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<SEC-DOCUMENT>0001125282-05-000935.txt : 20050225
<SEC-HEADER>0001125282-05-000935.hdr.sgml : 20050225
<ACCEPTANCE-DATETIME>20050224183530
ACCESSION NUMBER:		0001125282-05-000935
CONFORMED SUBMISSION TYPE:	SB-2/A
PUBLIC DOCUMENT COUNT:		4
FILED AS OF DATE:		20050225
DATE AS OF CHANGE:		20050224

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:		05638501

	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
</title>
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<body bgcolor="#FFFFFF">
<page>

<table width="100%" border="0" cellpadding="0" cellspacing="0">
  <tr>
    <td align="center"><p><font size="2" face="serif">As filed with the Securities
          and Exchange Commission on February 25, 2005<b> Registration No. 333- 116838</b></font></td>
  </tr>
</table>

<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>
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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>U.S. Securities and Exchange Commission<br>
Washington, D.C.  20549</b></font></p>

<p align="center"><font size="4" face="serif"><b>Amendment No. 3</b></font></p>

<p align="center"><font size="4" face="serif"><b>to</b></font></p>
<p align="center"><b><font face="serif" size="4">Form SB-2</font></b></p>
<p align="center"><b><font face="serif" size="4">REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933</font></b></p>
<p align="center"><b><font face="serif" size="5">Coffee Holding Co., Inc.</font><font face="serif" size="4"><br>
</font></b><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 align="center" width="30%"><font size="2" face="serif">Nevada</font><br>
<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" width="41%"><font size="2" face="serif">2080</font><br>
<font size="2" face="serif"><font face="serif" size="1"> (Primary Standard Industrial
Classification<br>
Code Number)</font></font></td>
<td align="center"><font size="2" face="serif">11-2238111</font><br><font size="2" face="serif"><font face="serif" size="1">(I.R.S. Employer</font></font><br><font size="2" face="serif"><font face="serif" size="1">Identification No.)</font></font></td>
</tr>
</table>
<p align="center"><font size="2" face="serif">4401 First Avenue, Brooklyn, New York  11232-0005<br>
</font><font size="2" face="serif">(718) 832-0800</font></p>
<p align="center"><font face="serif" size="1">(Address and telephone number of principal executive offices)<br>
</font><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></p>

<p align="center"><font size="2" face="serif"> President, Chief Executive Officer and Chief Financial Officer</font></p>

<p align="center"><font size="2" face="serif">4401 First Avenue<br>
</font><font size="2" face="serif">Brooklyn, New York 11232-0005</font></p>
<p align="center"><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 align="center" width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="bottom">
<td width="45%" align="center"><font size="2" face="serif">Matthew Dyckman, Esq.<br>
Thacher Proffitt &amp; Wood <font face="serif" size="1">LLP</font><br>
1700 Pennsylvania Avenue, N.W., Suite 800<br>
Washington, D.C.  20006<br>
(202)&nbsp;347-8400</font></td>
<td width="10%" align="center">&nbsp;</td>
<td align="center"><font size="2" face="serif">Steven M. Skolnick, Esq.<br>
Lowenstein Sandler PC<br>
65 Livingston Avenue<br>
Roseland, New Jersey  07068<br>
(973) 597-2500</font></td>
</tr>
<tr valign="top">
<td><hr noshade size="1"></td>
<td>&nbsp;</td>
<td><hr noshade size="1"></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="top" bgcolor="#FFFFFF">
<td align="center" valign="bottom"><font size="2" face="serif"><font face="serif" size="1">Title
      of Each Class of Securities to<br>
      be Registered</font></font></td>
<td width="10%" align="center" valign="bottom"><font size="2" face="serif"><font face="serif" size="1">Amount to be registered (1)</font></font></td>
<td width="20%" align="center" valign="bottom"><font size="2" face="serif"><font face="serif" size="1">Proposed Maximum Offering </font></font><br>
  <font size="2" face="serif"><font face="serif" size="1">Price Per Share (2)</font></font></td>
<td width="20%" align="center" valign="bottom"><font size="2" face="serif"><font face="serif" size="1">Proposed Maximum Aggregate Offering Price (2)</font></font></td>
<td width="13%" align="center" valign="bottom"><font size="2" face="serif"><font face="serif" size="1">Amount of Registration Fee </font></font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Common Stock, $ 0.001 par value</font></td>
<td align="right"><font size="2" face="serif">1,610,000</font></td>
<td align="right"><font size="2" face="serif"> $5.50</font></td>
<td align="right"><font size="2" face="serif"> $8,855,000</font></td>
<td align="right"><font size="2" face="serif"> $1,043</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Warrants(3)</font></td>
<td align="right"><font size="2" face="serif">140,000</font></td>
<td align="right"><font size="2" face="serif"> $.0007142</font></td>
<td align="right"><font size="2" face="serif"> $100</font></td>
<td align="right"><font size="2" face="serif"> $1</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Common Stock, $0.001 par value(4)</font></td>
<td align="right"><font size="2" face="serif">140,000</font></td>
<td align="right"><font size="2" face="serif"> $6.60</font></td>
<td align="right"><font size="2" face="serif"> $924,000</font></td>
<td align="right"><font size="2" face="serif"> $109</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Total</font></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="right"><font size="2" face="serif"> $9,799,100</font></td>
<td align="right"><font size="2" face="serif"> $1,153(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 underwriters.</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 underwriters&#8217; 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">A fee in the amount of $1,534 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>
<table width="100%" border="0" cellspacing="0" cellpadding="0">
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    <td height="1" valign="top" bgcolor="#000000"></td>
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<div style="page-break-before:always"></div>
<page>
<p><a name="cover1"></a> </p>

<p align="center"><font size="2" face="serif"><b>Subject to Completion, Dated
      February 25, 2005</b></font></p>

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

<p align="center"><font size="2" face="serif"><b>1,400,000 Shares</b></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>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
    1,400,000 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
    $5.50 per share. We have applied to have our common stock listed on the American
    Stock Exchange under
    the symbol &#8220;JVA.&#8221;  See &#8220;Underwriting&#8221; 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 &#8220;Risk Factors&#8221; beginning on page 5.  You will experience immediate and substantial dilution.</b></font></p>

<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td align="left" width="10%">&nbsp;</td>
<td align="left" width="70%"><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">&nbsp;</td>
<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">&nbsp;</td>
<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>
<td>&nbsp;</td> </tr>
</table>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have granted the underwriters a 45 day option to purchase up to 210,000 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;Joseph Stevens &amp; Company, Inc. expects to deliver the shares on or about <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>, 2005.</font></p>
<p align="center"><b><font face="serif" size="4">JOSEPH STEVENS &amp; COMPANY, INC.</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>, 2005</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">TABLE OF CONTENTS</font></p>

<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p1"><font size="2" face="serif">Prospectus Summary                                                                      </font></a></td>
<td align="left" width="2%"><a href="#1"></a></td>
<td width="4%" align="right"><a href="#1"><font size="2" face="serif">1</font></a></td>
<td width="2%" align="left"><a href="#1"></a></td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#p5"><font size="2" face="serif">Risk Factors                                                                            </font></a></td>
<td align="left"><a href="#p1"></a></td>
<td align="right"><a href="#p5"><font size="2" face="serif">5</font></a></td>
<td align="left"><a href="#p1"></a></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p15"><font size="2" face="serif">Special Note Regarding Forward-Looking Statements                                       </font></a></td>
<td align="left"><a href="#15"></a></td>
<td align="right"><a href="#p15"><font size="2" face="serif">15</font></a></td>
<td align="left"><a href="#15"></a></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#p16"><font size="2" face="serif">Use of Proceeds                                                                         </font></a></td>
<td align="left"><a href="#16"></a></td>
<td align="right"><a href="#p16"><font size="2" face="serif">16</font></a></td>
<td align="left"><a href="#16"></a></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p17"><font size="2" face="serif">Dilution </font></a></td>
<td align="left"><a href="#17"></a></td>
<td align="right"><a href="#p17"><font size="2" face="serif">17</font></a></td>
<td align="left"><a href="#17"></a></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#p18"><font size="2" face="serif">Capitalization                                                                          </font></a></td>
<td align="left"><a href="#18"></a></td>
<td align="right"><a href="#p18"><font size="2" face="serif">18</font></a></td>
<td align="left"><a href="#18"></a></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p19"><font size="2" face="serif">Dividend Policy                                                                         </font></a></td>
<td align="left"><a href="#19"></a></td>
<td align="right"><a href="#p19"><font size="2" face="serif">19</font></a></td>
<td align="left"><a href="#19"></a></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#p20"><font size="2" face="serif">Selected Financial Information                                                          </font></a></td>
<td align="left"><a href="#20"></a></td>
<td align="right"><a href="#p20"><font size="2" face="serif">20</font></a></td>
<td align="left"><a href="#20"></a></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p21"><font size="2" face="serif">Management&#146;s Discussion
      and Analysis of Financial Condition and Results of Operations   </font></a></td>
<td align="left"><a href="#21"></a></td>
<td align="right"><a href="#p21"><font size="2" face="serif">21</font></a></td>
<td align="left"><a href="#21"></a></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#p30"><font size="2" face="serif">Business                                                                                </font></a></td>
<td align="left"><a href="#30"></a></td>
<td align="right"><a href="#p30"><font size="2" face="serif">30</font></a></td>
<td align="left"><a href="#30"></a></td>

