                                   month, commencing November 1,
                                                   2002,  with the entire unpaid
                                                   balance  due and  payable  on
                                                   the Maturity Date

                  (ii)

                  (iii)


                                      B-2
<PAGE>

                  (iv)  Real Property              Not Applicable
                        Advance:

        3.  Interest Rates:

            (a)   (i) Revolving Loans:             0.25%  per annum in excess of
                                                   the Prime Rate

            (b)   Term Loan:                       0.50%  per annum in excess of
                                                   the Prime Rate

        4.  Minimum Loan Amount:                   $2,000,000

        5.  Maximum Days: the lesser of

            (a)   Maximum days after original      60 days
                  due date for Eligible Accounts:

            (b)   Maximum days after original      90 days
                  invoice date for Eligible
                  Accounts:

        6.  Fees:

            (a)   Closing Fee:                     N/A

            (b)   Facility Fee:

                  (i)   Initial Term:              $18,500

                        (A)                        $10,000

                        (B)                        $8,500

                  (ii)  Renewal Term               $18,500

            (c)   Service Fee:                     Not Applicable

            (d)   Unused Line Fee:                 Not Applicable

            (e)   Minimum Borrowing Fee:

                  (i)   Applicable Period:         Each Year

                  (ii)  Date payable:              Each  anniversary of the date
                                                   of the Agreement


                                      B-3
<PAGE>

            (f)   Success Fee:                     Not Applicable

            (g)   Warrants:                        Not Applicable

            (h)   Early Termination                3% of  the  Maximum  Facility
                                                   Amount  if  terminated  on or
                                                   prior    to   the    one-year
                                                   anniversary   of  the   Third
                                                   Amendment  Effective Date; 2%
                                                   of   the   Maximum   Facility
                                                   Amount  if  terminated  after
                                                   the one-year  anniversary  of
                                                   the Third Amendment Effective
                                                   Date  and on or  prior to the
                                                   two-year  anniversary  of the
                                                   Third   Amendment   Effective
                                                   Date  and 1% of  the  Maximum
                                                   Facility Amount if terminated
                                                   at   any   time   after   the
                                                   two-year  anniversary  of the
                                                   Third   Amendment   Effective
                                                   Date   and   prior   to   the
                                                   Maturity Date;  provided that
                                                   the  Early   Termination  Fee
                                                   will be  waived  by Lender if
                                                   Borrower  transfers the Loans
                                                   and   all   of   its    other
                                                   Obligations    hereunder   to
                                                   another   division  of  Wells
                                                   Fargo Bank.

            (i)   Fees for letters of credit       1 % per  annum  of  the  face
                  and other Credit Accommodations  amount  of each  open  Credit
                  (or guaranties thereof           Accommodation, plus all costs
                  by Lender):                      and  fees   charged   by  the
                                                   issuer

            (j)   Field Exam Fee:                  $750 per day per person  plus
                                                   all  out-of-pocket  expenses,
                                                   provided, that if no Event of
                                                   Default has  occurred  during
                                                   any   consecutive   365   day
                                                   period commencing on November
                                                   20 of  each  year,  then  the
                                                   maximum  amount  of the field
                                                   exam   fees  for   which  the
                                                   Borrower  shall be  obligated
                                                   to pay the Lender during such
                                                   period   shall   not   exceed
                                                   $10,000.

      7.    Maturity Date:


                                      B-4
<PAGE>

            (a)   Initial Maturity Date:           November 20, 2004

      8.    Financial Covenants:

            (a)   Capital Expenditure              Not Applicable
                  Limitation:

            (b)   Minimum Net Worth                Not Applicable
                  Requirement:

            (c)   Minimum Tangible                 Not Applicable
                  Net Worth:

            (d)   Minimum Working                  Not Applicable
                  Capital:

            (e)   Maximum Cumulative               Not Applicable
                  Net Loss:

            (f)   Minimum Cumulative               -for   the   fiscal   quarter
                  Net Income:                      ending  January  31  of  each
                                                   fiscal year,  commencing with
                                                   January  31,  2003;  -for the
                                                   period of two fiscal quarters
                                                   ending   April   30  of  each
                                                   fiscal year,  commencing with
                                                   April  30,  2003;   -for  the
                                                   period   of   three    fiscal
                                                   quarters  ending  July  31 of
                                                   each fiscal year,  commencing
                                                   with July 31, 2002;  and -for
                                                   the  period  of  four  fiscal
                                                   quarters ending October 31 of
                                                   each fiscal year,  commencing
                                                   with  October 31,  2002,  the
                                                   Borrower shall be required to
                                                   maintain a minimum cumulative
                                                   net   income   in  an  amount
                                                   mutually agreed upon with the
                                                   Lender,  but in no event less
                                                   than  67% of  the  cumulative
                                                   net income  projected  by the
                                                   Borrower    for   each   such
                                                   period,  as  reflected in its
                                                   forecasted  income  statement
                                                   for the  fiscal  year  ending
                                                   October   31


                                      B-5
<PAGE>

                                                   of each year, commencing with
                                                   October 31, 2002.




            (g)   Maximum Leverage Ratio:          Not Applicable

            (h)   Limitation on Equipment          Not Applicable
                  Leases:

            (i)   Limitation on Purchase           Not Applicable
                  Money Security Interests:

            (j)   Additional Financial             Not Applicable
                  Covenants:

      9.    Borrower Information:

            (a)   Prior Name of Borrower:          None

            (b)   Prior Trade Names of Borrower    None

            (c)   Existing Trade Names             None
                  of Borrower:

            (d)   Inventory Locations:             Continental Terminals, Inc.
                                                   738 Third Avenue
                                                   Brooklyn, New York 11232

            (e)   Other Locations:                 4425a First Avenue
                                                   Brooklyn, New York 11232

                                                   4401 First Avenue
                                                   Brooklyn, New York 11232-0005

                                                   54 A Hackensack Avenue
                                                   River Terminal
                                                   Kearny, NJ  07032

            (f)   Litigation:                      None

            (g)   Ownership of                     Andrew Gordon - 32.5%
                  Borrower                         David Gordon - 32.5%
                                                   Mr. and Mrs. Sterling Gordon
                                                   - 15.0%
                                                   Other - 20.0%

            (h)   Subsidiaries (and) ownership     None
                  thereof):


                                      B-6
<PAGE>

            (i)   Facsimile Numbers:

                  Borrower:                        718-832-0892

                  Lender:                          646-728-3279

       10.  Description of Real Property           None

       11.  Lender's Bank:                         Wells Fargo Bank

       12.  Other Covenants:                       None

       13.  Exceptions to Negative Covenants:      None

       14.  Cash Collateral:                       None

       15.  Guaranties:

            (a)   Guarantors:                      Andrew Gordon
                                                   David Gordon
            (b)   Amount:                          Each in the amount of
                                                   $500,000


                                      B-7
<PAGE>

      IN WITNESS WHEREOF,  Borrower and Lender have signed this Schedule A as of
the date set forth in the Third Amendment to which this Schedule is attached.

Borrower:                               Lender:

COFFEE HOLDING CO., INC.                WELLS FARGO BUSINESS  CREDIT,  INC., (as
                                        assignee  of Banc of America  Commercial
                                        Finance Corporation, f/k/a NationsCredit
                                        Commercial Corporation)

By: /s/ Andrew Gordon                   By: /s/ Michael J. Eggenberg
    --------------------------------        ----------------------------------
    Name:  Andrew Gordon                    Name:  Michael J. Eggenberg
    Title: President/CEO                    Title: Officer


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>3
<FILENAME>b332774ex10_9.txt
<DESCRIPTION>LEASE AGREEMENT
<TEXT>
<PAGE>
                                                                    Exhibit 10.9

- --------------------------------------------------------------------------------
HSBC Business Credit (USA) Inc.                                  LEASE AGREEMENT
- --------------------------------------------------------------------------------

      The  undersigned  lessor  (herein,  "Lessor")  does  hereby  lease  to the
undersigned  lessee  Coffee  Holding  Co.,  Inc. a Nevada  corporation  (herein,
"Lessee"),  subject  to the  terms  and  conditions  set  forth,  the  equipment
described below,  together with all attachments and accessories now or hereafter
affixed  thereto,  and  substitutions  and  replacements  thereof  (herein,  the
"Equipment"):

- --------------------------------------------------------------------------------
Equipment Description
- --------------------------------------------------------------------------------
Two (2) ICA Automatic Packaging Machines,  S/N; V3649, S/N V3650,  including all
attachment and accessories.
- --------------------------------------------------------------------------------
No. of Rental                Commencement Date             Lease Expiration Date
Installments 36              July 19, 2002                 July 19, 2005
- --------------------------------------------------------------------------------
Rental Installment                  Other Terms: See $1 Purchase Rider
Amount                              attached hereto and by this reference made a
$11,770.71                          part hereof.
- --------------------------------------------------------------------------------

EQUIPMENT LOCATION:

      Upon  execution  of this Lease,  Lessee  shall pay to Lessor the first N/A
Rental  Installment(s)  and a Security Deposit in the amount of $-0-. All rental
installments  are based on an Equipment cost to Lessor equal to $383,763.60.  In
the  event  the  Lessor's  cost is other  than as set forth  above,  the  rental
installment amount set forth above shall be adjusted accordingly.

TERMS AND CONDITIONS

      1. Lessee  acknowledges  that it has  reviewed  and  approved  any written
Supply Contract and that Lessor has advised Lessee in writing of the identity of
the  Supplier of the  Equipment,  that Lessee is  entitled to the  promises  and
warranties,  if any, of the Supplier or any third party provided by the Supplier
to Lessor in connection  with or as part of the Supply  Contract and that Lessee
may  contact  Supplier  for an accurate  and  complete  description  of any such
promises and warranties, including any disclaimers and limitations of them or of
remedies.  Lessee shall be deemed to have  irrevocably  accepted  the  Equipment
under this Lease by its  execution of Lessor's  form of Delivery and  Acceptance
Certificate. If the Commencement Date is left blank above, then the Commencement
Date is the date of delivery  and  acceptance  of the  equipment  as evidence by
Lessee's execution of the Delivery and Acceptance  Certificate.  The rental term
of the Equipment  shall commence upon the  Commencement  Date and shall continue
until  the  lease  expiration  date set forth  above.  Lessee  shall pay rent to
Lessor,  monthly in  advance,  in the Rental  Installment  amounts,  and for the
number of Rental  Installments both as set forth above, on the first day of each
month (unless  otherwise  provided herein) during the term hereof,  plus, in the
case of the first  Rental  Installment,  the per diem  equivalent  of the Rental
Installment  for  each  day  from and  including  the  Commencement  Date to and
including the day immediately preceding the due date of such Rental Installment.


                               Member HSBC Group

<PAGE>

      2. All  rentals  shall be paid to Lessor at Lessor's  address,  or at such
other address as Lessor may specify by notice to Lessee.  All such rentals shall
be paid without  notice or demand,  and Lessee's  obligation to pay such rentals
shall be absolute and unconditional and not subject to any abatement, reduction,
set-off,  defense,   counterclaim  or  recoupment  (for  any  reason  whatsoever
(including,  without limitation,  Abatements due to any present or future claims
of  Lessee  against  Lessor  under  this  Lease or  otherwise,  or  against  the
manufacturer  or vendor of the Equipment);  nor,  except as otherwise  expressly
provided  herein,  shall  this  Lease  terminate  or the  obligations  of Lessee
hereunder  be  affected  by reason of any defect in or damage to, or any loss or
destruction of, any Equipment front any cause  whatsoever,  or the  interference
with  the  use  thereof  by any  private  person,  corporation  or  governmental
authority, or the invalidity or unenforceability or lack of due authorization of
this Lease or lack of right, power or authority to enter into this Lease, or fur
any other cause, whether similar or dissimilar to the foregoing,  any present or
future law or  regulation  to the  contrary  notwithstanding.  If any rentals or
other sums due  hereunder  are not paid within 10 days of the due date  thereof,
Lessee shall pay to Lessor on demand,  as additional  rental, an amount equal to
five percent (5%) of such past due rentals or sums.

      3. To the extent  that,  contrary to the  intention  of the  parties,  the
transaction  evidenced  hereby is deemed to be a pledge or  security  agreement,
Lessee  hereby  grants a security  interest in and to the Equipment to Lessor to
secure the obligations of Lessee hereunder.

      4. Until the Equipment is returned to Lessor in accordance  with the terms
of this Lease,  Lessee shall: (a) use the Equipment solely in the conduct of its
business,  (b) keep the Equipment at the address  specified in this Lease, or as
set forth in the Delivery and Acceptance Certificate,  and not remove all or any
part of the Equipment therefrom without the Lessor's prior written consent,  (c)
use and preserve the Equipment in a careful,  proper and lawful  manner,  and in
accordance  with   manufacturer's   specifications   and  applicable   insurance
requirements,  (d) at its own  expense,  keep  the  Equipment  in  good  repair,
condition and working order and furnish any and all parts and labor required for
that  purpose,  and in this  connection  shall use only spare and  repair  parts
manufactured or furnished by the manufacturer of the Equipment, (e) not make any
material  alterations  to the  Equipment  without the prior  written  consent of
Lessor,  and Lessee  agrees that all  equipment,  attachments,  accessories  and
repairs  at any time  made to or placed  upon the  Equipment  shall  immediately
become the  property  of Lessor,  and shall be deemed to have been  incorporated
into the Equipment  and subject to the terms and  conditions of this Lease as if
originally leased hereunder, (f) promptly notify Lessor of any loss of or damage
to the  Equipment,  (g) assume  and shall  bear the  entire  risk of loss of and
damage  to the  Equipment,  and  injury  or death  to  persons,  from any  cause
whatsoever pursuant to the provisions of' this Lease, and provide full insurance
coverage as hereinafter  provided,  (h) mark and identify the Equipment with all
information  and in such  manner as  Lessor  may  request  from time to time and
replace promptly any such markings or identifications which are removed, defaced
or  destroyed,  (i)  permit  reasonable  access by  Lessor or its  agents to the
Equipment  during normal business hours for purposes of inspection,  (j) protect
and  defend,  at its own cost and  expense,  the  title of  Lessor in and to the
Equipment from and against all claims,  liens,  encumbrances and legal processes
of Lessee's  creditors or any other party claiming by or through Lessee, and (k)
NOT ASSIGN,  SUBLET OR HYPOTHECATE  ANY OF THE EQUIPMENT OR ANY INTEREST IN THIS
LEASE OR ALLOW THE EQUIPMENT TO BE USED BY PERSONS  OTHER THAN  EMPLOYEES OF THE
LESSEE,  AND ANY ATTEMPT TO DO SO SHALL CONSTITUTE


                               Member HSBC Group

                                       2
<PAGE>

A DEFAULT HEREUNDER AND SUCH ASSIGNMENT, SUBLEASE OR HYPOTHECATION SHALL BE VOID
AND WITHOUT EFFECT.

      5. Lessee shall,  at its expense,  insure and keep the  Equipment  insured
against all risks of physical  loss at not less than the lesser of: (a) the full
replacement value thereof or (b) the Stipulated Loss Value (if any) shown herein
or on any  addendum,  amendment  or  attachment  hereto  (the  "Stipulated  Loss
Value");  but in any  event an  amount  sufficient  to avoid  the  effect of any
coinsurance clause.  Lessee shall further, at its expense,  provide and maintain
comprehensive public liability insurance against claims for bodily injury, death
and/or property damage arising out of the use, ownership,  possession, operation
or  condition of the  Equipment,  together  with such other  insurance as may be
required by law or reasonably requested by Lessor. All said insurance shall name
both  Lessor and Lessee as parties  insured  and shall be in form and amount and
with  insurers  satisfactory  to  Lessor,  and  Lessee  shall  furnish to Lessor
certified  copies or  certificates  of the policies of such  insurance  and each
renewal  thereof.  Each  insurer  must agree by  endorsement  upon the policy or
policies  issued by it that it will give  Lessor not less than 30 days'  written
notice  before such policy or policies arc  cancelled,  nonrenewed or materially
altered  and,  with  respect to property  insurance,  that (aa) losses  shall be
payable  solely to Lessor,  and (bb) no act or  omission of Lessee or any of its
officers,  agents,  employees or representatives shall affect the obiligation of
the  insurer  to pay the full  amount of any  loss.  Lessee  hereby  irrevocably
authorizes  Lessor to make,  settle  and  adjust  claims  under  such  policy or
policies of property insurance and to endorse the name of Lessee on any check or
other item of payment for the proceeds thereof;  it being  understood,  however,
that unless otherwise directed in writing by Lessor,  Lessee shall make and file
timely all claims under such policy or policies,  and Lessee may,  unless Lessee
is then in default, settle and adjust all such claims.