</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p43"><font size="2" face="serif">Management                                                                              </font></a></td>
<td align="left"><a href="#43"></a></td>
<td align="right"><a href="#p43"><font size="2" face="serif">43</font></a></td>
<td align="left"><a href="#43"></a></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#p49"><font size="2" face="serif">Security Ownership of Certain Beneficial Owners and Management                          </font></a></td>
<td align="left"><a href="#49"></a></td>
<td align="right"><a href="#p49"><font size="2" face="serif">49</font></a></td>
<td align="left"><a href="#49"></a></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p50"><font size="2" face="serif">Certain Relationships and Related Transactions                                          </font></a></td>
<td align="left"><a href="#50"></a></td>
<td align="right"><a href="#p50"><font size="2" face="serif">50</font></a></td>
<td align="left"><a href="#50"></a></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#p50"><font size="2" face="serif">Description of Capital Stock                                                            </font></a></td>
<td align="left"><a href="#50"></a></td>
<td align="right"><a href="#p50"><font size="2" face="serif">50</font></a></td>
<td align="left"><a href="#50"></a></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p56"><font size="2" face="serif">Shares Eligible for Future Sale                                                         </font></a></td>
<td align="left"><a href="#56"></a></td>
<td align="right"><a href="#p56"><font size="2" face="serif">56</font></a></td>
<td align="left"><a href="#56"></a></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#p57"><font size="2" face="serif">Underwriting                                                                            </font></a></td>
<td align="left"><a href="#57"></a></td>
<td align="right"><a href="#p57"><font size="2" face="serif">57</font></a></td>
<td align="left"><a href="#57"></a></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p60"><font size="2" face="serif">Legal Matters                                                                           </font></a></td>
<td align="left"><a href="#60"></a></td>
<td align="right"><a href="#p60"><font size="2" face="serif">60</font></a></td>
<td align="left"><a href="#60"></a></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#p61"><font size="2" face="serif">Experts                                                                                 </font></a></td>
<td align="left"><a href="#61"></a></td>
<td align="right"><a href="#p61"><font size="2" face="serif">61</font></a></td>
<td align="left"><a href="#61"></a></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><a href="#p61"><font size="2" face="serif">Where You Can Find Additional Information                                               </font></a></td>
<td align="left"><a href="#61"></a></td>
<td align="right"><a href="#p61"><font size="2" face="serif">61</font></a></td>
<td align="left"><a href="#61"></a></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><a href="#f1"><font size="2" face="serif">Financial Statements                                                                    </font></a></td>
<td align="left"><a href="#f1"></a></td>
<td align="right"><a href="#f1"><font size="2" face="serif">F-1</font></a></td>
<td align="left"><a href="#f1"></a></td>
</tr>
</table>
<p align="left"><font size="2" face="serif" align="left">Until <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u>, 2005, 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&#8217;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>
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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p>&nbsp;</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 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 &quot;Risk Factors&quot; section beginning on page 5  and our financial statements and their related notes before making a decision to invest in our common stock.</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.  Our core products can be divided into three categories:</font></p>
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<font size="2" face="serif"><b><i>Wholesale Green Coffee</i></b><b>:</b>  over 70 types of 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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<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>
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<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.</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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<td>
<font size="2" face="serif">Net sales increased 39% for the year ended October 31, 2004 compared to
the year ended October 31, 2003, from $20,240,000 to $28,030,000 and 16% for the year ended October 31, 2003 compared to the year ended October 31, 2002 from $17,433,000 to $20,240,000;</font></td>
</tr>
</table>
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  <td>&nbsp;</td>
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<td>
<font size="2" face="serif">Net income increased 41% for the year ended October 31, 2004 compared to the year ended October  31, 2003 from $622,000 to $875,000 and decreased 18% for the year ended October 31, 2003 compared to the year ended October 31, 2002 from $755,000 to $622,000;</font></td>
</tr>
</table>
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<font size="2" face="serif">We increased our overall annual coffee poundage volume from 13.0 million pounds in 1998 to 26.2 million pounds in 2004; and</font></td>
</tr>
</table>
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<font size="2" face="serif">Since 1998, we increased the number of our specialty green coffee customers by 75% from 150 to 262.</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>

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<font size="2" face="serif"><b><i>National Distribution with Capacity For Growth</i></b><b>.</b>  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.  </font></td>
</tr>
</table>

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<font size="2" face="serif"><b><i>Positioned to Profitably Grow Through Varying Cycles of the Coffee Market. </i></b> We believe that our profitability is not dependent on any one product or price segment of the coffee industry and, therefore, is less sensitive than our competition to potential coffee commodity price and overall
 economic volatility.</font></td>
</tr>
</table>

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  <td></td>
  <td>&nbsp;</td>
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<font size="2" face="serif"><b><i>Wholesale Green Coffee Market Presence.</i></b>  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></td>
</tr>
</table>

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  <td></td>
  <td>&nbsp;</td>
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<td width="3%"></td>
<td width="3%">
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<td>
<font size="2" face="serif"><b><i>Diverse Portfolio of Differentiated Branded Coffees. </i></b> We have amassed a portfolio of five proprietary name brands and two licensed name brands sold to supermarkets, wholesalers and individually-owned stores in 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.  </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>
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<td width="3%"></td>
<td width="3%">
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<td>
<font size="2" face="serif"><b><i>Management Has Extensive Experience in the Coffee Industry.</i></b>  We have been a family operated business for three generations and have remained profitable through varying cycles in the coffee industry and the economy.  Andrew Gordon, our President, Chief Executive Officer and Chief Financial Officer, and David Gordon, our Executive Vice President &#150; Operations, have worked with Coffee Holding for 22 and 24 years, respectively.  </font></td>
</tr>
</table>

<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: </font></p>

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<font size="2" face="serif"><b><i>Selectively Pursuing Strategic Acquisitions and Alliances</i></b><b>.</b>  We  intend to expand our operations and market presence 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.  </font></td>
</tr>
</table>
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  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
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<td width="3%">
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<td>
<font size="2" face="serif"><b><i>Growing Our Caf&eacute; Caribe Product.  </i></b>We believe there is significant opportunity for our Caf&eacute; Caribe brand to gain market share among Hispanic consumers in the United States.  We intend to use a portion of the proceeds of this offering to implement a branded sales and marketing campaign designed to increase our brand awareness in existing markets.  </font></td>
</tr>
</table>

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  <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>Further Penetrating the Markets 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: specialty blends; private label &#8220;value&#8221; blends and trial-sized mini-brick packages; specialty instant coffees; instant cappuccinos and hot chocolates; and tea line products.  </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>
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<td width="3%"></td>
<td width="3%">
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<td>
<font size="2" face="serif"><b><i>Developing Our Food Service Business.</i></b> We plan to expand further into the food service business by developing new distribution channels for our 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></td>
</tr>

</table>
<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="center"><font face="serif" size="2">2</font></p>
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<p align="center"><font size="2" face="serif"><b>The Offering</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">1,400,000 shares</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">Common stock outstanding after the offering(1)</font></td>
<td align="left"><font size="2" face="serif">5,399,650 shares</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">Use of proceeds</font></td>
<td align="left"><font size="2" face="serif">We intend to use the proceeds of this offering to implement a branded sales and marketing campaign, to repay approximately $1.0 million of indebtedness, to purchase additional equipment for our La Junta, Colorado facility, to grow 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 &#8220;Use of Proceeds.&#8221;</font></td>
</tr>
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  <td align="left">&nbsp;</td>
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</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 &#8220;JVA.&#8221;</font></td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
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</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 &#8220;Risk Factors&#8221; beginning on page 5.</font></td>
</tr>
</table>
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<tr valign="top">
  <td>&nbsp;</td>
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</tr>
<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 140,000 shares of our common stock underlying warrants to be issued to the underwriters.</font></td>
</tr>
</table>

<p align="center"><font face="serif" size="2">3</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, 2004, 2003 and 2002 was derived from our financial statements that have been audited by Lazar Levine &amp; Felix LLP for the respective 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 &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; for a discussion of our financial statements for the years ended October 31, 2004 and 2003.</font></p>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="7" align="center"><font size="1" face="serif"><b>For the Year 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 align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>October 31,<br>2004</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>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>
</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"><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>
</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">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 28,030</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</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>
</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">20,928</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>
</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>
</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;7,102</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>
</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">5,400</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>
</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>
</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;1,702</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>
</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">(134</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">(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>
</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>
</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;1,568</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>
</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">693</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>
</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>
</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"> 875</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>
</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>
</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">$</font></td>
<td align="right"><font size="2" face="serif"> .22</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .16</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .19</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Book value per share</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">         .75</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>
</tr>
</table>
<br><br>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="bottom">
<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"><font size="1" face="serif"><b>At October 31,</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>At October 31, 2004</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="bottom">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="1" face="serif"><b>2004</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="1" face="serif"><b>2003</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="1" face="serif"><b>2002</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 align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="10" align="center"><font size="1" face="serif"><b>(Dollars in thousands)</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>Balance Sheet Data</b>:</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Total assets</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 10,914</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 7,035</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 6,042</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif">   15,709</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Short-term debt</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 7,867</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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">     6,867</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">$</font></td>
<td align="right"><font size="2" face="serif"> 51</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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">          51</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">$</font></td>
<td align="right"><font size="2" face="serif"> 7,918</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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"> 6,918</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Shareholders&#8217; equity</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,996</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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"> 8,791</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 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 $5,795,000 from the sale of common shares offered by this prospectus at an
assumed initial public offering price of $5.00 per share.</font></td>
</tr>
</table>

<p align="center"><font face="serif" size="2">4</font></p>
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<div style="page-break-before:always"></div>
<page> <a name="p5"></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>Risk Factors Affecting Our Company</b></font></p>
<p align="left"><font size="2" face="serif"><b>Because our business is highly dependent upon a single commodity, coffee, 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>
<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 roasting, blending, packaging and distribution of 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">the roasting, blending, packaging and distribution of proprietary branded 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 sale of wholesale specialty green coffee.</font></td>
</tr>
</table>
<p align="left"><font size="2" face="serif">Demand for our products is affected by:</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">consumer tastes and preferences;</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">national, regional and local economic conditions;</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">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>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
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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>&nbsp;</p>
<p align="center"><font face="serif" size="2">5</font></p>
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<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">
  <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>
<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">such acquisitions, licensing arrangements or other strategic alliances may divert our management&#8217;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 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">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 not be able to 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 as they arise.  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="center"><font face="serif" size="2">6</font></p>
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<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 11.3%, 6.3% and 21.7% of our net sales for the year ended October 31, 2004 and 16.1%, 7.5%, and 15.6% of our net sales for the fiscal year ended October 31, 2003, respectively.  Although no other customer accounted for greater than 5% of our net sales during these periods, other customers may account for more than 5% of our net sales 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, Chief Financial 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 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>

<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 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 four 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. Although gains on futures contracts were $1,622,038 and $868,669
    for the years ended October 31, 2004 and 2003, respectively, we have incurred
    losses on futures contracts during some reporting periods, which could adversely
    affect our operating results and stock price.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the use of these derivative financial instruments has generally 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>

<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 use a portion of the proceeds of this offering 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 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>
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<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">the level of marketing and pricing competition from existing or new competitors in the coffee industry;</font></td>
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<font size="2" face="serif">the success of our hedging strategy;</font></td>
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<font size="2" face="serif">our ability to retain existing customers and attract new customers; and</font></td>
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<font size="2" face="serif">our ability to manage inventory and fulfillment operations and maintain gross margins.</font></td>
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<p align="left"><font size="2" face="serif">&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 market expectations.  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 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 2005 through the proceeds of this offering, cash provided by operating activities and borrowings under our credit facility with Merrill Lynch Business Services, Inc., which expires in October 2005.  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>

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<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 align="center"><font size="2" face="serif"><b>Risk Factors Relating to the Coffee Industry</b></font></p>
<p align="left"><font size="2" face="serif"><b>Increases in the cost of high quality Arabica or Robusta coffee beans could reduce our gross margin and profit.</b></font></p>
<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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<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>
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<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 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">11</font></p>
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<p align="center"><font size="2" face="serif"><b>Risk Factors Related to this Offering</b></font></p>
<p align="left"><font size="2" face="serif"><b>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 52.0% of our outstanding shares of common stock.  In addition, other members of the Gordon family beneficially own an additional 34.5% 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 64.1% 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 align="left"><font size="2" face="serif"><b>In connection with this offering, we will 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;In
    connection with this offering, we will amend our Articles of Incorporation
    to, among other things, include provisions which could make it more difficult
    for a third party to acquire us, even if doing so would be beneficial to
    our stockholders. These provisions include: </font></p>