      6. Lessee  agrees to report and pay to the  appropriate  authority any and
all license fees, registration fees,  assessments,  charges and taxes, including
penalty and interest,  if any,  assessed against the Equipment or the ownership,
purchase, rental or use of the Equipment, except for taxes payable in respect to
Lessor's net income.  Unless Lessee provides Lessor with a valid  certificate of
exemption, Lessee shall pay all applicable sales or use taxes to Lessor.

      7. LESSEE HEREBY WAIVES ANY RIGHT TO CANCEL,  REPUDIATE OR TERMINATE  THIS
LEASE.  REVOKE  ACCEPTANCE  OF THE  EQUIPMENT,  ACCEPT  PARTIAL  DELIVERY OF THE
EQUIPMENT,  "COVER" BY  PURCHASING  OR LEASING  REPLACEMENT  EQUIPMENT,  RECOVER
SPECIAL OR  CONSEQUENTIAL  DAMAGES  AND ANY RIGHT TO SEEK  SPECIFIC  PERFORMANCE
HEREOF.

      THIS LEASE SETS FORTH THE FULL  AGREEMENT  BETWEEN THE PARTIES AND MAY NOT
BE MODIFIED,  EXCEPT IN A WRITING SIGNED BY THEM. NEITHER THIS LEASE NOR LESSEES
RIGHTS IN THE EQUIPMENT MAY BE ASSIGNED BY LESSEE.

      8. The Equipment shall remain personal property notwithstanding the manner
in which it may be attached to realty,  and title thereto shall remain in Lessor
exclusively.   Lessee  shall  keep  the  Equipment   free  from  all  liens  and
encumbrances.  Lessee shall execute and/or to Lessor any further instruments and
assurances  reasonably  requested  from time to time by Lessor  to  protect  its
interest,  and Lessee shall  otherwise  cooperate and defend the title of Lessor
and to


                               Member HSBC Group

                                       3
<PAGE>

maintain the status of the Equipment as personal  property,  including,  without
limitation,  the execution of financing statements,  motor vehicle documentation
(for the purpose of obtaining titles in Lessor's name, noting liens on vehicles,
obtaining  repossession  title  certificates  or otherwise  protecting  Lessor's
interest in vehicles)  and the  furnishing  of waivers with respect to rights in
the  Equipment  from the owners and  mortgagees  of the real estate on which the
Equipment is or will be located,  all at Lessee's expense.  Without limiting the
foregoing,  Lessee hereby authorizes and irrevocably appoints Lessor as Lessee's
attorney-in-fact,  coupled with an interest, with full power of substitution, to
execute  and  file  such  financing  statements,   motor  vehicle  documentation
(relating to titles,  lien notation and/or  repossession title certificates) and
other  documents in all places where necessary to protect  Lessor's  interest in
the Equipment.

      9.  Lessor  shall not be  liable  for any  direct,  indirect,  special  or
consequential  damages or loss (a) resulting  from the  non-delivery,  delivery,
manufacture,  installation, use, ownership or operation of the Equipment or from
any defects in or failures,  malfunctions,  repairs, replacements or alterations
thereof,  or (b) arising out of this Lease or any breach hereof,  or (c) without
limitation, arising out of any other liability of any nature with respect to the
Equipment, or this Lease or any breach thereof (hereinafter "Liabilities"),  and
Lessee shall and hereby does indemnify and hold harmless Lessor,  its directors,
officers,  employees,  agents  and  representatives,  from  any and all  claims,
actions, suits, proceedings, costs, expenses, damages and liabilities, including
attorneys'  fees,  arising out of, connected with, or resulting from, this Lease
or the breach thereof or the Equipment,  including,  without limitation, any and
at   Liabilities.   LESSEE   UNDERSTANDS   AND  AGREES  THAT  LESSOR   MAKES  NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,  WITH RESPECT TO THE
CONDITION OF THE EQUIPMENT,  ITS  MERCHANTABILITY,  THE FITNESS OF THE EQUIPMENT
FOR A PARTICULAR  PURPOSE,  OR WITH RESPECT TO PATENT  INFRINGEMENT OR THE LIKE.
THIS  PARAGRAPH  SHALL  SURVIVE  THE  TERMINATION  OF THIS  LEASE AND MAY NOT BE
MODIFIED,  AMENDED  DISCHARGED  OR  TERMINATED  BY ANY  WRITING  OR ANY  ACTION,
INACTION CONDUCT OR PAST DEALINGS OF THE PARTIES HERETO.

      10.  Lessee  warrants  to  Lessor  that (a) this  Lease  has been duly and
validly executed and delivered by Lessee and constitutes and will constitute the
valid and  binding  obligation  of  Lessee,  and is and will be  enforceable  in
accordance with its terms;  (b) the execution,  delivery and performance of this
Lease by Lessee will not violate any law or other  governmental  requirement or,
if Lessee is a corporation,  Lessee's corporate charter or by-laws;  nor will it
constitute a default under any agreement, instrument or document to which Lessee
is now or hereafter a party or by which Lessee is now or will hereafter be bound
(c) all financial statements and information which have been or may hereafter be
submitted to Lessor relating to Lessee or any guarantor of Lessee's  obligations
hereunder  ("Guarantor")  have been and will be  complete,  true and correct and
have been and will be prepared in accordance with generally accepted  accounting
principles;  Lessee  agrees to deliver to Lessor at any time or times  hereafter
such  documents  as  Lessor  may  reasonably  request  to  demonstrate  Lessee's
compliance with this Lease.

      11. So long as Lessee  shall not be in default and fully  performs  all of
its  obligations  hereunder,  Lessor will not  interfere  with the quiet use and
enjoyment of the Equipment by Lessee.


                               Member HSBC Group

                                       4
<PAGE>

      12. Lessee hereby  consents to any  assignment or encumbrance by Lessor of
this Lease or all or any part of the rentals  hereunder  or the rights of Lessor
in the  Equipment,  with or  without  notice.  Lessee  agrees  that  the  rights
hereunder  of any  assignee or  creditor  of Lessor  shall not be subject to any
defense,  setoff or  counterclaim  that Lessee may have against the Lessor,  and
(that any such assignee or creditor shall have all of Lessor's rights hereunder,
but none of Lessor's  obligations  hereunder  or any claim which Lessee may have
against  Lessor.  The rights of Lessee  hereunder are subject and subordinate to
any security interest granted by Lessor in the Equipment.

      13. Upon the expiration or earlier  termination of this Lease with respect
to any Equipment,  Lessee shall return such Equipment to Lessor in the condition
required  by this Lease.  Lessee  shall make such  return,  at its  expense,  by
causing such Equipment to be assembled,  crated and loaded on board such carrier
as Lessor shall specify and shipping the same, freight and insurance prepaid, to
the  destination  specified  by Lessor.  Lessee shall pay to Lessor on demand as
additional rental hereunder, the cost of any repairs necessary to then place the
Equipment in the  condition  required by the Lease.  If Lessor shall so require,
Lessee will  provide free storage and  insurance  for any  Equipment at Lessee's
location for a period not exceeding  sixty (60) days from date of expiration as'
earlier  termination  of this Lease.  If, for whatever  reason,  Lessee fails to
return the Equipment or set forth herein, Lessee agrees to pay, at Lessor's sole
option,  rental  installments  to  Lessor  in the  same  amount  as  hereinabove
provided, until so returned.

      14. As used  herein  the term  "Event of Loss"  shall  mean the  actual or
constructive loss of the Equipment,  by damage,  theft, or otherwise,  including
any failure to return the Equipment to Lessor upon the expiration or termination
of this Lease,  unless Lessee shall have purchased the Equipment or renewed this
Lease,  pursuant to the terms of any  purchase or renewal  option to this Lease.
Upon the  occurrence of an Event of Loss,  Lessee shall notify Lessor in writing
of such  occurrence and pay to Lessor within 30 days of the date of the Event of
Loss, the Casualty Value. As used herein the term "Casualty  Value" shall mean':
(a) the sum of any  and all  amounts  then  due and  owing  hereunder  including
without  limitation,  accrued  but  unpaid  rent  (collectively,   the  "Accrued
Amounts") and the  Stipulated  Loss Value or, if none (b) the sum of the Accrued
Amounts and the aggregate of all future rentals  reserved  herein and discounted
to present  value at a rate equal to the Federal  Reserve  Discount Rate for the
Federal Reserve Bank of New York then in effect (the "Discount Rate"),  plus the
purchase  option/agreement  or estimated residual amount stated herein or in any
purchase  option,  purchase  agreement  or  terminal  rental  adjustment  clause
applicable to the Equipment, also discounted at the Discount Rate.

      15. Each of the following shall constitute a default under this Lease: (a)
the breach by Lessee of its  obligations to pay rent when due and the failure to
cure said  breach  within ten (10) days,  (b) the breach by Lessee of any of the
other terms hereof,  (c) if Lessee or any Guarantor dies or becomes insolvent or
ceases to do business as a going concern,  (d) if Lessee or any Guarantor  makes
an assignment  for the benefit of creditors,  (e) if a petition in bankruptcy or
for  arrangement  or  reorganization  is  filed  by or  against  Lessee  or  any
Guarantor,  (f) if property of Lessee or any Guarantor is attached or a receiver
is  appointed  for Lessee or any  Guarantor,  or any of Lessee's or  Guarantor's
property,  (g) the  occurrence  of a default  pursuant to the  provisions of any
other  agreement  by and  between  Lessor  or  HSSC  Bank  USA  ("Bank")  or any
subsidiary or affiliate thereof and Lessee or any Guarantor,  (h) the occurrence
of a  default  (with any  applicable  cure  period  having  expired),  under any
material  agreement for the payment of


                               Member HSBC Group

                                       5
<PAGE>

money to which Lessee or any  Guarantor is a party,  (i) if false or  misleading
representations  or warranties are made or given either  heretofore or hereafter
in connection  with this Lease or the  extension of credit  hereunder by Lessor,
(j) if a material  adverse  change in Lessor's  or any  Guarantor  financial  or
business  condition  occurs,  or (k) if there occurs any sale or disposition of:
(i) the principal  business  assets of Lessee or any Guarantor if Lessee or such
Guarantor is a sole proprietorship, (ii) a controlling interest in Lessee or any
Guarantor if Lessee or such Guarantor is a  corporation,  partnership or similar
entity  or  (iii)  all or  substantially  all of the  assets  of  Lessee  or any
Guarantor.

      16. In the event of any  default  under this  Lease,  Lessor  may,  at its
option,  do one or more of the following:  (a) terminate this Lease and Lessee's
rights hereunder, (b) proceed by appropriate court action to enforce performance
of the terms of this Lease and/or recover damages for the breach hereof;  (C) by
notice in writing,  cause Lessee,  at Lessee's  expense,  promptly to return the
Equipment to the  possession of the Lessor in accordance  with the terms hereof,
or Lessor  directly or by its agent,  and without  notice or  liability or legal
process,  may enter upon any  premises  where any  Equipment  is  located,  take
possession  of such  Equipment,  and either  store it on said  premises  without
charge or remove the same (any damages  occasioned by such taking of possession,
storage or removal  being waived by Lessee);  and/or (d) declare as  immediately
due and payable and forthwith recover from Lessee, as liquidated damages and not
as a penalty,  an amount equal to the Casualty Value with interest  thereon at a
per  annum  rate of  eighteen  percent  (18%)  from and after the date of demand
therefor.

      In the event of any  repossession  of any Equipment by Lessor,  Lessor may
(but need not),  without  notice to Lessee,  (A) hold or use all or part of such
Equipment for any purpose whatsoever,  (B) sell all or part of such Equipment at
public or  private  sale for cash or on credit  and/or  (C) relet all or part of
such  Equipment  upon such terms as Lessor may  solely  determine,  in each case
without any duty to account to Lessee except as herein expressly provided. After
any repossession of Equipment by Lessor there shall be applied on account of the
obligations of Lessee hereunder the net proceeds  actually by Lessor from a sale
or lease of such  Equipment,  after  deduction of all expenses of sale and other
expenses recoverable by Lessor hereunder. No termination,  repossession or other
act by Lessor after  default shall  relieve  Lessee from any of its  obligations
hereunder.  In  addition to all other  charges  hereunder,  Lessee  shall pay to
Lessor on demand all fees, costs and expenses  incurred by Lessor as a result of
such default, including without limitation,  reasonable attorneys',  appraisers'
and brokers'  fees and expenses and costs of removal,  storage,  transportation,
insurance  and  disposition  of the  Equipment.  In the event  that any court of
competent jurisdiction  determines that any provision of this Section is invalid
or  unenforceable  in whole or in part,  such  determination  shall not prohibit
Lessor from establishing its damages sustained as a result of any breach of this
Lease in any  action  or  proceedings  in which  Lessor  seeks to  recover  such
damages.  To the extent  permitted  by law,  Lessee  hereby  waives any right of
setoff or  counterclaim  in any action between  Lessor and Lessee.  The remedies
provided  herein  in  favor of  Lessor  shall  not be  exclusive,  but  shall be
cumulative and in addition to all other  remedies  existing at law or in equity,
any one or more of which may be exercised simultaneously or successively.

      As additional  collateral  security for the payment and performance of its
obligations  hereunder,  and under any other agreement by and between Lessor and
Lesser,  Lessee hereby creates and grants in f of Lessor a security  interest in
any and all  equipment,  fixtures,  goods,


                               Member HSBC Group

                                       6
<PAGE>

inventory, documents, instruments,  accounts, chattel paper, general intangibles
or other personal property or fixtures in which Lessor or Bank or any subsidiary
or affiliate thereof now has or may hereafter have a security interest.

      17.  If  Lessee  shall  fail to make any  payment  or  perform  any act or
obligation  required of Lessee hereunder,  Lessor may (but need not) at any time
thereafter make such payment or perform such act or obligation at the expense of
Lessee.  Any payment so made or expense so incurred by Lessor  shall  constitute
additional  rental  hereunder  payable  by  Lessee to Lessor  upon  demand,  The
performance of any act or payment of any monies by Lessor,  as aforesaid,  shall
not be deemed a waiver or  release of any  obligation  or default on the part of
Lessee.

      18.  Lessee shall  furnish to Lessor within 120 days after the end of each
fiscal year of Lessee  during the term hereof a statement of profit and loss and
of surplus of Lessee for such fiscal  year-end and a balance  sheet of Lessee as
at the end of such year, all in accordance  with generally  accepted  accounting
principles  and in  reasonable  detail  and  certified  by a  reputable  firm of
independent  public  accountants.  Lessee  shall  furnish  to Lessor  such other
information  about the  condition  and affairs of Lessee and any  Guarantor  and
about the Equipment as Lessor may from time to time reasonably request.

      19. Lessee shall give Lessor  immediate  notice of any default  hereunder,
any material  adverse  change in financial  condition or operations of Lessee or
any Guarantor, or any loss, material damage or accident affecting the Equipment.
All  notices  under  this  Lease  shall be in  writing  and sent to the  address
hereinabove,  or as the parties may  designate.  None of the  provisions of this
Lease shall be held to have been waived by any act or knowledge  of Lessor,  but
only by a written instrument  executed by Lessor and delivered to Lessee. If any
provision of this Lease or the application  thereof is hereafter held invalid or
unenforceable, the remainder of this Lease shall not be affected thereby, and to
this end the provisions of this Lease are declared severable.