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<font size="2" face="serif">prohibiting stockholder action by written consent and requiring all stockholder actions to be taken at a meeting of our stockholders; and</font></td>
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<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 underwriters&#8217; warrants), we will have 5,399,650 shares of
 common stock issued and outstanding (5,609,650 shares if the underwriters&#8217; over-allotment option is
 exercised in full). Of those shares, the 1,400,000 sold in this offering (1,610,000 if the underwriters&#8217;
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 &#8220;restricted securities&#8221; 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 2,079,116 held by our officers and directors and an additional 1,380,384
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 3,600,000 shares are subject
 to lock-up agreements which prohibit the sale of such shares for nine months after this offering.
 However, it is possible that the underwriters could waive the nine-month lock-up period depending
on several factors, including, but not limited to, the market price and
demand for our common stock and the general condition of the securities markets.
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 &#8220;JVA&#8221;.</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 on an exchange or other trading market, 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="center"><font size="2" face="serif">13</font></p>
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<p align="left"><font size="2" face="serif"><b>We will have discretion as to the use of the proceeds of this offering.  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 implement a branded sales and marketing campaign, to repay approximately $1.0 million of indebtedness, to purchase additional equipment for our La Junta, Colorado facility, to grow 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.  We will have broad discretion in applying the portion of the net proceeds reserved for general corporate purposes and may use the proceeds in ways that are not optimal or with which stockholders disagree.  Accordingly, investors in this
offering will be relying on management&#8217;s judgment with only limited information about our specific intentions regarding a significant portion of 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 $3.37 per share
    ($3.27 per share assuming exercise of the underwriters&#8217; over-allotment
     option) in the net tangible book value per share of common stock based on
    an assumed initial public offering price of
 $5.00 per share.  New investors and existing stockholders will have paid  88.9%
    and 11.1%, respectively, of the  total consideration paid for the shares
    of our common stock outstanding after this offering. 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 140,000 shares of our common stock for issuance upon the exercise
    of warrants to be issued to the underwriters 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 &quot;penny stock,&quot; 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 &quot;penny stock.&quot; 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 &quot;recognized&quot; 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; 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">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="center"><font size="2" face="serif">14</font></p>
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<page> <a name="p15"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></p>
<p>&nbsp;</p>
<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 &#8220;may,&#8221; &#8220;should,&#8221; &#8220;plan,&#8221; &#8220;expect,&#8221; &#8220;anticipate,&#8221; &#8220;estimate&#8221; and similar words, although some forward-looking statements are expressed differently.  Forward-looking statements represent our management&#8217;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 &#8220;Risk Factors&#8221; set forth above.</font></p>
<p align="center"><font face="serif" size="2">15</font></p>
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<page>
<a name="p16"></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
    $5.8 million, or $6.7 million if the underwriters exercise
their over-allotment option in full, assuming an initial public offering price
    of $5.00 per share and after  deducting the underwriting discounts and commissions
    of approximately $630,000, or $724,500 if the underwriters
exercise their over-allotment option in full, and estimated offering expenses
    payable by us of  approximately $575,000 or $607,000 if the underwriters
    exercise their over-allotment option in full.  </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 as follows:</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">approximately $1.5 million to implement a branded sales and marketing campaign designed to increase our brand awareness in existing markets, including targeting Hispanic consumers 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">approximately $1.0 million to repay indebtedness under our revolving line of credit and term loan;</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">approximately $800,000 to purchase additional equipment for our La Junta, Colorado facility that will allow us to increase production and expand our product offerings on the West Coast; </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">approximately $500,000 to grow our food service distribution both organically and through acquisitions; 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 remaining $2.9 million for general corporate
purposes, including working capital and capital expenditures and, as strategic
opportunities arise, to fund acquisitions, licensing and other strategic alliances.  </font></td>
</tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The $1.0 million indebtedness that we intend to repay using proceeds of this offering constitutes obligations under our new credit facility.  In November 2004, we refinanced our credit facility by entering into a new financing arrangement with Merrill Lynch Business Financial Services Inc. and terminating our prior agreement with Wells Fargo Business Credit.  This new line of credit is for a maximum of $4,000,000, expires on October 31, 2005 and requires monthly interest payments at a rate of LIBOR plus 2.4% (an effective rate of 4.99% at January 31, 2005).  This loan is secured by a blanket lien on all of our assets and the personal guarantees of Andrew Gordon and David Gordon, two of our officers and
directors.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing represents our best estimate of our allocation of the net proceeds of this offering.  This estimate is based on certain assumptions related to our sales and marketing activities, the growth of our business, competition and other factors.  In addition, although we have no present plans or intentions, as strategic opportunities arise, we may use a portion of the proceeds of this offering to fund future acquisitions, licensing and other strategic alliances.  Future events, as well as changes in economic or competitive conditions or our business and the results of our sales and marketing activities and growth of our business, may make shifts in the allocation of funds necessary or desirable.</font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A substantial portion of the net proceeds will be reserved for general corporate purposes.  Our management will have broad discretion in the application of this portion of the net proceeds.  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="center"><font size="2" face="serif">16</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>DILUTION</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
    net tangible book value at October 31, 2004 was approximately $2,996,000
    or $.75 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 $5.00 per share, and after deducting underwriting discounts and
    commissions and estimated offering expenses payable by us, our as adjusted
    net tangible
    book value at October 31, 2004 would have been approximately $8,791,000,
    or $1.63 per share ($9,714,000 or $1.73 per share assuming exercise of the
    underwriters&#8217;
over-allotment option) of common stock.  This represents an immediate increase
in the net tangible book value of $.88 per share ($.98 per share assuming exercise
of the underwriters&#8217; over-allotment option) to existing stockholders and
an immediate dilution of $3.37 per share ($3.27 per share assuming exercise of
the underwriters&#8217; over-allotment option) to new investors purchasing shares
of our common stock in this offering. The following table illustrates this per
share dilution:</font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#ffffff">
  <td width="9%" align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Assumed public offering price per share (1)</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="1%" align="right">&nbsp;</td>
<td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="1%" align="right"><font size="2" face="serif">$</font></td>
<td width="10%" align="right"><font size="2" face="serif">   5.00</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:6%; text-indent:-3%"><font size="2" face="serif">Net tangible book value per share at October 31,
 2004</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">     .75</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">Increase per share attributable to new investors</font></div></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">     .88</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></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">&nbsp;</td>
<td align="left"><div style="margin-left: 3%; text-indent: -3%"><font size="2" face="serif">As adjusted net tangible book value per share<br>
after the offering(2) </font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
<td align="right" valign="bottom"><font size="2" face="serif">   1.63</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
<td align="left"><font size="2" face="serif">Dilution per share to new investors</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">   3.37</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>
</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">____________________</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Before deduction of underwriting discounts and commissions and estimated expenses of the offering.</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<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
underwriters&#8217; 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 $5.00 per share:</font></p>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&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 align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Existing stockholders</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td align="right" width="8%"><font size="2" face="serif">3,999,650</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td align="right" width="8%"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;74.1</font></td>
<td align="left" width="2%"><font size="2" face="serif">%</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> 871,887</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="2%">&nbsp;</td>
<td align="right" width="8%"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1</font></td>
<td align="left" width="2%"><font size="2" face="serif">%</font></td>
<td align="right" width="2%"><font size="2" face="serif">$</font></td>
<td align="right" width="8%"><font size="2" face="serif"> .22</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">New investors</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,400,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25.9</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">7,000,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;88.9</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 5.00</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">5,399,650</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">  7,871,887</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100.0</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</table>
<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 140,000 shares of our common stock have been reserved for future issuance upon exercise of warrants to be granted to the underwriters 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">17</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p18"></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 October 31, 2004, on
    an actual basis and as adjusted to reflect the completion of this offering
    and the sale of 1,400,000 shares of common stock at an assumed initial public
    offering price of $5.00 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 October 31, 2004. This table does not include 800,000 shares of our
    common stock reserved for future issuance under our 1998 Stock Option Plan
    and 140,000 shares of our common stock reserved for future issuance upon
    exercise of warrants to be granted to the underwriters in connection with
this offering.</font></p>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="4" align="center"><font size="1" face="serif"><b>At October 31, 2004</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><hr noshade size="1"></td>
  <td><hr noshade size="1">
  </td>
  <td><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>Actual</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="1" face="serif"><b>As Adjusted</b>(1)</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Short term debt:</font></td>
<td align="left">&nbsp;</td>
<td align="right"><hr noshade size="1"></td>
<td align="left"><hr noshade size="1"></td>
<td align="left">&nbsp;</td>
<td align="right"><hr noshade size="1"></td>
<td align="left"><hr noshade size="1"></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">Current portion of term loan</font></div></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="1%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;252,000</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="1%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif">            0</font></td>
<td align="left" width="2%">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">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;111,060</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">111,060&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,685,045</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">  1,937,045</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td></td>
  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
  <td></td>
  <td><hr noshade size="1">
  </td>
  <td><hr noshade size="1">
  </td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left:6%; 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,048,105</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">  2,048,105</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Long term debt:</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,855</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">         5,855</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Stockholders&#8217; equity:</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">Preferred stock, $.001 per value, 10,000,000
shares authorized, no shares issued or outstanding</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#150;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#150;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">Common
      stock, $.001 par value, 30,000,000 shares authorized, 3,999,650 shares
      issued and outstanding actual, and 5,399,650 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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,000</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">      5,400                                                                                          </font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">Additional paid-in capital</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;867,887</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;6,661,487</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">Retained earnings</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,123,934</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">    2,123,934</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Total stockholders&#8217; equity</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,995,821</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">    8,790,821</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
<td><hr noshade size="1"></td>
<td><hr noshade size="1"></td>
<td></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Total capitalization</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 6,049,781</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 10,844,781</font></td>
<td align="left">&nbsp;</td>

</tr>
<tr valign="top">
<td></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
<td><hr noshade size="2"></td>
<td><hr noshade size="2"></td>
<td></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td colspan="2"><hr align="left" width="10%" size="1" noshade></td>
  </tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Reflects completion of this offering, the sale of 1,400,000 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 140,000 shares of our common stock reserved for future issuance upon exercise of warrants to be granted to the underwriters upon completion of this offering.  Assumes no exercise of the underwriters&#8217; over-allotment option.</font></td>
</tr>
</table>

<p align="center"><font face="serif" size="2">18</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p19"></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.  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">19</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<a name="p20"></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, 2004, 2003 and 2002 was derived from our fiscal financial statements audited by Lazar Levine &amp; Felix LLP for the respective 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 &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations&#8221; for a discussion of our financial statements for the years ended October 31, 2004 and 2003.</font></p>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top">
<td align="left"><font size="1" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="7" align="center"><font size="1" face="serif"><b>For the Year Ended</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1">
</td>
  <td align="center"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="center"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td 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>2004</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>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>
</tr>
<tr valign="top">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="center"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="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 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"><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>
</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="1%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> 28,030</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="1%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> 20,240</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="1%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> 17,433</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">20,928</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>
</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>
</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;7,102</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>
</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">5,400</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>
</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>
</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;1,702</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>
</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">(134</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">(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>
</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>
</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;1,568</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>
</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">693</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>
</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>
</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"> 875</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>
</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>
</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">$</font></td>
<td align="right"><font size="2" face="serif"> .22</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .16</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> .19</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Book value per share</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif">         .75</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>
</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>
</tr>
</table>
<br>
<br>


<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="right">&nbsp;</td>
<td colspan="8" align="center" valign="bottom"><font size="2" face="serif"><b>At<br>
October 31,</b></font><font size="2" face="serif">&nbsp;</font></td>
<td></td>
<td></td>
<td align="center"><font size="2" face="serif"><b>At<br>
  October 31, 2004</b></font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1">
</td>
  <td align="right"><hr noshade size="1">
</td>
  <td align="left"><hr noshade size="1">
</td>
  <td align="right"><hr noshade size="1">
</td>
  <td align="right"><hr noshade size="1">
</td>
  <td align="left"><hr noshade size="1">
</td>
  <td align="right"><hr noshade size="1">
</td>
  <td align="right"><hr noshade size="1">
</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1">
    </td>
  <td align="center"><hr noshade size="1">
    </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" valign="bottom"><font size="2" face="serif"><b>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="2" face="serif"><b>2003</b></font></td>
<td align="left" valign="bottom">&nbsp;</td>
<td align="right" valign="bottom">&nbsp;</td>
<td align="center" valign="bottom"><font size="2" face="serif"><b>2002</b></font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif"><b>As Adjusted(1)</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1">
</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="right"><hr noshade size="1"></td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1"></td>
  <td align="center"><hr noshade size="1"></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="center" colspan="12"><font size="2" face="serif"><b>(Dollars in thousands)</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif"><b>Balance Sheet Data</b>:</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Total assets</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 10,914</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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"> 15,709</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" width="2%">&nbsp;</td>
<td align="right" width="1%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> 7,867</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="1%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> 2,076</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="1%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> 2,483</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="1%"><font size="2" face="serif">$</font></td>
<td align="right" width="10%"><font size="2" face="serif"> 6,867</font></td>
<td align="left" width="2%">&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">$</font></td>
<td align="right"><font size="2" face="serif"> 51</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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"> 51</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">$</font></td>
<td align="right"><font size="2" face="serif"> 7,918</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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"> 6,918</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Shareholders&#8217; equity</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 2,996</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</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"> 8,791</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 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 $5,795,000 from the sale of shares of common
stock
offered by this prospectus.</font></td>
</tr>
</table>

<p align="center"><font face="serif" size="2">20</font></p>
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<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>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 &#8220;Risk Factors&#8221; 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 &#8220;Selected Financial Data&#8221; 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.  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>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td width="3%">&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">&nbsp;</font></td>
<td colspan="2"><font size="2" face="serif">&nbsp;</font><font size="2" face="serif">Our operating results are affected by a number of factors including:</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 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; </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 success of our hedging strategy; 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.  In February 2004, we acquired certain assets of Premier Roasters.  We also hired a West Coast Brand Manager to market our S&amp;W brand and to increase sales of S&amp;W
    coffee to new customers and increased attendance at trade shows to promote
    our food service and private label coffee business. In the last twelve months,
    we also hired third party marketing specialists to increase the sale of our
    branded coffee through label redesigns and new distribution. As a result
    of these efforts, net sales increased in our specialty green coffee, private
    label and branded coffee business lines in both dollars and pounds sold since
    the date of the acquisition. In addition, we increased the number of our
customers in all three areas.</font></p>

<p align="center"><font size="2" face="serif">21</font></p>
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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>

<p align="left"><font size="2" face="serif">&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&#8217;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&#8217;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 generally 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 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;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&#8217; La Junta and Rocky Ford, Colorado locations, as well as all labels for all of Premier Roasters&#8217; coffee products.  In connection with the acquisition of these assets, we reached an agreement with the City of La Junta, Colorado on a 20-year lease for a 50,000 square foot facility in La Junta.  We are using the assets that we purchased to expand our integrated wholesale coffee roaster and dealer operations to the Western United States.  In connection with this transaction, we also entered
into a licensing agreement with Del Monte Corporation for the exclusive right to use the S&amp;W and IL CLASSICO trademarks, including Premium, Premium Decaf, French Roast, Colombian, Colombian Decaf, Swiss Water Decaf, Kona, and Mellow'd Roast lines, in connection with the production, manufacture and sale of ground coffee for distribution to retail customers in the United States and certain other countries approved by Del Monte Corporation.</font></p>

<p align="left"><font size="2" face="serif">&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 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="center"><font size="2" face="serif">22</font></p>
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<p><a href="#contents"><font size="2">Back to Contents</font></a></p>

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

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<td width="3%"><font size="2" face="serif">&#149;</font></td>
<td align="left">
<font size="2" face="serif"> We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, &#8220;Revenue Recognition&#8221; (&#8220;SAB 104&#8221;). Under SAB 104, 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%">&nbsp;</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&#8217; inability to make required payments. If there is deterioration of our customers&#8217; 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.  For example, every additional one percent of our accounts receivable that becomes uncollectible would reduce our operating income by approximately $40,000.</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="3%">&nbsp;</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 a first-in, first-out basis).  Based on our assumptions about future demand and market conditions, inventories are subject to be 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">
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  <td>&nbsp;</td>
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<font size="2" face="serif"> We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, &#8220;Accounting for Income Taxes&#8221;  (&#8220;SFAS No. 109&#8221;). Under SFAS No. 109, deferred tax assets and liabilities are determined based on the liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized.  Accordingly, our net deferred tax asset of $91,700 could need to be written off if we do not remain profitable.</font></td>
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<p align="left"><font size="2" face="serif"><b>Year Ended October 31, 2004 (Fiscal 2004) Compared to the Year Ended October 31, 2003 (Fiscal 2003)</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Net Income</i>.&nbsp;&nbsp;&nbsp;&nbsp;Net income increased $253,260, or 40.7%, to $875,342 or $.22 per share for the year ended October 31, 2004 compared to $622,082 or $.16 per share for the year ended October 31, 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>&nbsp;&nbsp;&nbsp;&nbsp;Net sales totaled $28,030,389 for the year ended October 31, 2004, an increase of $7,790,522 or 38.5% from $20,239,867 for the year ended October 31, 2003.  The increase in net sales reflects a 50.6% increase in coffee pounds sold from 17.4 million pounds in 2003 to 26.2 million pounds in 2004.  The increase in pounds of coffee sold is the result of increased sales of our private label, branded and specialty green coffees.  The increase in net sales also reflects sales of $1,631,000 under our license of the S&amp;W brand which we signed in February 2004.  Sales of our Caf&eacute; Caribe brand, as measured by Information Resources Incorporated data, increased approximately 32% over fiscal 2003 due
in part to the efforts of our third party marketing specialists through label redesigns and new distribution.  The number of our customers in the specialty green coffee area grew approximately 6.9% to 262 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>&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales for the year ended October 31, 2004 was $20,927,506 or 74.7% of net sales, as compared to $15,373,127 or 76.0% of net sales for the year ended October 31, 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 reflects increased purchases of green coffee in the amount of approximately $3,500,000, an increase in packaging costs associated with the increase in net sales of approximately $700,000 and approximately $1,400,000 from higher green coffee prices during the period as prices increased $.16 per pound year to year, partially offset by net gains
on future contracts.  As the price of coffee is cyclical and volatile and subject to many factors, including weather, politics and economics, we are unable to predict the purchase price of green coffee for fiscal 2005.  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 $1,622,038 for the year ended October 31, 2004 compared to $868,669 for the year ended October 31, 2003.  The use of these derivative
financial instruments enabled us to mitigate the effect of changing prices during these periods, to increase our margins as coffee prices have increased and to be more competitive with our pricing.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Gross Profit.</i>&nbsp;&nbsp;&nbsp;&nbsp;Gross profit for the year ended October 31, 2004 was $7,102,883, an increase of $2,236,143 or 45.9%, from $4,866,740 for the year ended October 31, 2003.  Gross profit as a percentage of net sales increased by 1.3% to 25.3% for the year ended October 31, 2004 from 24.0% for the year ended October 31, 2003.  Gains on futures contracts, 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>&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses increased $1,408,057 or 35.3% to $5,400,382 for the year ended October 31, 2004 from $3,992,325 for 2003 due to increases in selling and administrative expenses and officers&#8217; salaries.  Selling and administrative expenses increased $1,276,344 or 36.4% to $4,777,809 for the year ended October 31, 2004 from $3,501,465 for 2003.  The increase in selling and administrative expenses reflects several factors, including increases of approximately $320,000 in shipping expenses, $322,000 in office salaries, $140,000 in sales commissions, $60,000 in maintenance, $71,000 in utilities, $51,000 in travel and $64,000 in depreciation.   </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 needs and our roasting and blending requirements.  We also incurred expenses associated with the hiring of 25 new employees at the facility.  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 increases in
maintenance, utilities, travel and depreciation reflect the increased costs of operating two facilities.  </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Officers&#8217; salaries increased $131,713 to $622,573 for the year ended October 31, 2004 from $490,860 for the year ended October 31, 2003.  The increase was primarily due to salary increases for senior officers.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Other Expense.</i>&nbsp;&nbsp;&nbsp;&nbsp;Other expense decreased $2,003 or 1.4% from $135,967 for the year ended October 31, 2003 to $133,964 for the year ended October 31, 2004.  </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Income Before Taxes.</i>&nbsp;&nbsp;&nbsp;&nbsp;We had income of $1,568,537 before income taxes for the year ended October 31, 2004 compared to income of $738,448 before income taxes for the year ended October 31, 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>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Income Taxes</i>.&nbsp;&nbsp;&nbsp;&nbsp;Our provision for income taxes for the year ended October 31, 2004 totaled $693,195 compared to $116,366 for the year ended October 31, 2003 as a result of increased income before taxes.</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 October 31, 2004, we had working capital of $726,444 which represented a $2,636,752 decrease from our working capital of $3,363,196 as of October 31, 2003, and total stockholders&#8217; equity of $2,995,821, which increased by $875,342 from our total stockholders&#8217; equity of $2,120,479 as of October 31, 2003.  Our working capital decreased primarily due to an increase in our accounts payable of $2,797,389 and 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 October 31, 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 October 31, 2004, the outstanding balance on our line of credit was $2,685,045 compared to $2,376,066 at October 31, 2003.  This decrease in working capital was partially offset by a $1,881,986 increase in accounts receivable and a $476,865 increase in inventories at October 31, 2004 compared to October 31, 2003.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of October 31, 2004, we had a credit facility with Wells Fargo Business Credit that provided 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 provided for borrowings of up to 85% of our eligible trade accounts receivable and 60% of eligible inventories.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
    of October 31, 2004, the line of credit with Wells Fargo Business Credit
    had an outstanding balance of $2,685,045 as compared to an outstanding balance
    of $2,376,066 at October 31, 2003. The outstanding balance under the term
    loan was $252,000 as of October 31, 2004, and was $336,000 at October 31,
    2003. We believe we were in compliance with all required financial
    covenants at October 31, 2004.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November 2004, we refinanced our credit facility by entering into a new financing arrangement with Merrill Lynch Business Financial Services Inc. and terminating our prior agreement with Wells Fargo Business Credit.  This new line of credit is for a maximum of $4,000,000, expires on October 31, 2005 and requires monthly interest payments at a rate of LIBOR plus 2.4% (an effective rate of 4.99% at January 31, 2005).  This loan is secured by a blanket lien on all of our assets and the personal guarantees of Andrew Gordon and David Gordon, two of our officers and directors.  As of January 31, 2005, we had $3,480,045 outstanding under the line of credit.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    new credit facility contains covenants that place restrictions on our operations.
    Among other things, these covenants: require us to maintain certain financial
    ratios; require us to maintain a minimum net worth; and prohibit us from
    merging with or into other companies, acquiring all or substantially all
    of the assets of 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. As of the date of
    this prospectus, we believe we were in compliance with all covenants
    contained in the credit facility.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also lease machinery and equipment under capital leases which expire in July 2006.  The interest rate on the capital leases vary from 6.75% to 7.6% per annum.  The outstanding balance on the capital leases aggregated $116,915 at October 31, 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 July 31, 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 year ended October 31, 2004, our operating activities provided net cash of $1,616,465 as compared to the year ended October 31, 2003 when net cash used in operating activities was $744,226.  The increased cash flow from operations for the year ended October 31, 2004 was primarily due to $875,342 in net income, $2,797,389 in increased accounts payable, offset in part by $467,865 in increased inventory levels and a $1,881,986 increase in accounts receivable.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended October 31, 2004, our investing activities used net cash of $1,056,179 as compared to the year October 31, 2003 when net cash used by investing activities was $62,758.  The decreased cash flow from investing activities for fiscal 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 year ended October 31, 2004, our financing activities provided net cash of $8,027 as compared to the year ended October 31, 2003 when net cash provided by financing activities was $837,248.  The decreased cash flow from financing activities was primarily due to decreased net cash borrowings under our line of credit, principal payments on our capital lease and payments to related parties.  Net cash used on our line of credit decreased $745,714 to net cash used of $308,079 for the year ended October 31, 2004 compared to net cash used of $1,054,693 for the year ended October 31, 2003.  In addition, we repaid $79,646 in loans to our stockholders during the year ended October 31, 2004.  We also lease machinery and
equipment under capital leases which expire in July 2006.  The interest rate on the capital leases vary from 6.75% to 7.6% per annum.  Principal payments on our capital leases increased $100,785 to $221,306 for the year ended October 31, 2004 from $120,521 for the year ended October 31, 2003. </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>
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<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, through October 31, 2005 with cash provided by this offering, our operating activities and the use of our credit facility.  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 October 31, 2004, our debt consisted of $116,915 of fixed rate debt on capital leases and $2,937,045 of variable rate debt under our revolving line of credit and term loan.  At October 31, 2004, interest on the variable rate debt was payable primarily at 5.00% (or .25% above the prime rate) for the revolving line of credit and at 5.25% (or .50% above the prime rate) for the term loan.  We do not expect changes in interest rates to have a material effect on results of operations or cash flows in fiscal 2005, 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 four 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 October 31, 2004, we held 101 options (generally with terms of two months or less) covering an aggregate of 3,787,500 pounds of green coffee beans at a price of $.75 per pound.  The fair market value of these options, which was obtained from a major financial institution, was $49,200 at October 31, 2004.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We acquire futures contracts with longer terms (generally three to four months) primarily for the purpose of guaranteeing an adequate supply of green coffee.  At October 31, 2004, we held 90 futures contracts for the purchase of 3,375,000 pounds of coffee at an average price of $.80 per pound for March 2005 contracts.  The market price of coffee applicable to such contracts was $.77 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 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;&nbsp;&nbsp;We are an integrated wholesale coffee roaster and dealer in the United States.  Our core products can be divided into three categories:</font></p>