      20. The parties hereto intend to comply with any and all applicable  usury
laws now in effect or hereafter  enacted;  if any interest rate inherent in this
Lease would  violate any such  statute or  regulation  applicable  thereto,  the
rate(s)  shall be  deemed  automatically  amended  to the  highest  lawful  rate
allowed.

      21.  Subject to the terms  hereof,  this Lease  shall be binding  upon and
inure  the  benefit  of  Lessor  and  Lessee  and  their   respective   personal
representatives,  successors  and  assigns.  This Lease shall be  construed  and
enforced in accordance with, and governed by, the laws of the State of New York,
without regard to principles of conflicts of laws. LESSEE AGREES THAT LESSOR MAY
BRING ANY ACTION OR PROCEEDING TO ENFORCE THIS LEASE OR RELATED DOCUMENTS IN ANY
SUPREME  COURT  OF THE  STATE OF NEW YORK OR ANY  DISTRICT  COURT OF THE  UNITED
STATES  LOCATED WITHIN THE STATE OF NEW YORK, AND AGREES THAT SERVICE OF PROCESS
BY CERTIFIED  MAIL,  RETURN  RECEIPT  REQUESTED,  SHALL BE  SUFFICIENT TO CONFER
PERSONAL  JURISDICTION.  LESSEE AND LESSOR WAIVE THEIR RIGHT TO TRIAL BY JURY IN
CONNECTION WITH ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS LEASE
OR RELATED  DOCUMENTS.  This Lease is  submitted  to Lessor  for  acceptance  or
rejection and will not


                               Member HSBC Group

                                       7
<PAGE>

become  effective  until accepted by Lessor in writing at its principal  office.
This  Lease is  irrevocable  by  Lessee  for the full  term  hereof  and for the
aggregate rentals herein reserved.


                               Member HSBC Group

                                       8
<PAGE>

LESSEE'S INITIAL     DG

LESSOR:                                    LESSEE:

HSBC Business Credit (USA) Inc.            Coffee Holding Co.,  Inc.
One HSBC Center, 29th Floor,               4401 First Avenue, Brooklyn, NY 11232
Buffalo, NY 14203

By: /s/ J.B. Koblas III                    By: /s/ David Gordon
    -------------------                        ----------------

      J. B. Koblas III - VP                        David Gordon, V.P.
- -----------------------------------        -------------------------------------
  (Print or Type: Name and Title)             (Print or Type: Name and Title)

Date: July 19, 2002                        Date: July 19, 2002


                               Member HSBC Group

                                       9
<PAGE>

- --------------------------------------------------------------------------------
HSBC Business Credit (USA) Inc.                             $1.00 PURCHASE RIDER
- --------------------------------------------------------------------------------

         This  Rider  is  attached  to and  forms a part of that  certain  Lease
Agreement  dated July 19, 2002 (such Lease Agreement being referred to herein as
the "Lease" by and between HSBC Business Credit (USA) Inc. ("Lessor") and Coffee
Holding Co., Inc. ("Lessee").

      1.  Immediately  upon payment by Lessee of all of the  installments now or
hereafter coming due, and performance by Lessee of all other obligations,  under
the Lease, and notwithstanding any other provision in the Lease to the contrary,
Lessee  shall  purchase  from  Lessor  all the  equipment  covered  by the Lease
("Equipment")  (for the sum of $1.00,  plus all applicable sales and other taxes
("Purchase Price").

      2. Upon final and irrevocable  payment of the Purchase Price, Lessor shall
execute and deliver to Lessee a Bill of Sale conveying all Lessor's right, title
and interest to the Equipment,  WITHOUT  REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, ON AN "AS IS, WHERE IS" BASIS, WITH ALL FAULTS.

HSBC Business Credit (USA) Inc.            Coffee Holding Co.,  Inc.

By: /s/ J.B. Koblas III                    By: /s/ David Gordon
    -------------------                        ----------------

      J.B. Koblas III - V.P.                        David Gordon, V.P.
- -----------------------------------        -------------------------------------
  (Print or Type: Name and Title)             (Print or Type: Name and Title)

Date: July 19, 2002                        Date: June 28, 2002


                               Member HSBC Group

                                       10
<PAGE>

- --------------------------------------------------------------------------------
HSBC Business Credit (USA) Inc.                                     PAY PROCEEDS
- --------------------------------------------------------------------------------

TO: HSBC Business Credit (USA) Inc.        Date: July 19, 2002
    One HSBC Center-29th Floor
    Buffalo, NY 14203

         Reference is hereby  directed toward that certain LEASE AGREEMENT dated
2002 for and in  consideration of which your company has agreed to advance funds
in the amount of $383,763.60.  Accordingly,  the undersigned  hereby irrevocably
authorizes your company to disburse said amount as follows:

Pay to: ICA S.P.A.                         $34,274.00

Pay to: Coffee Holding Co., Inc.           $349,489.60

                                           Very Truly yours,
                                           Coffee Holding Co., Inc.
                                           (name of Lessee)

                                           By: /s/ David Gordon
                                               ---------------------------------

                                           Title: V.P.


                               Member HSBC Group

                                       11
<PAGE>

- --------------------------------------------------------------------------------
HSBC Business Credit (USA) Inc.                           CORPORATE RESOLUTION
                                                          INCUMBENCY CERTIFICATE
                                                          (LEASE)
- --------------------------------------------------------------------------------

      I KAREN GORDON, DO HEREBY CERTIFY THAT:

      I am the duly  elected,  qualified  and acting  (Assistant)  Secretary  of
Coffee Holding Co. Inc. (the "Corporation").

      The following resolutions were adopted by the corporation either at a duly
called meeting,  or by unanimous  written consent,  of the Board of Directors of
the Corporation, such meeting having been held on or such consent being dated as
of 1 July 2002.

      RESOLVED,  that the  Corporation  be, and hereby is,  authorized  to lease
equipment,  goods or materials from time to time (the "Leased  Equipment")  from
HSBC Business Credit (USA) Inc., One HSBC Center, 29th Floor,  Buffalo, NY 14203
or any assignee or successor thereof (collectively,  "Lessor"),  upon such terms
as the  Corporation  may from time to time require,  and that any and all of the
officers  of the  Corporation  be, and hereby are,  authorized  on behalf of the
Corporation to execute, acknowledge and deliver to Lessor one or more lessees on
such terms as the officer or officers  executing such documents on behalf of the
Corporation  may  approve,  such  approval to be  conclusively  evidenced by the
execution thereof; and

      RESOLVED FURTHER,  that, if Lessor should require, the Corporation be, and
hereby is, authorized to pledge,  mortgage or grant security  interests in, from
time to time, any or all of the Corporation's  assets,  whether real,  personal,
intangible,  or a combination  thereof, to secure the Corporation's  obligations
under any such leases,  and that any and all officers of the Corporation be, and
hereby are, authorized on behalf of the Corporation to execute,  acknowledge and
deliver  to Lessor any  security  documents  upon such  terms as the  officer or
officers  executing  such security  documents on behalf of the  Corporation  may
approve, such approval to be conclusively evidenced by the execution thereof;

      RESOLVED  FURTHER,  that any and all officers of the  Corporation  be, and
hereby are,  authorized and directed to do or cause to be done all such acts and
things as may be necessary,  advisable, convenient and proper in connection with
the  execution  and  delivery  of  leases  authorized  at  this  meeting  and in
connection  with  or  incidental  to  the   consummation  of  the   transactions
contemplated  thereby,  including  the  execution  and  delivery  of any and all
instruments  or agreements as may be required by Lessor in connection  with such
leases and security documents; and

      RESOLVED FURTHER,  that Lessor may rely on these resolutions until written
notice of any modification,  rescission or revocation of same shall, in whole or
in part, has been delivered to Lessor, but no such  modification,  rescission or
revocation  shall,  in any event,  be effective  with  respect to any  documents
executed or actions taken in reliance upon the foregoing  authority prior to the
delivery  to  Lessor  of such  written  notice of  modification,  rescission  or
revocation.


                               Member HSBC Group

                                       12
<PAGE>

      I CERTIFY THAT the Corporation is a corporation  duly organized,  existing
and in good standing under the laws of the state of its incorporation.

      I DO FURTHER  CERTIFY THAT the above  resolutions  have not been  altered,
amended, repealed or rescinded.

      I DO FURTHER CERTIFY THAT on this date the persons whose names, titles and
signatures  are listed  below are duly  elected (or  appointed).  qualified  and
acting  officers of the  Corporation  and hold the offices  set  opposite  their
respective names, that the signatures  appearing opposite their respective names
arc the genuine signatures of such officers,  that each of such officers is duly
authorized  for and on behalf of the  Corporation  to execute and deliver any of
the documents contemplated by the foregoing resolutions for and on behalf of the
Corporation and is not prohibited by or in any manner restricted by the terms of
the  Corporation's  Certificate  of  Incorporation  its By-Laws,  or of any loan
agreement,  indenture or contract to which the  Corporation  is a party or under
which it is bound, nor is the Corporation prohibited or restricted in connection
therewith by the ruling of any  governmental  authority or court. I also certify
that the  foregoing  authority  shall  remain in full  force and effect and that
Lessor  shall be  entitled  to rely  upon  same,  until  written  notice  of the
modification,  rescission or  revocation  of same in whole or in part,  has been
delivered to Lessor, but no such  modification,  rescission or revocation shall,
in any event,  be effective  with respect to any  documents  executed or actions
taken in reliance upon the foregoing  authority  prior to the delivery to Lessor
of such written notice of modification, rescission or revocation.


- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Name of Officer                Title of Officer             Signature of Officer
- --------------------------------------------------------------------------------
Andrew Gordon                  Pres & CEO                   /s/ Andrew Gordon
- --------------------------------------------------------------------------------
David Gordon                   V. Pres                      /s/ David Gordon
- --------------------------------------------------------------------------------

      IN WITNESS WHREOF, I have hereunto set my hand and affixed the seal of the
Corporation this 28th day of June 2002.

                                       /s/ Karen Gordon
                                       -----------------------------------------

                                       Karen Gordon
                                       -----------------------------------------
                                       (Type or Print Name)  Assistant Secretary


                               Member HSBC Group

                                       13


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>4
<FILENAME>b332774ex10_12.txt
<DESCRIPTION>LEASE FOR THE CITY OF LA JUNTA, COLORADO
<TEXT>
<PAGE>

                                                                   Exhibit 10.12

                                    L E A S E

      THIS INDENTURE OF LEASE WITNESSETH, That

      l. GRANT. THE CITY OF LA JUNTA, COLORADO, a municipal corporation,
hereinafter called "CITY", does hereby demise and lease unto COFFEE HOLDING CO.,
INC. a Nevada Corporation, hereinafter called "COMPANY", the premises located at
27700 Frontage Road, in the City of La Junta, State of Colorado, as shown on the
plat, Exhibit "A" attached herein, under the following conditions:

      2. TERM: Beginning on the 1st day of February, 2004, and ending on the
31st day of January, 2024, unless the term hereof shall be sooner terminated as
hereafter provided.

      3. DEMISE.

      A.    For and in consideration of the rent, covenants and agreements
            hereinafter provided and contained, the CITY hereby leases unto the
            COMPANY that real estate together with improvements thereon, more
            particularly described on Exhibit "A", attached and incorporated
            herein by reference.

      4. INSTALLATION OF TRADE FIXTURES. In order to facilitate the occupancy
and commercial use of the building by the COMPANY, the COMPANY shall have the
right to install its trade fixtures during the course of the construction of the
building, so long as such installation does not unreasonably interfere with the
progress of the construction work. During the course of the installation of such
trade fixtures, the COMPANY shall be liable for all loss, damage or other
liability arising from the installation of such trade fixtures.

      5. RENT.

      A.    The monthly base rent is determined to be $8,341.12 per month,
            payable in advance on the first day of each month during the term of
            the lease beginning February 1, 2004.

      B.    Monthly Rental. In consideration of said demise, the COMPANY agrees
            to pay to the CITY as rent for said premise for the full term
            aforesaid the sum calculated per Section (A) beginning on February
            1, 2004 and a similar amount per month (except as provided in
            Section (C) below), which said sums shall be due and payable in


<PAGE>

            advance on the 1st day of the month and on each and every calendar
            month thereafter during said term at the office of CITY. Any payment
            that is made after the 10th day of any month in which said payment
            is due will bear interest at l2% per annum from its due date.

      C.    Rent Abatement. As an inducement to execute this Lease, for the time
            period of February 1, 2004 through December 31, 2004 inclusive, the
            CITY shall forgive the corresponding rent payment for those
            respective months.

      5. PERSONAL PROPERTY TAXES. COMPANY agrees to pay all taxes levied upon
personal property including trade fixtures and supplies kept upon the Leased
Premises and if such taxes on COMPANY'S personal property, fixtures or property
placed in the Leased Premises of COMPANY are levied against CITY or CITY'S
property and if CITY pays the same (which CITY shall have the right to do
regardless of the validity of such levy), COMPANY, upon demand, shall pay to
CITY the taxes so levied against CITY. CITY shall have the right to file a
memorandum of this Lease with the Colorado State Department of Revenue to obtain
the benefits of C.R.S. l973, 39-26-ll7 (l)(b) or any like Statute. COMPANY shall
provide CITY with a Colorado Department of Revenue Sales Tax number within
thirty days after execution of this Lease.

      6. REAL PROPERTY TAXES. The COMPANY shall pay all real property taxes
incurred after February 1, 2004, on the Leased Premises and the COMPANY hold the
CITY harmless therefrom. The CITY shall pay all unpaid real property taxes for
2003. The CITY shall pay a pro-rated 1/12 of the 2004 real property taxes
representing the month of January 2004.

      7. CONDITION PRECEDENT.

      A.    COMPANY'S Duties. That the CITY'S obligation to perform any covenant
            of this agreement is expressly predicated upon the following:

            1.    Evidence (satisfactory to the CITY) that all financing
                  releases CHAFA financing, Otero Partner's, Inc. (Otero County
                  Revolving Loan Fund), BFI and La Junta Capital, Inc. have been
                  obtained by the date of execution thereof; and

            2.    Except as may otherwise be provided herein, in the event that
                  any of the said CONDITION PRECEDENT are not fulfilled, each of
                  the parties (upon written notice to the other party) shall be
                  released from the terms and provisions of this contract,
                  without further recourse to either of the parties, except as
                  may otherwise be provided herein.


<PAGE>

      8. PURCHASE OF ELECTRICITY.

      1.    During the term of the lease, the COMPANY agrees that it shall
            purchase all electrical services from the City of La Junta. The
            rates shall be at a reasonable commercial rate, customarily charged
            to other users within the City of La Junta, and shall be at terms of
            payment as set forth in the published policies of the Board of
            Utility Commissioners of the City of La Junta.

      2.    The parties acknowledge and agree that the terms and provisions of
            this subparagraph are a specific inducement to the CITY'S covenants
            and agreements of other portions of this lease, and the COMPANY'S
            obligation to purchase electricity under the terms as set forth
            herein are as a fundamental part of the consideration realized by
            the CITY.

      3.    COMPANY acknowledges that CITY has policies concerning the tendering
            of advance deposits for utility services provided by the CITY. To
            the extent that those deposits will be required prior to a "turn on"
            of utility services to the COMPANY by the CITY provider, the COMPANY
            shall make provisions of payment of deposits, as required by the
            published policies of the Utility Board of Commissioners of the City
            of La Junta.

      9. CHARACTER OF OCCUPANCY. It is understood and agreed that the premises
herein demised are to be used for manufacturing, and/or for any other legal
purpose whatsoever, and except as otherwise provided herein, that the COMPANY
will (at its own expense) construct any necessary improvements and/or additional
alterations upon the existing building for such operations and that except as
otherwise provided herein, that the COMPANY will (at its own expense) maintain
and repair all of said improvements, to include any maintenance of the parking
lot or such other use of occupancy as may be agreed upon by the CITY and
COMPANY, in writing.

      10. QUIET POSSESSION. The Landlord shall warrant and defend the Tenant in
the quiet enjoyment and peaceful possession of the Leased Premises during the
term aforesaid and all terms, conditions and covenants to be observed and
performed by the parties hereto shall be applicable to and binding upon their
administrators, executors, successors or assigns.

      11. COMPANY COVENANTS. The COMPANY further covenants and agrees as
follows:

      A.    To pay the rental as provided for at the time and in the manner
            aforesaid.

      B.    To pay all water, electricity and other utility bills incurred by it
            in the use and occupancy of said premises at the time the same
            become due and payable.

      C.    COMPANY agrees that said premises will not be used for


<PAGE>

            any unlawful purpose to include any unreasonable environmental
            hazard for the term of this lease, and COMPANY will not allow or
            create on said premises any condition that will cause an unsanitary
            condition.

      D.    COMPANY agrees to keep the outside surrounding area premises free of
            all trash and debris, and all weeds shall be mowed on a regular
            basis, and the entire area shall provide an acceptable appearance.

      E.    The parties acknowledge and agree that there are certain restrictive
            covenants, agreements, and other matters related to the use of the
            parking lot, and the use of ingress and egress to the property. This
            contract is subject to all of those provisions and covenants, which
            appear of record on the records of Otero County, Colorado. Further,
            the parties acknowledge and agree that COMPANY has satisfied itself
            as to provisions of those covenants and the sufficiency of ingress
            and egress to this property. COMPANY agrees to be bound by those
            agreements and COMPANY shall assume all responsibilities of the CITY
            that may be associated therewith.

      F.    COMPANY agrees to maintain the entire subject premises (to include
            the heating, electricity and plumbing) as is set forth below, normal
            wear and tear excepted.

      G.    That the COMPANY will not use or permit the demised premises to be
            used for any purposes prohibited by the laws of the United States or
            the State of Colorado, or the ordinances of the City of La Junta or
            County of Otero.

      H.    That the COMPANY will not permit any nuisance in the demised
            premises.

      I.    That the COMPANY will not use or keep any substance of material in
            or about the demised premises which may vitiate the validity of the
            insurance on said building or increase the hazard of the risk.

      J.    COMPANY shall not discriminate on the basis of race, color,
            religion, sex or national origin. The CITY reserves the right to
            take such action as the United States Government may direct to
            enforce this covenant.

      K.    Signs, notices, advertisements, or other inscriptions shall be
            approved as to style and content by CITY prior to erection.


<PAGE>

      12. CITY COVENANTS. As a material inducement to the COMPANY to effectuate
the transactions herein contemplated, the CITY represents and warrants to and
covenants and agrees with the COMPANY that:

      A.    The CITY is a municipal corporation, duly organized, validly
            existing and in good standing under the laws of the State of
            Colorado.

      B.    The CITY is the sole owner of fee simple absolute title to the
            Property, and the Property is not subject to any liens, restrictions
            or encumbrances except as set forth on the records of Otero County.

      C.    The City has all requisite power and authority to execute and
            deliver this Agreement.

      D.    The officers of the CITY who will execute the same for and on behalf
            of the CITY have the power and authority to do so and to bind the
            CITY.

      E.    The execution, delivery and performance of this Agreement by the
            CITY will not violate any provision of law, any order of any court
            or any administrative body with jurisdiction over the CITY or the
            Property, binding on the CITY of the Property, any provision of any
            indenture, agreement, or other instrument to which it is a party or
            by which Property is affected, or be in conflict with, result in a
            breach of or constitute a default under any such indenture,
            agreement or other instrument or result in the creation or
            imposition of any lien, charge or encumbrance of any nature
            whatsoever upon the Property.

      F.    No written or oral notice has been received by the CITY or its
            agents or employees of the violation of any federal, state, local or
            other governmental building, zoning, health, safety, platting, land
            use, environmental, subdivision or other law, ordinance or
            regulations, or any applicable private restriction, and the intended
            use is not a pre-existing, non-conforming use.

      G.    All of the Property is presently zoned for its present and intended
            use and the CITY knows of no actions or proceedings pending or
            contemplated which would affect such zoning.

      H.    There exists no judgment, lien, suit, action or legal,
            administrative, arbitration or other proceeding pending, or, to the
            CITY'S knowledge, threatened against the CITY which could result in
            a judgment or lien against the Property or any portion thereof
            between the date hereof and the date of occupancy by the COMPANY.
            There is no litigation or proceeding


<PAGE>

            pending or known to the CITY to be threatened against the Property,
            or the operation of the property or any facts which, to the
            knowledge of the CITY, adversely affect or in the future may
            adversely affect the operation of the Property for the COMPANY'S
            intended use thereof. There are no applications, ordinances,
            petitions, resolutions or other matters pending before any
            governmental agency which would affect in any manner the COMPANY'S
            intended use of the Property or any portion thereof. To the best of
            the CITY'S knowledge, after due investigation, there are no
            environmental proceedings, applications, ordinances, petitions,
            court pleadings, resolutions, investigations by public or private
            agencies, or other matters pending which could prohibit, impede,
            delay or adversely affect the COMPANY'S intended use of the Property
            or any portion thereof. No condemnation proceedings are pending or,
            to the CITY'S knowledge, threatened against the Property, and to the
            CITY'S knowledge there are no applications, ordinances, petitions,
            resolutions or other matters pending before any governmental agency
            in regard to access routes, curb cuts, median strips or other
            contemplated actions of public agencies which might tend to diminish
            or curtail the full flow of traffic by the Property and access
            thereto.

      I.    The Property is not presently subject to obligations for any unpaid
            or deferred taxes, assessments, construction costs or utility
            charges, and all real property taxes are current and paid to date.

      J.    Except as to parking restrictions of record and except for the
            parking agreement (attached hereto as Exhibit "A"), there are no
            private restrictions of which the COMPANY has not been notified and
            which affect the uses which may be made of the Property.

      K.    An environmental impact study is attached hereto as Exhibit "B".
            Except as to matters contained therein, CITY has not placed or
            caused to be placed on, and has not knowledge of or reason to
            believe that there exists, any infectious, hazardous or toxic waste
            substance, however defined, anywhere in, on or near the Property.

      L.    Except for the Parking Agreement set forth in Exhibit "A", no
            portion of the Property is the subject of any leasehold interest nor
            are there any existing service contracts or agreements affecting the
            Property.

      M.    The CITY shall not do anything to adversely affect the structural
            integrity of the improvements and the CITY shall, at its own costs
            and expenses, keep all parts or


<PAGE>

            portions of the Property in working order and good repair until
            occupancy by the COMPANY.

      N.    To the best of the CITY'S knowledge, there are no soil or subsoil
            conditions at the Property which would restrict, impair or prohibit
            use of the Property or any portion thereof for COMPANY'S intended
            use thereof.

      O.    To the best of the CITY'S knowledge, no portion of the Land is
            within an identified flood plain or other designated flood hazard
            area as established pursuant to the Flood Disaster Protection Act,
            as amended, or regulations promulgated thereto by HUD, FDIC, the
            Federal Reserve Board or any other governmental or
            quasi-governmental agency or authority having jurisdiction over all
            or any portion of the Property.

      P.    The Property has direct legal access to, abuts, and is served by a
            drive way over private property, which drive way provides a valid
            means of ingress and egress to and from the Property, without
            additional cost or expense to the COMPANY.

      Q.    All utilities, including water, gas, telephone, electricity, sewer,
            and sanitary services are currently available to the Property at
            normal and customary rates, and are adequate to serve the Property
            for the COMPANY'S intended use thereof.

      R.    The buildings, structures and improvements included, and to be
            included within the Property are and shall be structurally sound, in
            good repair and in acceptable condition, and all mechanical,
            electrical, heating, air-conditioning, drainage, sewer, water and
            plumbing systems are in property working order.

      S.    To the best of the CITY'S knowledge, the Property is not on any
            state or federal "superfund" list or any similar list maintained by
            a government agency with respect to sites requiring cleanup due to
            contamination by Hazardous Substances.

      T.    To the best of the CITY'S knowledge, the Property has not been used
            to generate, manufacture, refine, transport, treat, store, handle,
            dispose, transfer, produce or process any regulatory quantities of
            Hazardous Substances. For purposes thereof, "Hazardous Substances"
            means any substance, waste, contaminant, pollutant or material that
            has been determined now or before closing by any local, state or
            federal government authority to be capable of posing a risk of
            injury or damage to health, safety property, or the


<PAGE>

            environment, and includes, without limitation, all substances,
            wastes, contaminants, pollutants and materials defined or designated
            as hazardous, extremely or imminently hazardous, dangerous or toxic
            pursuant to (i) any applicable statute, code, ordinance, rule,
            regulations, or policy of any local or state governmental authority
            within the State of Colorado; (ii) Section 307 and 3ll of the Clean
            Water Act, as amended, 33 U.S.C. Sections l3l7, l32l; (iii) Section
            l004 of the Resource Conservation and Recovery Act, as amended, 42
            U.S.C. Section 6903; (iv) Section l0l of the Comprehensive
            Environmental Response and Liability Act, as amended, 42 U.S.C.
            Section 960l (v) Section ll2 of the Clean Air Act, as amended, 42
            U.S.C. Section 74l2; (vi) Section 7 of the Toxic Substances Control
            Act, as amended, l5 U.S.C. Section 2606; (vii) Sections l03 and l04
            of the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
            Sections l802, l803; or (viii) regulations promulgated pursuant to
            any of the foregoing, and includes all substances, wastes,
            contaminants, pollutants and materials defined, designated or
            identified as, or containing, polychlorinated biphenyls ("PCBs"),
            asbestos, or petroleum.

      13. CORPORATE GOOD STANDING. COMPANY shall ensure that the COMPANY shall
within thirty days after execution of this lease, and then thereafter at all
times during the term of this lease, be a corporation in good standing under the
laws of the State of Colorado, maintaining an appropriate registered agent and a
registered office, and otherwise complying with all laws of the State of
Colorado.

      14. ASSIGNMENT, SUBLETTING OR PLEDGE.

      A.    It is agreed that neither the Leased Premises nor any part thereof
            shall be sublet, nor shall this lease be assigned by COMPANY without
            the written consent of CITY having been first obtained, which shall
            not be unreasonably withheld or delayed by the CITY. No assignment
            for the benefit of creditors, or by operation of law, shall be
            effective to transfer any right to an assignee without the written
            consent of CITY first having been obtained.

      B.    It is agreed that if this lease be assigned, or if the Leased
            Premises or any part thereof be sublet or occupied by anyone other
            than COMPANY, CITY may collect rent from the assignee, undertenant
            or occupant, and apply the net amount collected to the rent herein
            reserved.

<PAGE>

      15. MAINTENANCE AND REPAIRS.

      A.    The CITY shall make such repairs as are necessitated by the CITY's
            negligence or by the CITY's breach of the Lease.

      B.    If the change in any laws during the term of the Lease requires
            structural repairs, replacements or improvements to the building,
            such repairs, replacements or improvements shall be made at the
            CITY's expense. Such additional costs shall be added to any sums
            allocated in paragraph 5(A) above and shall be amortized over the
            remaining useful life of the building; the computation of "remaining
            useful life" shall not be less than 20 years, and of which the
            additional rent shall be assessed from the date of completion of the
            structural repairs, replacements or improvements.

      C.    Except as herein provided, the CITY shall not be obligated to make
            repairs, replacements or improvements of any kind upon the Lease
            Premises, or repair any equipment, facilities or fixtures therein
            contained, including the parking lot, air conditioning equipment,
            heating equipment, or other equipment serving the Leased Premises.

      D.    The Lease Premises shall at all times be kept in good order,
            condition and repair by the COMPANY and in a clean, sanitary and
            safe condition and in accordance with all applicable laws,
            ordinances and regulations of any governmental authority having
            jurisdiction, normal wear and tear excepted.

      5.    The COMPANY shall maintain the parking lot in a condition equal to
            the lot as it exists upon execution of this Lease.

      6.    The COMPANY shall maintain the roof and accepts the roof in its
            current condition in exchange for a portion of the abatement of rent
            allocated in Paragraph 4(C) above.

      7.    During the last year of the term of the Lease, the COMPANY shall not
            be required to expend in excess of $100,000.00 on maintenance
            expense; but only if COMPANY demonstrates a continuing maintenance
            program throughout the entire term of the Lease.

      16. ACCEPTANCE OF PREMISES BY COMPANY. The taking possession of the Leased
Premises by the COMPANY shall be conclusive evidence as against the COMPANY that
the Leased Premises is acceptable to COMPANY.


<PAGE>

      17. PREMISES VACATED DURING TERM OF LEASE. Unless the COMPANY continues to
pay rent, if the COMPANY shall completely abandon or vacate the Leased Premises
before the end of the Term, the CITY may, at its option and with thirty (30)
days written notice to the COMPANY, enter Leased Premises, remove any signs of
the COMPANY therefrom, and re-let the same, or any part thereof, as CITY may see
fit, without thereby voiding or terminating the Lease, and, for the purpose of
such re-letting, the CITY is authorized to make any repairs, changes,
alterations or additions in or to said Leased Premises, as may be reasonably
required, necessary or desirable for the purpose of such re-letting and the
COMPANY shall be liable for the balance of the rent herein reserved until the
expiration of the Lease. The CITY shall take reasonable efforts to mitigate its
damages. Any subsequent damages or repairs resulting from the actions of the
subtenant, shall not be imputable to the COMPANY.

      18. HOLDING AFTER TERMINATION. It is agreed that if, after the expiration
of the Term, the COMPANY shall remain in possession of the Leased Premises,
without giving timely notice as required herein, then such holding over shall be
deemed and taken to be a holding upon a tenancy from month to month at a monthly
rental equivalent to the last monthly payment hereinbefore provided for, payable
in advance on the same day of each month as above provided with all other terms
and conditions of the Lease remaining the same.

      19. NO IMPLIED SURRENDER OR WAIVER. No act or thing done by the CITY or
its agents during any term hereby granted, shall be deemed an acceptance or a
surrender of the Leased Premises, and no agreement to accept a surrender of the
Leased Premises shall be valid, unless the same shall be made in writing and
signed by the CITY. The mention in this Agreement of any particular remedy shall
not preclude the CITY or the COMPANY from any other remedy the CITY or the
COMPANY might have, whether in law or in equity, nor shall the waiver of any
violations of any covenant or condition in this Agreement prevent a subsequent
act, which would have originally constituted a violation, from having all of the
force and effect of any original violation. The receipt by the CITY of rent with
knowledge of the breach of any covenant in the Lease shall not be deemed a
waiver of such breach. The failure of the CITY or the COMPANY to enforce any of
the conditions set forth herein shall not be deemed a waiver of such conditions.
The receipt by the CITY of rent from any assignee, subtenant or occupant of the
Leased Premises shall not be deemed a waiver of the covenant Paragraph 18
against assignment and subletting without written consent of the CITY, or an
acceptance of the assignee, subtenant or occupant as the COMPANY, or a release
of the COMPANY from the further observance of performance by the COMPANY of the
covenants in the Lease contained on the part of the COMPANY to be observed and
performed. No provision of the Agreement shall be deemed to have been waived by
the CITY or the COMPANY unless such waiver be in writing signed by the CITY or
the COMPANY.


<PAGE>

      20. ALTERATIONS.

      A.    After reasonable notice to the COMPANY, the CITY shall have the
            right at any time to enter the Leased Premises to examine and
            inspect the same, or to make such repairs, additions, or alterations
            as it may deem necessary or proper for the safety, improvement or
            preservation thereof. Said alterations (completed at the insistence
            of the CITY) shall be at the expense of the CITY provided that the
            same do not materially interfere with the COMPANY's operations.

      B.    In exercise of its rights pursuant to this Paragraph, except in the
            event of emergency, the CITY shall not use force to enter the Leased
            Premises. In all events, the CITY shall use its best efforts not to
            disturb the tenancy therein.