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<font size="2" face="serif"><b><i>Wholesale Green Coffee:</i></b>  unroasted raw beans imported from around the world and sold to large and small roasters and coffee shop operators;</font></td>
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<font size="2" face="serif"><b><i>Private Label Coffee:</i></b>  coffee roasted, blended, packaged and sold under the specifications and names of others, including supermarkets that want to have their own brand name on coffee to compete with national brands; and</font></td>
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<font size="2" face="serif"><b><i>Branded Coffee:</i></b> coffee roasted and blended to our own specifications and packaged and sold under our seven brand names in different segments of the market.</font></td>
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<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 and coffee shop operators.  </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>&nbsp;&nbsp;&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&#8217; La Junta and Rocky Ford, Colorado locations, as well as all labels for all of Premier Roasters&#8217; 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>
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<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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<font size="2" face="serif">Specialty coffees, which include:</font></td>
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<font size="2" face="serif">Gourmet coffees (premium grade Arabica coffees sold in whole bean and ground form);</font></td>
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<font size="2" face="serif">Espresso-based beverages; and </font></td>
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<font size="2" face="serif">Premium coffees (upscale coffees mass-marketed by the leading coffee companies).</font></td>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Specialty Green Coffee.</i></b><b></b>&nbsp;&nbsp;&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 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 Specialty Coffee Association, the estimated number of specialty coffee retail outlets grew from 585 units in 1989 to 17,400 units by the end of 2003;</font></td>
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<font size="2" face="serif">Increasing demand for all premium food products, including specialty coffee, where the difference in price from the commercial brands is small compared to the perceived improvement in product quality and taste;</font></td>
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<font size="2" face="serif">Greater consumer awareness of specialty coffee as a result of its increasing availability;</font></td>
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<font size="2" face="serif">Ease of preparation of specialty coffees resulting from the increased use of automatic drip coffee makers and home espresso machines; and</font></td>
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<font size="2" face="serif">The overall low price of Arabica coffee beans, which has allowed consumers to afford higher end specialty 100% Arabica coffees.</font></td>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Hispanic Coffee Market in the United States.</i></b><b></b>&nbsp;&nbsp;&nbsp;&nbsp;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">According to Information Resources Inc., Spanish espresso beverages&#8217; total volume sales increased by 12% from April 2003 to April 2004;</font></td>
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<font size="2" face="serif">According to the United States Census Bureau, Hispanic Americans are the largest minority group in the United States as of January 2003 with 37 million people residing throughout the United States; and </font></td>
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<font size="2" face="serif">According to a May 2004 report by the Selig Center for Economic Growth, the purchasing power of Hispanic consumers will reach $992 billion by 2009.</font></td>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Coffee Commodity Market.</i></b><b></b>&nbsp;&nbsp;&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&#8217;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.</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>National Distribution with Capacity For Growth.</i></b>&nbsp;&nbsp;&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>
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<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;&nbsp;&nbsp;While many of our competitors engage in distinct segments of the coffee business, we sell products in each
of the following areas:</font></p>

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<font size="2" face="serif">Wholesale specialty green and gourmet whole bean coffees; </font></td>
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<font size="2" face="serif">Instant coffees; and</font></td>
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<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 align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Wholesale Green Coffee Market Presence.</i></b>&nbsp;&nbsp;&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 75% from 150 to 262.  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 14-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;&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>
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<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;&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.  Andrew Gordon, our President, Chief Executive Officer and Chief Financial Officer, and David Gordon, our Executive Vice President &#150; Operations,  have worked with Coffee Holding for 22 and 24 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 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;&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 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 supplier of ground roast private label coffee for four West Coast divisions of Albertson&#8217;s, Inc., the second largest food and drug retailer in the United States according to Hoover&#8217;s Online.  We intend to further expand the market presence of our branded products outside our primary Northeastern United States market through other acquisitions and strategic alliances.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Grow Our Caf&eacute; Caribe Product.</i></b>&nbsp;&nbsp;&nbsp;&nbsp;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 targets espresso coffee drinkers and, in particular, 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.  </font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Further
Penetrating the Markets of Our Niche Products.</i></b>&nbsp;&nbsp;&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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<font size="2" face="serif">Instant cappuccinos and hot chocolates; and</font></td>
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<p align="left"><font size="2" face="serif">We recently established relationships with additional independent sales brokers to market our products on a national scale.  </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Develop Our Food Service Business.</i></b>&nbsp;&nbsp;&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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<font size="2" face="serif"><b><i>Wholesale Green Coffee</i></b><b>:</b> unroasted raw beans imported from around the world and sold to large and small roasters and coffee shop operators;</font></td>
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<font size="2" face="serif"><b><i>Private Label Coffee</i></b><b>:</b> coffee roasted, blended, packaged and sold under the specifications and names of others,  including supermarkets that want to have their own brand name on coffee to compete with national brands; and</font></td>
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<font size="2" face="serif"><b><i>Branded Coffee</i></b><b>:</b> coffee roasted and blended to our own specifications and sold under our seven brand names in different segments of the market.</font></td>
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<p>&nbsp;</p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Wholesale Green Coffee.</i></b>&nbsp;&nbsp;&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 &#8220;one bag at a time&#8221; rather than &#8220;one cup at a time.&#8221; </font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Private Label Coffee.</i></b>&nbsp;&nbsp;&nbsp;&nbsp;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 October 31, 2004, we supplied coffee under approximately 42 different labels to wholesalers and retailers, including Supervalu, C&amp;S Wholesale 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>&nbsp;&nbsp;&nbsp;&nbsp;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 &#8220;Business&#150;Trademarks.&#8221; </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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<font size="2" face="serif"><b><i>Caf&eacute; Caribe </i></b>is a specialty espresso coffee that targets espresso coffee drinkers and, in particular, the Hispanic consumer market;<i></i></font></td>
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<font size="2" face="serif"><b><i>S&amp;W</i></b> is an upscale canned coffee established in 1921 and includes Premium, Premium Decaf, French Roast, Colombian, Colombian Decaf, Swiss Water Decaf, Kona, Mellow'd Roast and IL CLASSICO lines;</font></td>
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<font size="2" face="serif"><b><i>Caf&eacute; Supremo</i></b><i></i> is a specialty espresso that targets espresso drinkers of all backgrounds and tastes.  It is designed to introduce coffee drinkers to the tastes of dark roasted coffee;</font></td>
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<font size="2" face="serif"><b><i>Don Manuel</i></b> is produced from the finest 100% Colombian coffee beans.  Don Manuel is an upscale quality product which commands a substantial premium compared to the more traditional brown coffee blends.  We also use this known trademark in our food service business because of the high brand quality;</font></td>
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<font size="2" face="serif"><b><i>Fifth Avenue</i></b> is a blended coffee that has become popular as an alternative for consumers who purchase private label or national branded coffee.  We also market this brand to wholesalers who do not wish to undertake the expense of developing a private label coffee program under their own name;</font></td>
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<font size="2" face="serif"><b><i>Via Roma</i></b> is an Italian espresso targeted at the more traditional espresso drinker; and</font></td>
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<font size="2" face="serif"><b><i>Il CLASSICO</i></b> is an S&amp;W brand espresso product.</font></td>
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<p align="left"><font size="2" face="serif"><b>Other Products</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also offer several niche products, including:  </font></p>
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<font size="2" face="serif">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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<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 October 31, 2004 was $.745 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 2004, substantially
    all of our green coffee purchases were from approximately<b></b>ten<b></b>suppliers,
    which accounted for approximately $14.3 million, or<b></b> 81% of our total
    product purchases. One of these suppliers, Rothfos Corporation, accounted
    for $6.1 million, or 34% of our total product purchases. <b></b>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>