      C.    The COMPANY shall make no alterations in excess of $50,000.00 or
            additions to the Leased Premises in excess of $50,000.00 without
            first obtaining the written consent of the CITY, and all additions
            or improvements made by the COMPANY (except only movable equipment
            and furniture) shall be deemed a part of the Real Estate and shall
            remain upon and be surrendered with the Leased Premises as a part
            thereof, at the end of the term, by lapse of time or otherwise.

      D.    All alterations and additions shall be made in a reasonable and good
            workman-like manner.

      21. INSURANCE.

      A.    During the term of the Lease, the COMPANY, at its own cost and
            expense, shall be responsible for insuring the building and
            fixtures, personal property improvements and equipment therein. The
            building shall be insured for an amount not less than the fair
            market value of the building, which is initially agreed upon as
            $1,125,000.00. The CITY and the COMPANY hereby waive their right of
            recovery against each other for any loss or damage and shall cause
            their respective insurer(s) to waive their subrogation right for any
            payments made for such loss or damage.

      B.    During the term of the Lease, the COMPANY shall maintain, at its own
            cost and expense, commercial general liability insurance in an
            amount of not less than One Million Dollars ($1,000,000.00) covering
            bodily injury and property damage liability per occurrence and
            Worker's Compensation and Employer's


<PAGE>

            Liability insurance in an amount not less than the statutory limit.
            The commercial general liability insurance shall name the CITY as an
            additional insured. Prior to the Commencement Date of the Lease, the
            COMPANY shall provide the CITY with a certificate from its
            insurer(s) evidencing the insurance coverage herein stated.

      C.    The CITY shall be named as an additional insured on any policy
            required of COMPANY pursuant to the preceding subparagraph.

      22. INDEMNITY.

      A.    City's Protection. Except for the CITY's negligence or breach of the
            Lease, the COMPANY indemnifies and saves harmless the CITY of and
            from all liability for damages or claims against the CITY on account
            of injuries to the person or property of any other person rightfully
            in the building for any purpose whatsoever, where the injuries are
            caused by the negligence or misconduct of the COMPANY, its agents,
            servants or employees, or where such injuries are the result of the
            violation of law or ordinances, governmental orders of any kind, and
            the COMPANY agrees neither to hold nor attempt to hold the CITY
            liable for any injury or damage, either proximate or remote
            occurring through or caused by the COMPANY's repairs or alterations
            to the Leased Premises. The CITY shall not have any liability
            hereunder with respect to damage to property or personal injury
            occurring outside the building, except to the extent same is in any
            manner due or attributable to the negligent or willful acts of the
            CITY, its agents, employees or contractors.

      B.    Company's Protection. Except for the COMPANY's negligence or breach
            of this Agreement, the CITY indemnifies and saves harmless the
            COMPANY of and from all liability for damages or claims against the
            COMPANY on account of injuries to the person or property of any
            other person rightfully in said building for any purpose whatsoever,
            where the injuries are caused by the negligence or misconduct of the
            CITY, its agents, servants or employees, and the CITY agrees neither
            to hold nor attempt to hold the COMPANY liable for any injury or
            damage, either proximate or remote occurring through or caused by
            the CITY's repairs or alterations to the Leased Premises. The
            COMPANY shall not have any liability hereunder with respect to
            damage to property or personal injury occurring outside the
            building, except to the extent the same is in any manner due or
            attributable to the negligent or willful acts of the COMPANY, its
            agents, employees or contractors.


<PAGE>

      23. EMINENT DOMAIN.

      1.    If the Leased Premises shall be taken by right of eminent domain, in
            whole or substantially in part, for public purposes, then this
            lease, at the option of either party, shall forthwith terminate, and
            the current rent shall be properly apportioned to the date of such
            taking and in such event Landlord shall receive the entire award for
            the lands and improvements so taken.

      2.    Thereafter, both the CITY and the COMPANY shall be discharged from
            all further obligations under this Lease. Although the award in the
            event of any condemnation shall belong to the CITY, the COMPANY
            shall have the right to claim and recover from the condemning
            authority such compensation, if any, as may be separately awarded to
            the COMPANY in the COMPANY'S own right:

            1.    In a separate proceeding on account of any and all damage to
                  the COMPANY'S business by reason of the condemnation to
                  include any relocation expenses; and

            2.    For or on account of any cost or loss which the COMPANY shall
                  incur in removing the COMPANY'S furniture, fixtures and
                  equipment from the Leased Premises.

      24. BREACH OR DEFAULT.

      A.    COMPANY BREACH. The COMPANY agrees to observe and perform the
            conditions and agreements herein set forth to be observed and
            performed by the COMPANY, and further agrees that if default be made
            by the COMPANY in the payment of said rent, or any part thereof, or
            if the COMPANY shall fail to materially observe or materially
            perform any of said conditions or agreements and such default shall
            continue beyond the notice periods provided below, then and in the
            event, and as often as the same may happen, it shall be lawful for
            the CITY, at its election, with previous notice, to re-enter and
            repossess itself of the Leased Premises, with legal proceedings. The
            COMPANY shall receive thirty (30) days written notice of any alleged
            failure to make a payment before the same shall be considered a
            default of the terms of this Lease. The ninety (90) day notice
            provision for failure to perform any covenant (other than the
            failure to make payment) shall be reasonably extended if the cure
            requires a period of time longer than ninety (90) days, and if the
            COMPANY is diligently pursuing the cure of said default.

      B. CITY BREACH. The CITY acknowledges that:

            1.    The COMPANY has committed and shall commit substantial
                  resources in planning for this Project, purchasing fixtures
                  for the building and


<PAGE>

                  relocating a portion of its business to the CITY of La Junta;
                  and

            2.    The CITY shall receive ninety (90) days written notice of any
                  alleged breach before the same shall be considered a default
                  of the terms of the Lease. In the event the default is not
                  cured within the aforesaid ninety (90) days, the COMPANY shall
                  be entitled to relief as allowable by law. The ninety (90) day
                  notice period shall be reasonably extended if the cure
                  requires a period of time longer than ninety (90) days, and if
                  the CITY is diligently pursuing such cure.

      25. INSOLVENCY. It is further agreed between the parties hereto that if
the COMPANY shall be declared insolvent or bankrupt, or if any assignment of the
COMPANY's property shall be made for the benefit of creditors or otherwise, or
if the COMPANY's leasehold interest herein shall be levied upon under execution,
or seized by virtue of any court of law, or a Trustee in Bankruptcy or a
Receiver be appointed for the property of the COMPANY, whether under the
operation of a State or Federal statute, then and in any such case after a
ninety (90) day notice to the COMPANY to remedy the situation, the CITY may, at
its option, with thirty (30) days written notice terminate the Lease,
immediately retake possession of said Leased Premises, using such force as may
be necessary, without being guilty of any manner of trespass or forcible entry
or detainer, and without the same working any forfeiture of the obligations of
the COMPANY hereunder.

      In the event an Order for Relief is entered by a Bankruptcy Court for the
COMPANY, the COMPANY agrees that the provisions of 11 U.S.C. 365 shall apply and
that the COMPANY, as Debtor-in-Possession, or a Trustee shall promptly cure any
and all defaults, of any kind or type, in the terms of the Lease by payment
within ten (10) days of any such Lease payments then due and owing or by
remedying any defect in the occupancy of the leased space. Further, in the event
that the COMPANY, as a Debtor-in-Possession, or a Trustee should elect to assign
the Lease, it is agreed that the Lease may be assigned or subleased to a light
industry business operation suitable to the CITY or, to any other user suitable
to the CITY, which consent by the CITY shall not be unreasonably withheld. Since
the building has been retrofitted to use as a light manufacturing building, any
other type of tenant shall not be deemed acceptable without express consent of
the CITY.

      26. REMOVAL OF COMPANY'S PROPERTY.

      A.    If the COMPANY shall fail to remove all effects from the Leased
            Premises within thirty (30) days after the abandonment thereof, or
            within thirty (30) days after


<PAGE>

            the termination of the Lease for any cause whatsoever, the CITY, at
            its option, may remove the same in any manner that it shall choose,
            and store said effects without liability to the COMPANY for a period
            not to exceed thirty (30) additional days. After that period of
            time, the CITY shall dispose of the same without any further
            liability to the CITY.

      B.    The COMPANY agrees to pay the CITY on demand, any and all reasonable
            expenses incurred, in such removal, including Court costs and
            attorney's fees and storage charges on such effects for the length
            of time the same shall be in the CITY's possession.

      C.    As to any equipment or fixtures purchased by COMPANY which are
            thereafter attached to the building, the COMPANY shall be entitled
            to remove said equipment and fixtures, but only if COMPANY restores
            the area affected by the equipment or fixtures in the building and
            Leased Premises to its original condition, ordinary wear and tear
            excepted.

      27. LOSS OR DAMAGE TO COMPANY'S PROPERTY. All personal property of any
kind or description whatsoever in the Leased Premises shall be at the COMPANY's
sole risk, and the CITY shall not be held liable for any damage done to or loss
of such personal property, or for damage or loss suffered by the business of the
COMPANY arising from any act or neglect of the employees of the COMPANY, or from
bursting, overflowing or leaking of water, sewer pipes, or from heating or
plumbing fixtures, or from electric wires, or from gases, or odors, caused in
any other manner whatever, except in the case of willful neglect or breach of
the Lease on the part of the CITY.

      28. SURRENDER OF POSSESSION. The COMPANY agrees to deliver and surrender
to the CITY possession of the Leased Premises at the expiration or termination
of the Lease, by lapse of time or otherwise, in as good repair as when the
COMPANY obtained the same at the commencement of said term, excepting only
ordinary wear and decay, and insured damages, or damage by the elements or by
act of God or by insurrection, riot, invasion or commotion, or of military or
usurped power.

      29. SEVERABILITY CLAUSE. If any clause or provision of this Agreement is
illegal, invalid and unenforceable under present or future law effective during
any term of the Lease, then and in that event, it is the intention of the
parties hereto that the remainder of the Agreement shall not be affected
thereby. The caption of each Paragraph hereof is added as a matter of
convenience only and shall be considered to be of no effect in the construction
of any provision or provisions of this Agreement.


<PAGE>

      30. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Colorado, and the COMPANY agrees that Otero County, Colorado shall be
the appropriate jurisdiction for any actions arising under the terms of the
Lease.

      31. BINDING TERMS. All terms, conditions and covenants to be observed and
performed by the parties hereto shall be applicable to and binding upon their
heirs, administrators, successors and assigns, as permitted.

      32. AUTHORITIES FOR ACTION, NOTICE. The CITY may act in any matter
provided for in this Agreement by the City Manager, and any notice to be given
to the CITY as provided for in this Agreement shall be delivered in person to
its City Manager or sent to the CITY by certified mail return receipt requested,
overnight delivery service, or by facsimile with confirmation, addressed to its
principal office at P. O. Box 489, 601 Colorado Avenue, La Junta, Colorado
81050. Notice to the COMPANY shall be sent by the CITY to the COMPANY by
certified mail, return receipt requested, by overnight delivery service, or by
facsimile with confirmation to: COFFEE HOLDING CO., INC., 4401 First Avenue,
Brooklyn, New York 11232-0005, Attn: Andrew Gordon.

      33. COSTS AND ATTORNEY'S FEES. In the event either party retains the
services of an attorney to enforce its rights under this Agreement, then the
prevailing party as determined by a court of competent jurisdiction shall be
entitled to recover, in addition to its other damages, its reasonable attorney's
fees and other legal costs.

      34. AMENDMENT OR MODIFICATION. The parties acknowledge and agree that
neither has relied upon any statements, representations, agreements or
warranties, except such as are expressed herein, and that no amendment or
modification of this Agreement shall be valid or binding unless expressed in
writing and executed by the parties hereto in the same manner as the execution
of this Agreement.

      35. MEMORANDUM. Upon execution of this Lease, the parties shall execute a
memorandum of this Lease in the form of Exhibit "B", attached and incorporated
herein, or such other form as the parties may agree upon and upon which may be
necessary for filing among the real property records of Otero County, Colorado,
which shall be recorded against the subject property described in paragraph four
above. When the lease term has expired or on an earlier termination, the parties
shall execute an agreement


<PAGE>

terminating the lease in a form appropriate for recording on the records of
Otero County.

      IN WITNESS WHEREOF, the CITY and the COMPANY have executed this Agreement.

COFFEE HOLDING CO., INC.                          THE CITY OF LA JUNTA, COLORADO
                                                  A Municipal Corporation
/s/ Andrew Gordon                                 /s/ Richard G. Klein
- -----------------------------                     ------------------------------
By: Andrew Gordon                                 By: Richard G. Klein,
                                                       City Manager


<PAGE>

                                    Exhibit B

                               MEMORANDUM OF LEASE

      THIS MEMORANDUM OF LEASE AGREEMENT("Memorandum of Lease") is dated
February ____, 2004, and is entered into by the City of La Junta, Colorado, a
Municipal Corporation ("City"), and COFFEE HOLDING CO., INC., ("Company").

      WITNESSETH THAT, WHEREAS:

      A. CITY and COMPANY made and entered into a lease ("Lease") pertaining to
certain real estate owned by the CITY, located in La Junta, Colorado:

            See Attached Exhibit A

      B. It is the desire of the parties hereto that without filing the Lease in
the Office of the Otero County Clerk & Recorder, constructive notice of the
provisions thereof should be accomplished through the execution and delivery of
this "Memorandum of Lease" and the filing thereof in the office of such County
Recorder.

      NOW, THEREFORE, in consideration of the foregoing premises, it is hereby
agreed by and between the parties hereto as follows:

      1. All of the provisions of the Lease are hereby incorporated herein by
reference, including without limitation, the following:

            a.    The date of occupancy of the premises by the COMPANY is
                  February 1, 2004.

            b.    The obligations on the part of the CITY to lease the land and
                  building to the COMPANY and the obligation on the part of the
                  COMPANY to lease said land and building from the CITY for an
                  initial term of twenty years;

            c.    The obligation on the part of the COMPANY to pay to the CITY
                  an annual rent as the term "Rent" is defined in the lease.

            d.    The remedies on the part of the CITY and the COMPANY in the
                  event of a default by the other party in its respective
                  obligations under the lease; and

            e.    The rights and responsibilities of each of the parties in case
                  of fire or other casualty which damages or destroys the
                  building.


<PAGE>

      2. None of the provisions of this Memorandum of Lease are intended in any
way to alter the terms of this Lease; this Memorandum of Lease is intended to
serve only constructive notice, through the proper recording of the same, of the
terms, covenants and conditions set forth in the Lease.

      IN WITNESS WHEREOF, the parties hereto have caused these presents to be
duly executed as of the day and year first above written.

COFFEE HOLDING CO., INC.                          THE CITY OF LA JUNTA, COLORADO
                                                  A Municipal Corporation
/s/ Andrew Gordon                                 /s/ Richard G. Klein
- -----------------------------                     ------------------------------
By: Andrew Gordon                                 By: Richard G. Klein,
                                                       City Manager

STATE OF NEW YORK    )
                     ) SS.
COUNTY OF KINGS      )

      Subscribed and sworn to before me in the County of Kings, State of
New York, this _____ day of February, 2004 by Andrew Gordon,
President of Coffee Holding Co., Inc.

      My commission expires: May 5, 2005

                                                        /s/ Gerard DeCapua
                                                        ------------------------
                                                        Notary Public

STATE OF COLORADO    )
                     ) SS.
COUNTY OF OTERO      )

      Subscribed and sworn to before me in the County of Otero, State of
Colorado, this 24th day of February, 2004 by Richard G. Klein, City Manager,
City of La Junta, Colorado.