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<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 coffee exporting countries.  Increases in the cost of coffee beans can, to a certain extent, be passed on to our customers in the form of higher prices for coffee beans and processed coffee.  Drastic or prolonged increases in coffee prices could also adversely impact our business as it could lead to a decline in overall consumption of coffee.  Similarly, rapid decreases in the cost of coffee beans could force us to lower our sale prices before realizing cost reductions in our purchases.</font></p>

<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 2 of the notes to financial statements in this prospectus.  We acquire futures contracts with longer terms (generally three to four 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 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 &#8220;Management&#8217;s Discussion and Analysis of Financial Condition and Results of Operations &#150; Commodity Price Risks.&#8221;</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>
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<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 and Green Mountain Coffee Roasters accounted for approximately 11.3%, 6.3% and 21.7% of net sales for the fiscal year ended October 31, 2004 and 16.1%, 7.5% and 15.6% of our net sales for the fiscal year ended October 31, 2003, 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 prices.  Because our profits on a fixed-price contract could decline if coffee prices increased, we acquire futures contracts with longer terms (generally three to four 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 is effective to eliminate the pricing risks and we generally remain exposed to loss when prices change 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.</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.</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 &#8220;value&#8221; blends and mini-brick, filter packages, instant cappuccinos and tea line products.  We also intend to add specialty instant coffees to our extensive line of instant coffee products.</font></p>
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<p align="left"><font size="2" face="serif"><b>Charitable Activities</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Coffee Holding is also a supporter of several coffee oriented charitable organizations.  </font></p>

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<font size="2" face="serif">For over 10 years, we have been members of Coffee Kids, an international non-profit organization that helps to improve the quality of life of children and their families in coffee-growing communities in Mexico, Guatemala, Nicaragua and Costa Rica.</font></td>
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<font size="2" face="serif">We are members of Grounds for Health, an organization that educates, screens, and arranges treatment for women who have cancer and live in the rural coffee growing communities of Mexico.</font></td>
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<font size="2" face="serif">We are a licensed Fair Trade dealer of Fair Trade certified coffee.  Fair Trade helps small coffee farmers to increase their incomes and improve the prospects of their communities and families.  It guarantees farmers a minimum price of $1.26 per pound or five cents above the current market price.</font></td>
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<font size="2" face="serif">Most recently, we are the administrative benefactors to a new non-profit organization called Cup for Education.  After discovering the lack of schools, teachers, and basic fundamental learning supplies in the poor coffee growing communities of Central and Latin America, &#8220;Cup&#8221; 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;&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;&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>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><i>Branded Competition.</i></b>&nbsp;&nbsp;&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 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&#8217; 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<b></b>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>
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<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 $90,000 for the latest one year extension of the lease through August 31, 2005.</font></p>

<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>
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<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.  Three of our four independent directors will become directors concurrently with the completion of the offering.</font></p>
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<td align="left"><font size="2" face="serif"><b>Name</b></font></td>
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<td width="2%" align="right">&nbsp;</td>
<td width="45%" align="center"><font size="2" face="serif"><b>Position</b></font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
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    </td>
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    </td>
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<td align="left"><font size="2" face="serif">Andrew Gordon</font></td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">43</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Chief Executive Officer, President, Chief Financial Officer, Treasurer and Director</font></td>
<td align="left">&nbsp;</td>
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<td align="left"><font size="2" face="serif">David Gordon</font></td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">40</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Executive Vice President &#150; Operations, Secretary and Director</font></td>
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<td align="left"><font size="2" face="serif">Gerard DeCapua</font></td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">43</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director</font></td>
<td align="left">&nbsp;</td>
</tr>
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<td align="left"><font size="2" face="serif">Daniel Dwyer</font></td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">48</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director</font></td>
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<td align="left"><font size="2" face="serif">Barry Knepper</font></td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">54</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director(1)</font></td>
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<td align="left"><font size="2" face="serif">Sal Reda, CPA</font></td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">40</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director(1)</font></td>
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<td align="left"><font size="2" face="serif">Robert M. Williams</font></td>
<td align="right">&nbsp;</td>
<td align="center"><font size="2" face="serif">45</font></td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">Director(1)</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">_______________</td>
  </tr>
<tr valign="top">
<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>
</tr>
</table>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Andrew Gordon</i> has been our Chief Executive Officer, President, Treasurer and one of our directors since 1997 and our Chief Financial Officer since November 2004.  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;<i>David Gordon</i> 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 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;<i>Gerard DeCapua</i> has served as a director of Coffee Holding since 1997.  Mr. DeCapua has had his own law practice in Rockville Centre, New York since 1986.  Mr. DeCapua received his law degree from Pace University.</font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Daniel Dwyer</i> 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&#8217; length terms.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the following persons have been appointed to serve as directors upon completion of the offering:</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Barry Knepper</i> 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;<i>Sal Reda, CPA</i> 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;<i>Robert M. Williams</i> 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 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;&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>
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<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;&nbsp;&nbsp;The Compensation Committee will provide advice and make recommendations 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;&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 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>
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<p align="left"><font size="2" face="serif"><b>Executive Compensation</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain compensation information for our chief executive officer and each other executive officer whose salary and bonus compensation exceeded $100,000 for the fiscal year ended October&nbsp;31, 2004.</font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#FFFFFF">
<td colspan="13" align="center"><font size="2" face="serif"><b>Summary Compensation Table</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td colspan="7" align="center"><font size="2" face="serif"><b>Annual Compensation</b></font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right">&nbsp;</td>
  <td align="center">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="right"><hr noshade size="1">
    </td>
  <td align="center"><hr noshade size="1">
    </td>
  <td align="left"><hr noshade size="1">
    </td>
  <td align="right"><hr noshade size="1">
    </td>
  <td align="center"><hr noshade size="1">
    </td>
  <td align="left"><hr noshade size="1">
    </td>
  <td align="right"><hr noshade size="1">
    </td>
  <td align="center"><hr noshade size="1">
    </td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left" valign="bottom"><font size="2" face="serif"><b>Name and<br>Principal Position</b></font></td>
<td width="2%" align="left" valign="bottom">&nbsp;</td>
<td width="1%" align="right" valign="bottom">&nbsp;</td>
<td width="10%" align="center" valign="bottom"><font size="2" face="serif"><b>Fiscal Year</b></font></td>
<td width="2%" align="left" valign="bottom">&nbsp;</td>
<td width="1%" align="right" valign="bottom">&nbsp;</td>
<td width="10%" align="center" valign="bottom"><font size="2" face="serif"><b>Salary <br>($)</b></font></td>
<td width="2%" align="left" valign="bottom">&nbsp;</td>
<td width="1%" align="right" valign="bottom">&nbsp;</td>
<td width="10%" align="center" valign="bottom"><font size="2" face="serif"><b>Bonus <br>($) (1)</b></font></td>
<td width="2%" align="left" valign="bottom">&nbsp;</td>
<td width="1%" align="right" valign="bottom">&nbsp;</td>
<td width="10%" align="center" valign="bottom"><font size="2" face="serif"><b>All Other<br>
Compensation ($) (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">2004</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 269,500</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 39,000</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"> 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, Chief Financial Officer and President</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">28,719</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">2002</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">190,254</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">49,500</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">David Gordon</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="center"><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"> 224,400</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 39,000</font></td>
<td align="left">&nbsp;</td>
<td align="right"><font size="2" face="serif">$</font></td>
<td align="right"><font size="2" face="serif"> 9,887</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">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">9,887</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">2002</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">153,467</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">49,500</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">&#151;</font></td>
<td align="left">&nbsp;</td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td colspan="2"><hr align="left" width="20%" 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 as bonuses were earned in the fiscal year shown.</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 by Coffee Holding 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 2004.  During that year, salaries and bonuses were determined by the Board of Directors.  Andrew Gordon&#8217;s current base annual salary is $290,000 and will be increased to $325,000 after completion of the offering.  David Gordon&#8217;s current base annual salary is $275,000 and will be increased to $300,000 after completion of the offering.  Once established, the Compensation Committee will determine the salaries and bonuses of Andrew Gordon, David Gordon and our other executive officers, subject to the terms of their employment agreements.</font></p>

<p align="left"><font size="2" face="serif"><b>Employment Agreements</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Concurrently with the completion of this offering, we intend to enter into employment agreements with Andrew Gordon to secure his continued service as President, Chief Executive Officer and Chief Financial Officer and with David Gordon to secure his continued service as Executive Vice President &#150; Operations.  These employment agreements will have rolling three-year terms that will begin at the conclusion of the offering.  These agreements may be converted to a fixed three-year term by the decision of our Board of Directors or the executive.  These agreements will provide for minimum annual salaries of $325,000 and $300,000, respectively, discretionary cash bonuses, and participation on generally applicable terms
and conditions in other compensation and fringe benefit plans.  They also guarantee customary corporate indemnification and errors and omissions insurance coverage throughout the employment term and thereafter for so long as the executives are subject to liability for such service to the extent permissible by the Nevada Revised Statutes.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The terms of the proposed employment agreements will provide that each executive will be entitled to severance benefits if his employment is terminated without &#8220;cause&#8221; or if he resigns for &#8220;good reason&#8221; or following a &#8220;change in control&#8221; (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 &#8220;cause&#8221; or resignation without &#8220;good
reason,&#8221; 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 &#8220;excess parachute payment&#8221; under current federal tax laws.  Federal tax laws impose a 20% excise tax, payable by each executive, on excess parachute payments.  Under the terms of the proposed employment agreements, we would reimburse the executives for the amount of this excise tax and would make an additional gross-up payment so that, after payment of the excise tax and all income and excise taxes imposed on the
reimbursement and gross-up payments, the executives will retain approximately the same net-after tax amounts under the employment agreement that they would have retained if there were no 20% excise tax.  The effect of this provision is that we, and not the executives, bear the financial cost of the excise tax and we could not claim a federal income tax deduction for an excess parachute payment, excise tax reimbursement or gross-up payment.</font></p>
<p align="left"><font size="2" face="serif"><b>Stock Option Plan</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a stock option plan, Coffee Holding Co., Inc. 1998  Stock Option Plan, under which non-qualified and incentive stock options to purchase shares of common stock may be granted to our directors, officers and other key employees and consultants.  The plan was adopted by our Board of Directors and approved by our stockholders on February 10, 1998.  On June 21, 2004, the plan was amended by our Board of Directors to reduce the number of shares of common stock reserved for issuance under the plan from 2,000,000 to 800,000, subject to adjustment for stock splits, stock dividends, reorganizations, mergers, recapitalizations or other capital adjustments. The plan is administered by our Board of Directors which may
delegate our powers to a committee of the Board.  No options may be granted after February 10, 2008.  The Compensation Committee will determine, at the time of grant, the purchase price of shares issuable pursuant to exercise of stock options; provided that the purchase price of a share of common stock under incentive stock options shall not be less than the fair market value of a share on the date the option is granted.  Unless earlier terminated due to termination of employment or death or disability of the optionee, each stock option shall terminate no later than ten years from the date on which it is granted.  Options are transferable only by will or the laws of descent and distribution.  No options have been granted under the plan.</font></p>
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<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&#8217; fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action or if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action, had no reasonable cause to believe his conduct was unlawful. This discretionary indemnification, unless ordered by a court, may be made by the corporation only if the indemnification is proper under the circumstances as determined by the stockholders, the board of directors consisting of members who were not parties to the proceeding, or by independent legal counsel.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A corporation may similarly indemnify a person described above who was or is a party or is threatened to be made a party to any threatened, pending or completed action brought by or in the right of the corporation to procure a judgment in our favor. However, indemnification may not be made for any claim, issue or matter as to which such person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of
the case, the person is fairly and reasonably entitled to be indemnified for such expenses as the court deems proper.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or preceding referred to above, or in defense of any claim, issue or matter herein, the corporation shall indemnify him against expenses, including attorneys&#8217; 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="center"><font size="2" face="serif">48</font></p>
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<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 the date of this prospectus 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, nominee for 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 the date of this prospectus.  As used in this prospectus, &#8220;voting power&#8221; is the power to vote or direct the voting of shares and &#8220;investment power&#8221; 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 5,399,650 shares outstanding, respectively.  The address of each beneficial owner is c/o Coffee Holding Co., Inc., 4401 First Avenue, Brooklyn, New York 11232-0005.</font></p>
<table width="100%" border="0" align="center" cellpadding="0" cellspacing="0">
<tr valign="bottom" bgcolor="#FFFFFF">
<td align="left"><font size="1" face="serif"><b>Name of Beneficial Owners,<br>
  Officers and Directors</b></font></td>
<td align="left"><font size="1">&nbsp;</font></td>
<td align="center"><font size="1">&nbsp;</font></td>
<td align="center"><font size="1" face="serif"><b>Number of<br>
  Shares Owned<br>
Before Offering</b></font></td>
<td align="center"><font size="1">&nbsp;</font></td>
<td align="center"><font size="1">&nbsp;</font></td>
<td align="center"><font size="1" face="serif"><b>Percentage <br>
  Owned Before<br>
Offering</b></font></td>
<td align="center"><font size="1">&nbsp;</font></td>
<td align="center"><font size="1">&nbsp;</font></td>
<td align="center"><font size="1" face="serif"><b>Percentage<br>
Owned After<br>
Offering</b></font></td>
<td align="center"><font size="1">&nbsp;</font></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>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Andrew Gordon</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="1%">&nbsp;</td>
<td align="right" width="10%"><font size="2" face="serif">1,039,408</font></td>
<td align="left" width="2%">&nbsp;</td>
<td align="right" width="1%">&nbsp;</td>
<td align="right" width="10%"><font size="2" face="serif">26.0</font></td>
<td align="left" width="2%"><font size="2" face="serif">%</font></td>
<td align="right" width="1%">&nbsp;</td>
<td align="right" width="10%"><font size="2" face="serif">19.2</font></td>
<td align="left" width="2%"><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">1,039,408</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">26.0</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">19.2</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">Gerard DeCapua</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">100</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
<td align="right">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</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="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">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
<td align="right">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</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="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">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
<td align="right">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Sal Reda</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">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
<td align="right">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</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="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">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></td>
<td align="right">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">*</font></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">1,099,784</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">27.5</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">20.4</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">1,099,784</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">27.5</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">20.4</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 (5 persons)</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">2,079,116</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">52.0</font></td>
<td align="left"><font size="2" face="serif">%</font></td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">38.5</font></td>
<td align="left"><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" align="left"><hr align="left" width="20%" size="1" noshade>
    </td>
  </tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">*</font></td>
<td align="left">
<font size="2" face="serif"> Less than 1%.</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">(1)</font></td>
<td align="left">
<font size="2" face="serif"> Includes 450,092 shares owned by Mrs. Gordon directly and 649,692 shares owned by Mrs. Gordon&#8217;s husband, Sterling A. Gordon.  Mrs. Gordon is the mother of Andrew Gordon and David Gordon.  </font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%"><font size="2" face="serif">(2)</font></td>
<td align="left">
<font size="2" face="serif"> Includes 649,692 shares owned by Mr. Gordon directly and 450,092 shares owned by Mr. Gordon&#8217;s wife, Rachelle L. Gordon.  Mr. Gordon is the father of Andrew Gordon and David Gordon.</font></td>
</tr>
</table>

<p align="center"><font size="2" face="serif">49</font></p>
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<p align="center"><font size="2" face="serif"><b>CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS</b></font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, certain of our stockholders, directors and officers have made loans to us for working capital purposes.  </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At October 31, 2003, we had loans payable to certain of our stockholders, directors and officers, in the aggregate principal amount of $79,646.  The loans, which were unsecured, due on demand and bore interest at a rate of 6% per year, were repaid prior to October 31, 2004.  </font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November 2004, we refinanced our credit facility by entering into a new financing arrangement with Merrill Lynch Business Financial Services Inc.  This line of credit is for a maximum of $4,000,000, expires on October 31, 2005 and requires monthly interest payments at a rate of LIBOR plus 2.4% (an effective rate of 4.99% at January 31, 2005).  This loan is secured by a blanket lien on all of our assets and the personal guarantees of Andrew Gordon and David Gordon, two of our officers and directors. </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 $6.1 million for green coffee purchases in fiscal 2004. All
    purchases are made on arms&#8217; 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>
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<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>

<p align="left"><font size="2" face="serif"><b>Underwriters&#8217; 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 underwriters to purchase from us up to 140,000 shares of our common stock.  These warrants are exercisable at a price per share equal to 120% 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 &#8220;Where You Can Find Additional Information&#8221; as to how to review copies of these documents.</font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Directors.</i>&nbsp;&nbsp;&nbsp;&nbsp;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 outstanding stock entitled to vote could remove the entire Board and replace it with persons of such holders&#8217; choice.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Restrictions on Call of Special Meetings.</i>&nbsp;&nbsp;&nbsp;&nbsp;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>&nbsp;&nbsp;&nbsp;&nbsp;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>&nbsp;&nbsp;&nbsp;&nbsp;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>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Higher
      Stockholder Vote Required to Approve Certain Business Combinations</i>.&nbsp;&nbsp;&nbsp;&nbsp;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 &#8220;Business Combinations&#8221; 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 an 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>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#8220;Business Combination&#8221; 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&#8217; assets:</font></p>

<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="6%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">(a)</font></td>
<td align="left">
<font size="2" face="serif">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="6%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">(b)</font></td>
<td align="left">
<font size="2" face="serif">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="6%"><font size="2" face="serif">&nbsp;</font></td>
<td width="3%"><font size="2" face="serif">(c)</font></td>
<td align="left">
<font size="2" face="serif">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&#8217; 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>

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<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>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#8220;Interested Stockholder,&#8221; 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>&nbsp;&nbsp;&nbsp;&nbsp;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>

<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">make a tender offer or exchange offer for any of our outstanding equity securities;</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">merge or consolidate us with another corporation or entity; or</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td></td>
  <td>&nbsp;</td>
  <td>&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">purchase or otherwise acquire all or substantially all of our properties and assets,</font></td>
</tr>
</table>

<p align="left"><font size="2" face="serif">in connection with the exercise of its judgment in determining what is in the best interest of us and our stockholders, give due consideration to the extent permitted by law to all relevant factors, including, without limitation, our employees, suppliers, creditors and customers; the economy of the state, region and nation; community and societal considerations; and the long- and short-term interests of us and our stockholders, including the possibility that these interests will best be served by our continued independence.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By having these standards in our proposed Articles of Incorporation, the Board of Directors may be in a stronger position to oppose such a transaction if our Board of Directors concludes that the transaction would not be in our best interests, even if the price offered is significantly greater than the market price of any of our equity securities.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Amendment to Proposed Articles of Incorporation and Bylaws.</i> The proposed Articles of Incorporation may be amended by the affirmative vote of 80% of the total votes eligible to be cast by stockholders, voting together as a single class; provided, however, that if at least a majority of our Board of Directors recommend approval of the amendment, then such amendment shall require the affirmative vote of only a majority of the total votes eligible to cast by stockholder, voting together as a single class.</font></p>
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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bylaws may be amended by the affirmative vote of a majority of our Board of Directors or by the affirmative vote of at least 80% of the total votes eligible to be cast by stockholders, voting together as a single class.  These provisions could have the effect of discouraging a tender offer or other takeover attempt where the ability to make fundamental changes through Bylaw amendments is an important element of the takeover strategy of the acquiror.</font></p>
<p align="left"><font size="2" face="serif"><b>Proposed Employment Agreements </b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The provisions described above are intended to reduce our vulnerability to takeover attempts and other transactions which have not been negotiated with and approved by members of our Board of Directors. The provisions of the proposed employment agreements may also discourage takeover attempts by increasing the costs to be incurred by us in the event of a takeover.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors believes that the provisions of the proposed Articles of Incorporation, Bylaws and employment agreements are in the best interests of us and our stockholders.  An unsolicited non-negotiated proposal can seriously disrupt the business and management of a corporation and cause it great expense. Accordingly, the Board of Directors believes it is in the best interests of us and our stockholders to encourage potential acquirors to negotiate directly with management and that these provisions will encourage such negotiations and discourage non-negotiated takeover attempts. It is also the Board of Directors&#8217; 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&#8217; 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&#8217; 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&#8217;s date
of acquiring shares, or (3) the consideration to be received by all of the holders of outstanding stock of the corporation not beneficially owned by the Interested Stockholder equals or exceeds thresholds set forth by the Nevada Revised Statutes.</font></p>

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<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The power of the Board of Directors to issue and determine the designations, rights, preferences, and powers of each series of preferred stock may be utilized as a method of discouraging, delaying or preventing a change of control of us.</font></p>
<p align="left"><font size="2" face="serif"><b>Transfer Agent and Registrar</b></font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
    transfer agent and registrar for our common stock is OTR, Inc. Its address
    is 1000 SW Broadway, Suite 920, Portland, Oregon 97205 and its telephone
    number
is (503) 225-0375.</font></p>
<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 underwriters&#8217; warrants), we will have 5,399,650 shares of common stock issued and outstanding (5,609,650 shares if the underwriters&#8217; over-allotment option is exercised in full). Of those shares, the 1,400,000 sold in this offering (1,610,000 if the underwriters&#8217; 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 &#8220;restricted securities&#8221; 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 2,079,116 held by our officers and directors and an additional 1,380,384 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 underwriters.  </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 &#8220;SEC&#8221;).
    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 underwriters, holders of approximately 3,600,000
    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;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>