      My commission expires: February 11, 2005

                                                        /s/ Julie J. Eck
                                                        ------------------------
                                                        Notary Public


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>5
<FILENAME>b332774ex10_13.txt
<DESCRIPTION>TRADEMARK LICENSE AGREEMENT FOR DEL MONTE CORP.
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.13

                           TRADEMARK LICENSE AGREEMENT

      This Trademark License Agreement ("Agreement") is made and entered into
effective as February 4, 2004, by and between DEL MONTE CORPORATION, a Delaware
corporation with a principal business address of One Market @ The Landmark, San
Francisco, California 94105 ("LICENSOR"), and COFFEE HOLDING CO., INC., a Nevada
corporation with a principal business address of 4401 First Avenue, Suite 1507,
Brooklyn, New York 11232 ("LICENSEE").

                                    RECITALS

      A. LICENSOR is the owner of the trademarks S&W, IL CLASSICO and S&W and
design and the registrations thereof listed on Schedule A attached hereto and
made a part hereof (collectively, the "Marks").

      B. LICENSEE operates a wholesale coffee business, including manufacturing,
roasting, packaging, marketing and distributing roasted and blended coffees for
private label accounts and its own brands.

      C. LICENSEE desires to obtain the exclusive right to use the Marks on and
in connection with the production, manufacture, distribution and sale in the
United States (the "Territory") of certain coffee products as described more
fully in Section 1 of this Agreement. LICENSOR is willing to grant LICENSEE the
right to use the Marks in said Territory, upon the terms and conditions
hereinafter set forth:

      NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

      1.    Grant of License

      LICENSOR hereby grants to LICENSEE, subject to the terms and conditions of
this Agreement, an exclusive license to use the Marks solely in the Territory
and solely on and in connection with the production, manufacture, distribution
and sale of roasted whole bean and ground coffee for distribution at the retail
distribution level (the "Products"). The license does not include the right to
use the Marks on or in connection with any other products or activity and does
not include the right to use the Marks outside of the Territory. All rights not
expressly granted herein are retained by LICENSOR. LICENSEE acknowledges that
use of the Marks by LICENSOR on a global Internet web site or successor
technology to identify Products sold outside the Territory does not violate this
Agreement.

      2.    Royalty Payments

            (a) In consideration for the license granted herein, LICENSEE agrees
to pay LICENSOR royalties as follows:

                                       1
<PAGE>

            (i)   [Confidential treatment requested]

            (ii)  [Confidential treatment requested]

Year 1 shall include the period from the date of this Agreement through December
31, 2004. Each contract year thereafter shall commence on January 1 and
terminate on December 31.

            (b) "Net Sales" as used in this Agreement shall mean LICENSEE's
gross sales value (the gross invoice amount billed customers) of the Products,
less discounts and customer allowances and less returns and damage claims up to
the amount of the actual sales value of the Products.

            (c) Royalties earned shall be computed and reported for each
calendar quarter and shall be due and payable within thirty (30) days of the end
of each quarter. Each royalty payment shall be accompanied with a royalty report
that sets forth for the most recent quarter and calendar year-to date, in
reasonable detail, (i) gross sales of the Products, (ii) Net Sales of the
Products with detail showing the calculation of Net Sales from gross sales, and
(iii) the royalty payment for the most recent quarter and the calculation
thereof. The royalty report shall include a statement signed by a duly
authorized officer of LICENSEE certifying the accuracy of such report and the
computation of royalties earned and payments made.

            (d) To the extent royalties paid during any contract year are less
than the Minimum Annual Royalty, LICENSEE shall pay such difference to LICENSOR
within thirty (30) days of the end of such contract year (together with the
fourth quarter royalty payment).

            (e) Amounts not paid when due will bear interest at the lower of the
maximum lawful interest rate or a rate of one percent (1.0%) per month.

            (f) Should LICENSEE terminate this Agreement or cease sales of
Products within a given year, LICENSEE shall be liable to LICENSOR for the full
Minimum Annual Royalty for such contract year in addition to any other remedies
to which LICENSOR shall be entitled by operation of law.

                                       2
<PAGE>

      3.    Ownership of the Marks

            (a) LICENSEE hereby acknowledges that LICENSOR is the owner of the
Marks and that LICENSEE's right to use the Marks is limited and derived solely
from this Agreement. LICENSEE acknowledges that it shall not acquire any rights
of ownership whatsoever in the Marks as a result of LICENSEE's use thereof, and
that all goodwill arising from ownership of the Marks (as distinguished from any
enhancement of value to LICENSEE's business arising from the license granted
hereunder) shall inure exclusively to the benefit of LICENSOR. LICENSEE shall
include on all packages, cartons and containers in which the Products are
marketed and on all labels and advertising and promotional material, the name
and address of LICENSEE as manufacturer of the Products and the phrase "S&W is a
registered trademark used under license," or equivalent approved in writing by
LICENSOR.

            (b) LICENSEE agrees to execute and deliver to LICENSOR, upon
LICENSOR's request, all documents which are necessary or desirable to secure or
preserve LICENSOR's rights in or registrations of the Marks or to record this
Agreement, as appropriate, or to cancel such registrations or recordations, as
appropriate. LICENSEE further agrees to assist LICENSOR in registering,
maintaining and reporting the Marks and use thereof as requested by LICENSOR.
LICENSEE will pay its own costs and expenses in this regard. All registration,
recordal and maintenance costs of the Marks shall be at the sole cost and
expense of LICENSOR.

            (c) Each of LICENSEE and LICENSOR hereby represents and warrants to
each other that (i) it has full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder; (ii) this Agreement has been
duly authorized by all necessary action on its part; and (iii) neither execution
of this Agreement by it nor performance of its obligations hereunder will
constitute a breach of any agreement to which it is a party. LICENSOR further
represents and warrants to LICENSEE that (i) neither execution of this Agreement
by it nor performance of its obligations hereunder will constitute a breach of
any agreement to which any of the Marks is subject and (ii) all necessary
consents have been obtained by persons who claim a security interest in the
Marks, or any of them.

      4.    Term

            Subject to Section 8 hereof, this license shall commence as of the
date of this Agreement and continue for an initial term of ten (10) years ending
at the close of business on December 31, 2014. Thereafter, subject to Section 8,
his Agreement shall continue automatically for up to two (2) additional terms of
five (5) years each, unless either party provides written notice of non-renewal
to the other party no less than six (6) months in advance of the expiration of
the initial term or any subsequent renewal term.

      5.    Quality Control and Other Conditions

            LICENSEE acknowledges the importance to LICENSOR and to its
reputation and goodwill, and to the public, of maintaining high, uniform
standards of quality in the Products produced, manufactured, distributed and
sold under the Marks. Therefore, LICENSEE agrees to:

                                       3
<PAGE>

            (a) Use the Marks in a manner that will protect LICENSOR's rights
and goodwill therein, including the use of all notices, legends or markings that
may be required by LICENSOR in order to give appropriate notice of any of the
Marks. No additional markings, legends or notices shall be used by LICENSEE on
Products without first obtaining LICENSOR's prior written approval, other than
LICENSEE's corporate identification;

            (b) Prior to marketing the Products in the Territory (including any
subsequent new Products), submit to LICENSOR for approval production samples
(including packaging) of the Products (the "Pre-Production Samples"), with
LICENSOR's approval thereof not to be unreasonably withheld or delayed. LICENSEE
shall not commence distribution of the Products in the Territory until LICENSOR
has communicated its approval of the Pre-Production Samples to LICENSEE in
writing and all Products subsequently manufactured for distribution in the
Territory shall conform to the Pre-Production Samples;

            (c) Produce and manufacture Products according to specifications and
other quality control standards established or approved by LICENSOR, the details
of which shall be supplied in writing by LICENSOR to LICENSEE from time to time;

            (d) Submit proposed new varieties for Products for written approval
by LICENSOR according to procedures provided to LICENSEE by LICENSOR;

            (e) Affix the Marks to or on packaging, advertising and promotional
materials only according to the formats, logo types, colors, styles and
specifications used by LICENSOR as of the date of this Agreement or according to
any other formats, logo types, colors, styles and specifications as shall be
specifically approved in advance by LICENSOR in writing;

            (f) Not use the Marks in any way other than expressly set forth
herein, except in such form and manner as shall be specifically approved in
advance by LICENSOR in writing, and according to specifications provided by
LICENSOR to LICENSEE;

            (g) In no event use any of the Marks in any way outside the
Territory or in connection with any other good or service other than the
Products, except as permitted under any other written license between the
parties;

            (h) Submit to LICENSOR at LICENSOR's request, but not more than once
in each calendar year, a complete list and representative samples of each
variety of the Products and of all packaging, advertising and promotional
materials bearing the Marks in order that LICENSOR may confirm, among other
things, that (i) the Products conform to the specifications approved by
LICENSOR, (ii) the Products are of merchantable quality and free from defects in
workmanship and materials, and (iii) the use of the Marks on the Products
conforms to the terms set forth herein;

            (i) To the extent permitted by law, use all reasonable efforts to
ensure that purchasers of Products do not distribute or sell or cause or assist
the distribution or sale of

                                       4
<PAGE>

Products outside the Territory;

            (j) Comply with all applicable laws and statutes, ordinances,
regulations, rules and decisions (each a "Law") adopted by any governmental
authority, including without limitation, Laws which prohibit adulteration and
misbranding, including, without limitation, the United States Federal Food, Drug
and Cosmetic Act of June 25, 1938, as amended (the "Federal Act"), and state
food and drug laws and Laws which prohibit production and shipment of goods in
violation of Section 404 or 301(d) of the Federal Act; and

            (k) Follow any other standards as may be reasonably necessary to
maintain LICENSOR's rights in the Marks and as conveyed by LICENSOR to LICENSEE
in writing.

      6.    Quality Control Enforcement

            (a) If LICENSOR notifies LICENSEE that LICENSOR has determined that
certain Products do not comply with any of the provisions set forth in Section 5
("Deficient Products"), LICENSEE shall cure such noncompliance promptly, but in
no event later than thirty (30) days, after LICENSEE's receipt of such notice.
In the event that LICENSOR determines that such noncompliance has or may have an
adverse effect on public health or safety, LICENSEE shall immediately ensure
that all such Deficient Products are removed from production, manufacture,
distribution and sale within forty-eight (48) hours.

            (b) If LICENSOR gives LICENSEE notice of LICENSEE's noncompliance
with this Section and LICENSEE continues (i) to permit the production,
manufacture, distribution or sale for more than forty-eight (48) hours of
Deficient Products which have an adverse effect on public health or safety, or
(ii) to produce, manufacture, distribute or sell for more than thirty (30) days
Products that are deficient for any other reason provided under this Section 6,
then LICENSOR shall be entitled, without limiting any other remedies which
LICENSOR may have under this Agreement or at law or in equity, to seek an
injunction against further production, manufacture, distribution and sale of
such Deficient Products.

      7.    Inspection

            In order that LICENSOR may ascertain LICENSEE's compliance with the
provisions of this Agreement, LICENSOR directly or through its agents may, at
any time during business hours, upon prior written notice of at least two (2)
business days, inspect the production, manufacturing, distribution and sale
facilities of LICENSEE (or of any co-packer or other contractor retained by
LICENSEE) used in connection with the Products. In the event that LICENSOR shall
notify LICENSEE of modifications or changes to LICENSEE's production,
manufacture, distribution or sale of the Products that are required in order for
LICENSEE to comply with or maintain any of the standards set forth herein,
LICENSEE shall promptly implement such modifications or changes, but in no event
later than thirty (30) days from receipt of such notice from LICENSOR.

                                       5
<PAGE>

      8.    Termination by LICENSOR

            The occurrence of any of the following events shall constitute good
cause for LICENSOR, at its sole and absolute option and without prejudice to any
other rights or remedies provided for hereunder or by law or equity, to
immediately terminate this Agreement by giving written notice to LICENSEE:

            (a) If LICENSEE breaches Section 6 or 15 of this Agreement;

            (b) If LICENSEE breaches any other term or condition of this
Agreement and LICENSEE fails to cure such breach within thirty (30) days after
notice thereof from LICENSOR;

            (c) If any Products are sold or distributed by LICENSEE, or LICENSEE
otherwise knowingly suffers or permits such Products to enter into commerce, in
any jurisdiction other than the Territory, except as permitted under any other
written license between the parties;

            (d) If LICENSEE determines to cease business, LICENSEE ceases to
engage in the sale, manufacture and/or distribution of Products for a period of
ninety (90) days other than by reason of the occurrence of a force majeure event
or condition, LICENSEE liquidates or LICENSEE is ordered by a court of competent
jurisdiction to liquidate its business;

            (e) If LICENSEE fails to pay in full within ten (10) days when due
any royalty payable to LICENSOR under Article 2 of this Agreement;

            (f) If LICENSEE files any voluntary petition in bankruptcy or
liquidation or for any corporate reorganization or for any similar relief under
the liquidation, bankruptcy or insolvency laws of any jurisdiction; upon the
filing of any involuntary petition in bankruptcy or its equivalent against
LICENSEE not dismissed within ninety (90) days from the filing thereof; the
appointment of a receiver or administrator of any of LICENSEE's property or
assets or the equivalent for LICENSEE by any court of any jurisdiction, which
receiver or administrator shall not have been dismissed within ninety (90) days
from the date of such appointment; if LICENSEE makes a general assignment for
the benefit of creditors; if LICENSEE becomes unable to meet debts as they
mature or any occurrence similar to any of the foregoing under the laws of any
jurisdiction irrespective of whether such occurrences are voluntary or
involuntary or whether they are by operation of law or otherwise.

      9.    Termination by LICENSEE

            LICENSEE may terminate this Agreement at any time by providing six
(6) months' written notice to LICENSOR. In the event of termination by LICENSEE,
LICENSEE shall remain liable for payment to LICENSOR of the Minimum Annual
Royalty for the year of termination, pursuant to Section 2, herein.

                                       6
<PAGE>

      10.   LICENSEE's Rights and Obligations Upon Termination

            Upon the termination of this Agreement for any reason, all of
LICENSEE's rights in the Marks under this Agreement and rights in this Agreement
shall immediately revert to LICENSOR, without any act by LICENSOR or LICENSEE.
In addition, LICENSEE shall:

            (a) Immediately cease using the Marks on or in connection with the
Products in the Territory;

            (b) Not thereafter, directly or indirectly, identify itself in any
manner as a licensee or publicly identify itself as a former licensee of
LICENSOR with regard to the Products in the Territory;

            (c) Immediately destroy and provide to LICENSOR evidence of the
destruction of all packaging and any and all promotional and other materials
bearing the Marks;

            (d) If reasonably requested by LICENSOR, execute and deliver to
LICENSOR a document or documents, in form and substance reasonably satisfactory
to LICENSOR, assigning to LICENSOR all of LICENSEE's right, title and interest,
if any, in and to the Marks and in and to any logotypes, trademarks or
copyrights incorporating the Marks, as used on or in connection with the
Products. In the event that LICENSEE fails to execute and deliver said document
or documents, LICENSOR shall have the right to execute the same as LICENSEE's
attorney-in-fact, and LICENSEE does hereby irrevocably constitute and appoint
LICENSOR its true and lawful attorney-in-fact only for the purpose of executing
such document or documents, at no cost to LICENSEE.

            (e) Notwithstanding the foregoing, in the event that LICENSEE will
have a substantial inventory of Products, packaging and/or labels for the
Products following the date of termination of this Agreement, LICENSOR and
LICENSEE shall meet and discuss in good faith an equitable plan for the
disposition of such Products, packaging and/or labeling; provided that LICENSOR
shall not be obligated to agree to any plan that results in LICENSOR assuming a
loss or any ongoing obligation with respect to such items or which may, in
LICENSOR's reasonable judgment, have a negative impact on the Marks or related
goodwill.

      11.   Notification of Infringements and Claims

            (a) LICENSEE shall immediately notify LICENSOR of any apparent
infringement of, challenge to use by LICENSEE of, or claim by any person to any
rights in, the Marks. LICENSEE agrees to execute any and all instruments which,
in the opinion of LICENSOR, may be reasonably necessary or advisable to protect
and maintain the interests of LICENSOR in the Marks.

            (b) LICENSOR will at all times have the right, in its sole
discretion, to take whatever steps it deems necessary or desirable to protect
the Marks from all harmful or wrongful

                                       7
<PAGE>

activities of third parties. Such steps may include, but are not limited to, the
filing and prosecution of (a) litigation against infringement or unfair
competition by third parties, (b) opposition proceedings against applications
for trademark or service mark registration for marks that are confusingly
similar to any one or more of the Marks, (c) cancellation proceedings against
registration of marks that are confusingly similar to any one or more of the
Marks, and (d) other appropriate administrative actions. LICENSOR shall have the
right to include LICENSEE in such litigation, opposition, cancellation or other
proceedings when necessary. LICENSEE shall cooperate with LICENSOR in any such
proceeding by providing oral testimony and documentary and other relevant
evidence, all at LICENSOR's cost and expense.

            (c) If LICENSOR and LICENSEE jointly participate in any litigation
or other proceeding with respect to the Marks, the respective responsibilities
of the parties, their contributions to the costs, and their participation in any
recoveries, will be shared equally by each party.

            (d) If LICENSEE desires to file litigation or other proceeding
against a third party, and LICENSOR, in its sole discretion, declines to
commence such litigation or proceeding, LICENSEE shall be entitled to commence
and prosecute the litigation or proceeding at its own expense, and shall be
entitled to all monetary damages received as a result. LICENSEE shall not be
authorized to enter into any agreement, consent, order or other resolution of a
claim by or against a third party that affects Marks without giving LICENSOR
prior written notice of such proposed agreement, consent order or other
resolution. LICENSOR shall have the right to approve any such agreement, consent
order or other resolution, which approval shall not be unreasonably withheld or
delayed. LICENSOR shall cooperate with LICENSEE in the prosecution of such
litigation or proceeding, all at LICENSEE's cost and expense.

            (e) LICENSOR shall at all times have the right to take whatever
steps it deems necessary or desirable to defend all claims that the use of the
Marks in the Territory infringes the rights of a third party. LICENSEE shall
have the right to participate in such defense at its own expense to protect its
rights under this Agreement relating to the Marks. If LICENSEE is named as a
party to such a claim and LICENSOR is not so named, LICENSEE shall defend such
action at its own expense, subject to LICENSOR's right to elect to participate
in and control such defense at its own expense. LICENSEE shall not be authorized
to enter into any agreement, consent order or other resolution of any claim by
or against a third party with respect to the Marks without LICENSOR's prior
written approval, which approval will not be reasonably withheld or delayed.
LICENSOR shall not be authorized to enter into any agreement, consent order or
other resolution of a claim by or against a third party that affects Marks in
the Territory without giving LICENSEE prior written notice of such proposed
agreement, consent order or other resolution. LICENSEE shall have the right to
approve any such action which materially adversely affects LICENSEE's rights
under this Agreement with respect to the Marks, which approval will not be
unreasonably withheld or delayed. Each party, at its own expense, shall have the
right to include the other in such litigation, opposition or cancellation
proceedings where necessary or desirable for the conduct thereof and shall keep
the other informed of the progress of such proceedings.

                                       8
<PAGE>

      12.   Right to Audit

            LICENSEE shall maintain true, correct and complete records in
connection with sales of Products and shall retain all such records for at least
twenty-four (24) months after the delivery of any Products. LICENSOR directly or
through its agents may from time to time, during regular business hours and with
prior written notice of at least two (2) business days, examine and copy all
records of LICENSEE in connection with LICENSEE's use of the Marks and
production and sales of the Products. Such examination may include, but shall
not be limited to, LICENSEE procedures and controls with respect to the use of
the Marks, the calculation of gross sales, the calculation of Net Sales, and the
calculation of royalties. LICENSEE shall pay all reasonable, direct and
substantiated costs incurred in connection with such examination in any case in
which the royalties determined pursuant to such an examination by LICENSOR or
its agents exceed by ten percent (10%) or more LICENSEE's previously reported
royalties due to LICENSOR. LICENSEE shall provide reasonable assistance and will
not interfere with LICENSOR in making the above examination.

      13.   Indemnification

            (a) LICENSOR shall indemnify LICENSEE against any and all costs and
expenses (including reasonable attorneys' fees) arising in connection with any
suits, claims or counterclaims that dispute LICENSEE's right to use the Marks as
provided for in this Agreement.

            (b) LICENSEE shall indemnify LICENSOR against any and all
liabilities, claims, actions, causes of action, counterclaims, costs and
expenses (including reasonable attorneys' fees) arising out of or incurred in
connection with LICENSEE's use of or right to use the Marks or LICENSEE's
production, manufacture, distribution and/or sale of the Products including,
without limitation, any act or failure to act which breaches this Agreement and
any claim in tort, including product or strict liability, excluding, however,
any liabilities, claims, actions, causes of action, counterclaims, costs and
expenses for which LICENSOR is liable to indemnify LICENSEE under Section 13(a).

      14.   Approval; Consent

            Where the approval or consent of LICENSOR is required under any
provision of this Agreement, such approval or consent shall be requested by
LICENSEE by notice to LICENSOR and providing LICENSOR with all information which
LICENSOR shall reasonably require for determining whether or not to grant such
approval or consent. LICENSOR shall, upon completion of its review of such
request and the information received from LICENSEE, notify LICENSEE of its
determination unless the information received from LICENSEE is insufficient for
LICENSOR to make its determination, in which event LICENSOR shall notify
LICENSEE that such information is insufficient. Should such approval or consent
not be received by LICENSEE within fifteen (15) business days of (i) the date of
such request or (ii) the date on which LICENSOR is provided with sufficient
information to make its determination, it

                                       9
<PAGE>

shall be deemed to have been given as of the date upon which it was first
requested.

      15.   Assignment and Sublicense

            Neither this Agreement nor any part or all of LICENSEE's interest in
this Agreement or the Marks may be voluntarily or involuntarily, directly or
indirectly, assigned, sold, mortgaged, hypothecated or otherwise transferred by
LICENSEE or its shareholders, and LICENSEE may not permit any lien or
encumbrance to be imposed upon this Agreement, nor grant any sub license to use
any of the Marks, without the prior written consent of LICENSOR, which consent
may be withheld in LICENSOR's absolute discretion. Any assignment, transfer or
lien in violation of the terms of this Agreement, shall constitute a material
breach of this Agreement, thereby giving LICENSOR the right to terminate this
Agreement immediately, and such assignment, transfer or sub license shall be
void ab initio and shall convey no rights or interests in the Marks.

      16.   Waiver

            The waiver by either party of a breach or provision of this
Agreement by the other shall not operate or be construed as a waiver of any
subsequent breach by such other party.

      17.   Binding Effect

            This Agreement shall be binding upon the parties hereto and shall
inure to the benefit of their respective permitted successors in interest and
assigns.

      18.   Notices

            All notices, consents, approvals, demands, requests and other
communications required or desired to be given hereunder must be given in
writing, shall refer to this Agreement, and shall be sent by registered or
certified mail, return receipt requested, by hand delivery, by facsimile or by
overnight courier service, addressed to the parties hereto at their addresses
set forth below, or such other addresses as they may designate by like notice:

            To LICENSOR:

                  Del Monte Corporation
                  One Market @ The Landmark
                  San Francisco, CA 94105
                  Attention: General Counsel
                  Telephone: (415) 247-3262
                  Facsimile: (415) 247-3263

                                       10
<PAGE>

            To LICENSEE:

                  Coffee Holding Co., Inc.
                  4401 First Avenue, Suite 1507
                  Brooklyn, New York 11232
                  Attention:  Andrew Gordon
                  Telephone: (718) 832-0800
                  Facsimile: (718) 768-4731

Any notice from a party hereto may be given by such party's respective
attorneys. Any notice or other communications made hereunder shall be deemed to
have been given (i) if delivered personally, by overnight courier service or by
facsimile, on the date received, or (ii) if by registered or certified mail,
return receipt requested, four (4) business days after mailing.

      19.   Attorneys' Fees

            If any action or proceeding is commenced between the parties hereto
with respect to this Agreement, the prevailing party shall be entitled to all
reasonable, direct and substantiated fees and expenses incurred by it in
connection with such action or proceeding, including reasonable attorneys' fees.

      20.   Severability

            If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. The parties acknowledge and agree that it is the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including the invalid, void or unenforceable provision,
covenant or restriction.

      21.   Headings

            The paragraph headings herein are for information only and this
Agreement shall not be construed by reference thereto.

      22.   Choice of Law

            Except to the extent governed by the Lanham Act (15 U.S.C. Section
1051 et seq.), the validity, construction and enforceability of this Agreement
shall be governed by the laws of the State of California and venue shall be at
San Francisco, California. The parties hereby irrevocably submit to the
non-exclusive jurisdiction of the state and federal courts sitting in the State
of California.

                                       11
<PAGE>

      23.   Agency

            Except as otherwise expressly set forth in this Agreement, LICENSEE
shall not be construed to be and shall not represent itself as an agent or
affiliate of LICENSOR.

      24.   Integration

            This Agreement constitutes the entire understanding of the parties
with respect to the subject matter hereof, and supersedes all prior agreements
between them relating to the same subject matter, whether oral, written or
implied. This Agreement may not be amended or modified except by written
agreement signed by a duly authorized representative of the party to be bound.

      IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed the day and year first written above.

LICENSOR:                                   LICENSEE:

DEL MONTE CORPORATION                       COFFEE HOLDING CO., INC.

By:      /s/ Susan H. Shields               By:      /s/ Andrew Gordon
         ------------------------                    ------------------------
Name:    Susan H. Shields                   Name:    Andrew Gordon
         ------------------------                    ------------------------
Title:   Vice President Marketing           Title:   President/CEO
         ------------------------                    ------------------------

                                       12
<PAGE>

                                   SCHEDULE A

                               Licensed Trademarks

Mark                         Registration No.           Registration Date
- -----                        ----------------           -----------------

S&W and Design               338,457                    September 8, 1936

S&W and Design               1,302,906                  October 30, 1984

S&W and Design               1,810,987                  December 14, 1993

IL CLASSICO                  1,816,052                  January 11, 1994


                                       13

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>6
<FILENAME>b332774_ex10-17.txt
<DESCRIPTION>CORPORATE BRANDS AGREEMENT
<TEXT>
<PAGE>

                                                                   Exhibit 10.17

                           CORPORATE BRANDS AGREEMENT

         THIS AGREEMENT ("Agreement") is made and entered into as of this 30th
day of March, 2004, by and between ALBERTSON'S, INC., a Delaware corporation,
with principal offices located at 250 Parkcenter Boulevard, Boise Idaho 83706
(hereafter referred to as "Albertson's"), and COFFEE HOLDING COMPANY, INC.,
a(n), Nevada corporation with its principal office located at 4401 First Avenue,
Brooklyn, NY 11232 (hereinafter referred to as "Supplier").

         It is agreed as follows:

         1. Supply Relationship.

                  (a) Supplier offers to sell and ship CANNED COFFEE in
         packaged, saleable condition to Albertson's as Albertson's may choose
         to order for the Products specified by Albertson's and agreed to by
         Supplier for Albertson's private label brands as designated by
         Albertson's ("Products"), on the terms and conditions set forth below.
         Supplier shall not divert, sell or salvage the Products to any other
         third party.

                  (b) This Agreement is not intended to bind Albertson's to
         purchase any specific quantity of Product or to bind Supplier to make
         available any specific quantity of Products. This Agreement is intended
         to define the terms on which any Product is purchased and accepted.

                  (c) Supplier warrants that the terms and conditions of sale
         herein offered to Albertson's by Supplier are being offered on
         proportionally equal terms to other customers of Supplier in
         competition with Albertson's for Products of like type and quantity and
         that during all shortages, pro-rates, and/or other sales restrictions
         Albertson's shall receive prompt notice and its equal and fair share of
         product offered for sale by Supplier to others.

         2. Payment Terms. Payment Terms of the gross invoice amount to
Albertson's with respect to Products shall be 2% / 15 NET 35 DAYS of Albertson's
receipt of Products and funds are considered received by Supplier when funds are
wired by Albertson's

         3. Product Compliance with Laws and Specifications. Supplier agrees to
comply with all applicable federal, state, and local laws, rules, and
regulations regarding its performance under this Agreement, including but not
limited to, those laws related to payment of employee-related taxes, such as
social security, FICA, and workers' compensation and wage and hour laws.
Supplier is strictly prohibited from utilizing any undocumented workers to
perform any of its duties hereunder and shall keep on file Forms 1-9 and related
documentation for all of its employees. Supplier's Products and/or all packaging
provided hereunder are hereby guaranteed, as of the date of shipment or
delivery, (a) not to be adulterated or misbranded within the meaning of the
Federal Food, Drug and Cosmetic Act, as amended, or within the meaning of
applicable federal or state laws or municipal ordinance in which the definitions
of adulteration are substantially the same as those contained in the above Act;
(b) not to be Products which may not, under the provisions of section 405 or 505
of the said Act, be introduced into interstate commerce; and (c) comply in all
respects with the pure food and drug laws of all states, including but not
limited to California's Health and Safety Code, Section 25249.5 et. seq., as
amended (commonly known as "Proposition 65"); the Federal Hazardous Substance
Act; the Federal Insecticide; Fungicide and Rodenticide Act; and the Nutrition
Labeling and Education Act. The Products comprising each shipment or delivery
hereafter made by Supplier to Albertson's are hereby guaranteed, as of the date
of such shipment or delivery, not to be misbranded.

<PAGE>

         4. Pricing Terms. Prices are listed on the attached Exhibit "A". In the
event Supplier desires to make a pricing change to any Product provided
hereunder, Supplier shall provide Albertson's with written documentation which
substantiates any requested pricing change. Price changes will only be
considered if changes are a direct result of a substantial increase in raw good
acquisition costs for materials needed to produce the finished Product. Any
request for a price increase shall be provided at least sixty (60) days in
advance of the requested implementation date. Albertson's reserves the right to
request additional information reasonably necessary to evaluate the validity of
a proposed price increase. Any price increase shall be effective only after
Albertson's has reviewed Supplier's documentation, and supplemental information,
if requested, and only upon Albertson's written approval. The prices offered or
quoted by Supplier to Albertson's shall include all duties and all sales,
excise, or similar taxes and charges which are now, or may hereafter be, levied,
imposed or charged (whether by federal, state, municipal or other public
authority) with respect to the sales of the Products hereunder. Supplier shall
pay all such duties, taxes, and surcharges levied, imposed or charged for
Product sold under this Agreement without any additional charge to Albertson's.

         5. Electronic Data Interchange / Electronic Funds Transfer. Albertson's
requires suppliers to transmit invoices via electronic data interchange or other
mutually acceptable electronic format (i.e., PC upload or EIS) (generically
"EDI") and to receive payment for invoices by way of an electronic funds
transfer (e.g. wire transfer or automatic clearing house) (generically "EFT").
Supplier is solely responsible for Supplier's technical upgrade costs or other
similar expenses related to EDI/EFT processes which may be necessary for
Supplier to communicate with Albertson's system. All EFT remittance information
will be transmitted in an unbundled format.

         6. Deliveries. For shipments of Products by common or contract carrier,
but not for shipments made under Albertson's backhaul program, Supplier will
ensure that the bill of lading states: "SHIPPING COSTS HAVE BEEN PREPAID -
CARRIER WILL HAVE NO RECOURSE AGAINST ALBERTSON'S", or words of similar effect
and meaning. For Shipments of Products by common or contract carrier, title and
risk of loss or damage to Products shall pass to Albertson's upon delivery
thereof by Supplier at Albertson's destination as designated in the applicable
purchase order.

<PAGE>

         7. Service Level. Supplier shall make deliveries of Products ordered by
Albertson's, F.O.B. Albertson's destination as designated in the applicable
Purchase Order, SEVEN (7) TO TEN (10) calendar days after Supplier's receipt of
such Purchase Order. Throughout the Term, Supplier will maintain a 98% Service
Level. For purpose of this Agreement, "Service Level" means that Supplier shall,
on the requested delivery date, supply Albertson's with all Product it may
choose to order within mutually agreed upon lead times, set forth on the
Purchase Order. For purposes of this Agreement, a 98% Service Level shall be
measured by (a) comparing the total quantity of Products shipped and received by
Albertson's to the total quantity ordered by Albertson's on any four (4)
consecutive week basis, (as determined by total SKU's ordered to SKU's received)
and by (b) comparing the total of requested delivery dates to the total actual
delivery dates on the same consecutive four (4) week basis. If Supplier fails to
maintain a 98% Service Level for any four (4) consecutive weeks, Albertson's
shall put Supplier on notice that Supplier is in breach of its Service Level
requirement. If Supplier's Service Level continues to be below 98% for another
four (4) consecutive weeks (for a total of eight (8) consecutive weeks), as
measured by both (a) the accuracy of amounts shipped and received compared to
the amounts ordered and (b) the timeliness of deliveries, Albertson's reserves
the right to terminate this Agreement upon seven (7) days written notice.
Notwithstanding anything in this Agreement to the contrary, the provisions of
Section 13(a)(iv) shall not apply to Service Level breaches and only the
provisions of this Section 7(b) shall control with respect to cure / termination
rights hereunder. Supplier agrees to maintain adequate retail support with
Albertson's retail stores and shall promptly notify Albertson's of any problems
which may affect Service Level.

         8. Deduction Disputes. Supplier must bring to Albertson's attention in
writing any deduction taken by Albertson's, which Supplier belies to be in
error, within ninety (90) days of the deduction. Failure on the part of Supplier
to dispute such deduction in writing within ninety (90) days of the deduction
will forever bar Supplier from disputing such deduction.

         9. Manufacturer. Except where Supplier is the importer of the Product,
Supplier shall be the actual manufacture of Products. No subcontracts,
co-manufacturer, alternate manufacturer or co-op agreements may be entered or
used by Supplier or importer, as applicable, unless the name, quantities,
quality type, code of products and actual manufacturer's and or packer's name is
supplied as part of this Agreement, and is previously approved in writing by
Albertson's.

         10. Quality. All Product purchased hereunder shall conform to the
quality specifications governing production of Product for Albertson's and all
applicable local, state and federal law and regulations. Supplier shall not
change the ingredients, formulation, packaging or the location of the
manufacturing facility of any Products without the prior written consent of
Albertson's.. Within 12 months of the date of this contract, Supplier shall pay
for Albertsons to audit any of the Supplier's manufacturing facilities that have
not been audited by Albertsons.

<PAGE>

         11. Product Reclamation. Supplier aggress that all Products designated
by Albertson's as damaged, out-of-code, or otherwise unsaleable (including
voluntary and involuntary recalls) shall be sent to Albertson's reclamation
center and Supplier agrees to abide by all applicable procedures established by
Albertson's for this reclamation process. Supplier agrees to abide by
Albertson's National Reclamation Policy.

         12. Term. The term of this Agreement shall be for one (1) year
commencing on the date first above written and shall automatically renew for
subsequent terms thereafter unless terminated as provided below.

         13. Termination. Either party may terminate this Agreement, in whole or
as to any particular Product, at any time under one of the following options in
which event the terms of this Section 13 shall apply:

                  (a) without cause upon ninety (90) days' advance written
         notice to the other party;

                  (b) immediately if the other party is or shall: (i) be or
         become insolvent or unable to pay its debts as they mature within the
         meaning of the United States Bankruptcy Code or any successor statute;
         or (ii) make an assignment for the benefit of its creditors; or (iii)
         file or have filed against it, voluntarily or involuntarily, a petition
         under the United States Bankruptcy Code or any successor statute unless
         such petition is stayed or discharged within ninety (90) days; or (iv)
         have a receiver appointed with respect to all or substantially all of
         its assets;

                  (c) upon thirty (30) days notice if the other party fails to
         fulfill any material obligation on its part to be performed under this
         Agreement, or is determined to be in breach of its representations and
         warranties in this Agreement in any material respect, provided the
         breaching party has not cured the breach within the thirty (30) days to
         the sole, reasonable satisfaction of the non-breaching party; provided,
         however, that there shall not be a default within the meaning of this
         Section 13 if the breaching party promptly commences to cure such
         breach within such thirty (30) day period and thereafter diligently
         pursues such cure to completion; provided further, however, that the
         period of cure shall in no event exceed sixty (60) days.

         In the event of Termination, notice to the other party shall be sent
via certified mail to the address listed on page 1 (if to Albertson's: send to
the attention of Vice President, Corporate Brands, with a copy of the notice
sent to this attention of the Legal Department #74200B and if to Supplier; send
to the attention of Andrew Gordon ____________________________________________).
Notice shall be deemed received four (4) calendar days after deposit into first
class mail.

         Upon termination of this Agreement for any reason, all prices shall
remain at the same level they were when notice was provided through the date of
termination. In the event Albertson's terminates this Agreement in while or as
to any particular Product without cause, or Supplier terminates this Agreement
in whole or as to any particular Product for cause, Albertson's shall order
through a wholesaler, or directly from Supplier, the existing supply of packed,
labeled and cased salable Products. Notwithstanding the foregoing, Albertson's
agrees to purchase not more than an average of ninety (90) day supply of Product
calculated by summing the Products purchased by Albertson's during the
immediately preceding four (4) fiscal quarters and dividing that sum by four
(4). In the event Albertson's terminates this Agreement for cause, or Supplier
terminates this Agreement without cause, Albertson's, in its sole discretion,
shall have the option to purchase or not, all or any part of the existing supply
of packed, labeled and cased salable Products up to a maximum amount equal to
the average ninety (90) day supply described above. In no event shall
Albertson's be obligated to purchase packaging, raw or unlabeled Products.

<PAGE>

         14. Indemnification. Supplier agrees to indemnify, defend and hold
Albertson's, its affiliates, directors, associates, agents, and representatives
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs and expenses, including, without limitation, costs and expenses of
investigation and settlement and attorney's fees and expenses (collectively,
"Claims"), to the extent such Claims are alleged to arise from: (i) any act or
omission by Supplier, or its agents and/or brokers, relating to or affecting the
condition, quality or character of any Product; (ii) the formulation of any
Product violating any patent, trade secret or other proprietary right of any
third party; (iii) trademark, copyright, trade dress or patent infringement,
(iv) a defect in the formulation of any Product causing illness, personal injury
or death, provided that such Product has not been altered, adulterated or
tampered with after leaving Suppliers possession; (v) the formulation of any
Product by Supplier violating any applicable federal or state food and drug or
consumer safety law, provided that such Product has not been altered,
adulterated or tampered with after leaving Supplier's possession; or (vi)
Supplier's performance under this Agreement or a breach by Supplier of any of
its representations, warranties, covenants or obligations under this Agreement.
Albertson's shall have the right to actively participate in the defense of any
Claim including, selection of counsel, formulation of strategy, and approval of
any settlement reached.

         15. Insurance. Supplier shall maintain (and shall cause each of its
agents, independent contractors and subcontractors performing any services
hereunder to maintain) at all times at its sole cost and expense at least the
following insurance covering its obligations under this Agreement:

         Commercial General Liability including but not limited to (i) injury to
         person, (ii) damage to property, (iii) contractual liability coverage,
         (iv) personal and advertising injury liability (v) products liability
         coverage including a broad form vendor's endorsement (additional
         insured-vendor), in an amount not less than Five Million Dollars
         ($5,000,000) for each occurrence listing Albertson's, Inc., its
         affiliates and wholly-owned subsidiaries as an additional insured.

                  If and only if Supplier's agents, independent contractors,
         subcontractors or employees will deliver Products directly to
         Albertson's stores, warehouses or other facilities, Suppliers shall
         maintain or cause each of its agents, independent contractors and
         subcontractors performing any services hereunder to maintain Worker's
         Compensation at statutory limits and Employer's Liability at limits not
         less than One Million Dollars ($1,000,000) and Business Automobile
         Liability for owned, hired, and non-owned vehicles in an amount not
         less than Five Million Dollars ($5,000,000) for each accident listing
         Albertson's, Inc., its affiliates and wholly-owned subsidiaries as an
         additional insured.

<PAGE>

         This insurance shall be issued by companies licensed to do business in
the state(s) where services are rendered. Upon execution of this Agreement and
PRIOR to commencement of this Agreement, Supplier shall provide Albertson's with
a Certificate of Insurance which shall indicate all insurance coverage required
by the provisions herein and that Albertson's will be provided with thirty (30)
days' written notice prior to substantial modification or cancellation of such
policy. Such Certificate of Insurance shall be updated annually and shall be
sent to: Albertson's, Inc., 250 Parkcenter Blvd., Boise, ID 83706, Attn: Records
Center.

         Failure by Supplier to require and verify its agents and independent
contractors compliance with the insurance requirements will be considered a
breach of this Agreement.

         16. Intellectual Property. It is understood and agreed by and between
the parties hereto that Albertsons' shall have all right, title and interest in
and to the label, design, trademark, and trade name used on the Products,
excluding registered trademarks which are the property of Supplier, and Supplier
shall not claim any such rights in these items. All art, plates, negatives or
designs prepared for Albertson's by either Albertson's, Supplier or
Albertson's/Supplier's printer, lithographer, or bag, box or carton manufacturer
shall be the property of Albertson's and shall remain Albertson's property upon
notice of termination of this Agreement by either party. It is expressly agreed
and understood that these items (and shipping) are inherent in the cost of doing
business, and Albertson's shall not reimburse Supplier for these items.

         17. Diversity. Albertson's values relationships with suppliers that
share our value of diversity in all aspects of running a good business.
Albertson's is developing a goal centered, best in class diversity sourcing
programs. It is Albertson's intent to engage in tier one suppliers in reporting
on second tier spend which is done primarily with minority and women owned
businesses. Albertson's Diversity Department will work with suppliers to develop
a schedule of reporting/sharing of information, pertinent to diversity goals and
purchasing activity. Requests for such information will be of a nature that
enhances Albertson's efforts to meet our objectives in this strategic area of
interest. Throughout the term of this Agreement, Supplier will be required to
periodically report to Albertson's Supplier' diversity spend and such reports
will be provided upon request in a format and containing contents which is
mutually agreed upon by the parties.

         18. Supplies. Albertson's reserves the right to purchase and sell to
Supplier all packaging supplies for its Products, labels, cartons, boxes or
bags. These supplies are the property of Albertson's and sale of supplies shall
be at a competitive price with Products of equal type and quality. These
supplies may be used by Supplier only so long as this Agreement is in effect. No
Products, trademarks, titles or prepacked labeled merchandise of Albertson's may
be sold, salvaged, exported, or used by the Supplier without written consent or
Albertson's.

<PAGE>

         19. Embargo or Bans. Albertson's shall not be held liable for product
or packaging not delivered to Albertson's as a result of any government embargo,
ban, prohibition or condemnation.

         20. Survival. All covenants, conditions, warranties, uncompleted
obligations and indemnifications contained in this Agreement which may involve
performance subsequent to any termination of this Agreement, or which cannot be
ascertained or fully performed until after termination of this Agreement shall
survive.

         21. Amendments and Conflicting Terms. Provisions of this Agreement may
be modified, amended or waived only by a written document specifically
identifying this Agreement and signed by an authorized representative of each
party. Without limitation, to the extent the terms and conditions or spirit of
this Agreement conflict with the terms and conditions on any purchase order,
shipping order form, bill of lading, receipt or the like, the terms and
conditions of this Agreement shall be controlling.

         22. Attorneys' Fees. In the event of any claim, dispute, or legal
proceeding arising out of or relating to this Agreement, the party prevailing in
such dispute shall be entitled to recover all reasonable fees and expenses
(including, without limitation, costs of investigation, reasonable attorneys'
fees and litigation expenses) incurred in connection therewith.

         23. Entire Agreement. This Agreement is intended by the parties to be
the entire agreement between the parties with respect to this specified Products
and Products identified above and is inclusive of all understandings between the
parties related to the subject matter hereof. No other agreements, whether oral,
written or implied shall be of any force and effect.

         24. Assignment. This Agreement is binding upon the parties hereto,
their successors and assigns. Notwithstanding anything to the contrary, in the
event of sale, dissolution, acquisition, or merger of Supplier, Albertson's
shall be notified pursuant to Section 13 within thirty (30) days and may, at its
sole option, elect to terminate this Agreement. This Agreement may not be
otherwise assigned without the prior written consent of Albertson's or Supplier
as the case may require.

         25. Control. In the event of a dispute between Albertson's and Supplier
as to amount due hereunder, Albertson's reporting and purchase records shall be
used to calculate any amounts owed.

         26. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed original, but all of which taken together shall
constitute one and the same instrument.

<PAGE>

         27. Headings. The titles or section headings of the various provisions
of this Agreement are intended solely for convenience and ease of reference and
shall not in any manner amplify, limit, modify or otherwise be used in, the
interpretation of any such provisions.

         28. Permits and Licensing. Supplier shall obtain and maintain, at its
sole cost and expense, all permits and licenses required to provide the Products
contemplated herein.

         29. Authorized Representatives. The undersigned represent that they are
authorized to execute this Agreement on behalf of the parties named herein.

ALBERTSON'S, INC.                                   COFFEE HOLDING COMPANY, INC.
On behalf of itself and its affiliates and
wholly-owned subsidiaries


By: /s/ J. Sean McKinless                           By: /s/ Andrew Gordon
    ---------------------                               -----------------
    J. Sean McKinless                                   Andrew Gordon
    Group Vice President, Strategic                     President and CEO
    Procurement

<PAGE>

                                   Exhibit "A"

[List of prices for and quantities of various coffee blends to be supplied to
various Albertson's distribution centers by Supplier]

*

*    Confidential information has been has been omitted pursuant to a request
     for confidential treatment and filed separately with the U.S. Securities
     and Exchange Commission. Such information consists of the entirety of
     Exhibit A (two pages).

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>b332774_ex23-1.txt
<DESCRIPTION>CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
<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/A - Amendment #1 of Coffee Holding Co., Inc. to be submitted to the
Securities and Exchange Commission on or about August 12, 2004.


                                               /S/ LAZAR LEVINE & FELIX LLP
                                               ----------------------------
                                                   LAZAR LEVINE & FELIX LLP




New York, NY
August 12, 2004


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>8
<FILENAME>b332774_ex99-1.txt
<DESCRIPTION>CONSENT
<TEXT>
<PAGE>

                                                                    Exhibit 99.1

                                     CONSENT

         The undersigned hereby consents, pursuant to Rule 438 promulgated under
the Securities Act of 1933, as amended, to his being named as about to become a
director of Coffee Holding Co., Inc. in such Company's Registration Statement on
Form SB-2.


                                         /s/ Barry Knepper
                                         -----------------------------------
                                         Barry Knepper

August 10, 2004

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>9
<FILENAME>b332774_ex99-2.txt
<DESCRIPTION>CONSENT
<TEXT>
<PAGE>

                                                                    Exhibit 99.2

                                     CONSENT

         The undersigned hereby consents, pursuant to Rule 438 promulgated under
the Securities Act of 1933, as amended, to his being named as about to become a
director of Coffee Holding Co., Inc. in such Company's Registration Statement on
Form SB-2.


                                         /s/ Sal Reda
                                         -----------------------------------
                                         Sal Reda

August 10, 2004

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>10
<FILENAME>b332774_ex99-3.txt
<DESCRIPTION>CONSENT
<TEXT>
<PAGE>

                                                                    Exhibit 99.3

                                     CONSENT

The undersigned hereby consents, pursuant to Rule 438 promulgated under the
Securities Act of 1933, as amended, to his being named as about to become a
director of Coffee Holding Co., Inc. in such Company's Registration Statement on
Form SB-2.


                                         /s/ Robert M. Williams
                                         -------------------------------------
                                         Robert M. Williams

August 10, 2004

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