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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;Joseph Stevens &amp; Company, Inc. is the representative of the underwriters of the offering described in this prospectus.  We have entered into an underwriting agreement with Joseph Stevens, on behalf of the underwriters, 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 underwriters have agreed to purchase, and we have agreed to sell, the number of shares of our common stock listed below:</font></p>
<table width="80%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="bottom" bgcolor="#FFFFFF">
<td align="left"><b><font size="1" face="serif"><u>Underwriter</u></font></b></td>
<td width="2%" align="left">&nbsp;</td>
<td colspan="2" align="center"><b><font size="1" face="serif">Number of Shares</font></b></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top">
<td></td>
<td></td>
<td width="2%"><hr noshade size="1"></td>
<td width="8%"><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>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Joseph Stevens &amp; Company, Inc.</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">Maxim Group LLC</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="left"><font size="2" face="serif">&nbsp;</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><div style="margin-left:6%; text-indent:-3%"><font size="2" face="serif">Total</font></div></td>
<td align="left">&nbsp;</td>
<td align="right">&nbsp;</td>
<td align="right"><font size="2" face="serif">1,400,000</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>
</tr>
</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 underwriters are 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 underwriters to purchase additional shares of common stock in this<b></b>offering.  The underwriting agreement also provides that the obligations of the underwriters 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 underwriters an option,
    exercisable for 45 days after the date of this prospectus, to purchase up
    to an additional 210,000 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 underwriters from us. The underwriters may exercise the
    option solely to cover over-allotments, if any, in the sale of shares of
    common stock that the underwriters have 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,
    assuming an initial public offering price of $5.00 per share, will be $8,050,000,
    $724,500 and
$7,325,500, respectively.</font></p>

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<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 underwriters&#8217; over-allotment option.</font></p>

<table width="80%" border="0" align="center" cellpadding="0" cellspacing="0">
  <tr valign="top">
    <td align="left"><font size="1" face="serif">&nbsp;</font></td>
    <td align="left"><font size="1" face="serif">&nbsp;</font></td>
    <td colspan="2" align="center" valign="bottom"><font size="1" face="serif">&nbsp;</font><font size="1" face="serif"><b>Without Option </b></font></td>
    <td align="center" valign="bottom"><font size="1" face="serif">&nbsp;</font></td>
    <td align="center" valign="bottom"><font size="1" face="serif">&nbsp;</font></td>
    <td align="center" valign="bottom"><font size="1" face="serif"><b>With Option</b></font></td>
  </tr>
  <td align="left"><font size="1" face="serif">&nbsp;</font></td>
  <td align="left"><font size="1" face="serif">&nbsp;</font></td>
  <td align="left"><hr noshade size="1"></td>
  <td align="left"><hr noshade size="1">
    </td>
  <td align="left"><font size="1" face="serif">&nbsp;</font></td>
  <td align="left">    <hr noshade size="1">
    </td>
  <td align="left">    <hr noshade size="1">
    </td>
  <td align="left"><font size="1" face="serif">&nbsp;</font></td>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">Per Share</font></td>
    <td align="left" width="2%"><font size="1" face="serif">&nbsp;</font></td>
    <td align="left" width="2%"><font size="2" face="serif">$</font></td>
    <td align="left" width="8%"><font size="1" face="serif">&nbsp;</font></td>
    <td align="left" width="2%"><font size="1" face="serif">&nbsp;</font></td>
    <td align="left" width="2%"><font size="2" face="serif"> $</font></td>
    <td align="left" width="8%"><font size="1" face="serif">&nbsp;</font></td>
    <td align="left" width="2%"><font size="1" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">Total</font></td>
    <td align="left"><font size="1" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">$ </font></td>
    <td align="left"><font size="1" face="serif">&nbsp;</font></td>
    <td align="left"><font size="1" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">$</font></td>
    <td align="left"><font size="1" face="serif">&nbsp;</font></td>
    <td align="left"><font size="1" face="serif">&nbsp;</font></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 and not taking into consideration
    the underwriters&#8217; over-allotment
allowance, will be approximately $575,000.</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The underwriters 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 underwriters may allow, and such dealers may reallow, a concession not in excess of $[ ] per share on sales to certain other dealers.  If all of the shares are not sold at the initial public offering price, the underwriters may change the offering price and the other selling terms.  If the terms of the offering are changed prior to the completion of the offering, we would either
amend or supplement the prospectus, as required by the securities laws, to disclose the changes to the offering price and other selling terms.  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 underwriters have 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 underwriters 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;In connection with this offering, the underwriters may distribute prospectuses electronically.  No forms of prospectus other than printed prospectuses and electronically distributed prospectuses that are printable in Adobe PDF format will be used in connection with this offering.</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 &#8220;JVA&#8221;.</font></p>
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<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 underwriters against specified liabilities, including liabilities under the Securities Act of 1933, and for contribution by us and the underwriters 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>Underwriters&#8217; 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 underwriters 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 underwriters 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
    underwriters), including any common stock purchased on exercise of the over-allotment
    option. Following this offering, we will enter into a financial advisory
agreement with the underwriters, 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 underwriters to purchase from us up to 140,000 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 120% 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.  The exercise price of the warrants was
negotiated between us and the underwriters as part of the underwriters&#8217; compensation in the offering.</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 3,600,000 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 underwriters. The underwriters have no present intention
to waive or shorten the lock-up period. The underwriters&#8217; determination
to release all or any portion of the shares from the lock-up agreements will
depend on several factors, including, but not limited to, the market price and
demand for our common stock and the general condition of the securities markets.
However, the underwriters&#8217; decision is arbitrary and may not be based on
any specific parameters.</font></p>

<p align="center"><font size="2" face="serif">59</font></p>
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<div style="page-break-before:always"></div>
<page> <a name="p60"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></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 underwriters to bid for and to purchase shares of our common stock.  As an exception to these rules, the underwriters 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 underwriters may engage in over-allotment sales, syndicate covering transactions, stabilizing transactions and penalty bids in accordance with Regulation M.</font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="3%">
<font size="2" face="serif">&nbsp;</font></td>
<td width="3%">
<font size="2" face="serif">&#149;</font></td>
<td>
<font size="2" face="serif">Over-allotments occur when the underwriters sell more of our shares than they purchase from us in this offering.  In order to cover the resulting short position, the underwriters may exercise the over-allotment option described above.  </font></td>
</tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&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>
<font size="2" face="serif">Additionally, the underwriters may engage in syndicate covering transactions.  Syndicate covering transactions are bids for or purchases of our common stock on the open market by an 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>
</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>
<font size="2" face="serif">Stabilizing transactions consist of bids or purchases made by the underwriters 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>
</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>
<font size="2" face="serif">A penalty bid is an arrangement permitting the underwriters to reclaim the selling concession that would otherwise accrue to a selected dealer if the common stock originally sold by the selected dealer was later repurchased by the underwriters and therefore was not effectively sold to the public by such underwriters.</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 underwriters 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 underwriters make any representation that the underwriters 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 underwriters in connection with this offering.</font></p>

<p align="center"><font size="2" face="serif">60</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page> <a name="p61"></a>
<p><a href="#contents"><font size="2">Back to Contents</font></a></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, 2004 and 2003 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
&#8220;<u>http://www.sec.gov.</u>&#8221;</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have filed with the SEC a registration statement on Form SB-2 and related exhibits under the Securities Act of 1933, as amended, with respect to the common stock offered in this document.  As permitted by the rules and regulations of the SEC, this document does not contain all the information set forth in the registration statement and related exhibits.  You may examine the registration statement and exhibits without charge at the Public Reference Room of the SEC and you may obtain copies from the SEC at prescribed rates.</font></p>
<p align="center"><font face="serif" size="2">61</font></p>
<hr noshade align="center" width="100%" size="2">
<div style="page-break-before:always"></div>
<page>
<p align="left"><a name="f1"></a> </p>
<p><a href="#f1"><font size="2">Back to Index</font></a></p>

<p align="center"><font size="2" face="serif"><b>COFFEE HOLDING CO., INC.</b></font></p>
<p align="center"><font size="2" face="serif"><b>INDEX TO FINANCIAL STATEMENTS</b></font></p>
<p align="center"><font size="2" face="serif"></font></p>
<p align="left"><font size="2" face="serif"><b>FINANCIAL STATEMENTS: </b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top" bgcolor="#FFFFFF">
    <td width="6%" align="left">&nbsp;</td>
    <td width="93%" align="left">&nbsp;</td>
    <td align="left"><div align="right"><font size="2" face="serif"><b>PAGE</b></font></div>
    </td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><a href="#f2"></a></td>
    <td align="left"><a href="#f2"><font size="2" face="serif">REPORT OF INDEPENDENT
          REGISTERED PUBLIC ACCOUNTANTS</font></a></td>
    <td width="7%" align="right"><a href="#f2"><font size="2" face="serif">F-2</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><a href="#f3"></a></td>
    <td align="left"><a href="#f3"><font size="2" face="serif">BALANCE SHEETS
          AS OF OCTOBER 31, 2004 AND 2003</font></a></td>
    <td align="right"><a href="#f3"><font size="2" face="serif">F-3</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td height="20" align="left"><a href="#f4"></a></td>
    <td align="left"><a href="#f4"><font size="2" face="serif">STATEMENTS OF
          OPERATIONS &#150; YEARS ENDED OCTOBER 31, 2004 AND 2003</font></a></td>
    <td align="right"><a href="#f4"><font size="2" face="serif">F-4</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><a href="#f5"></a></td>
    <td align="left"><a href="#f5"><font size="2" face="serif">STATEMENTS OF
          CHANGES IN STOCKHOLDERS&#8217; EQUITY - YEARS ENDED OCTOBER 31, 2004
          AND 2003</font></a></td>
    <td align="right"><a href="#f5"><font size="2" face="serif">F-5</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><a href="#f6"></a></td>
    <td align="left"><a href="#f6"><font size="2" face="serif">STATEMENTS OF
          CASH FLOWS &#150; YEARS ENDED OCTOBER 31, 2004 AND 2003</font></a></td>
    <td align="right"><a href="#f6"><font size="2" face="serif">F-6</font></a></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><a href="#f7"></a></td>
    <td align="left"><a href="#f7"><font size="2" face="serif">NOTES TO FINANCIAL
          STATEMENTS</font></a></td>
    <td align="right"><a href="#f7"><font size="2" face="serif">F-7/18</font></a></td>
  </tr>
</table>
<p align="center"><font size="2" face="serif">* * *</font></p>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</font></a></p>

<p align="center"><font size="2" face="serif"><b>REPORT OF INDEPENDENT REGISTERED
      PUBLIC ACCOUNTANTS</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 sheets of Coffee Holding Co., Inc. as of October 31, 2004 and 2003
    and the related statements of operations, changes in stockholders&#8217; equity
    and cash flows for each of the two years in the period ended October 31,
    2004. 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, 2004 and 2003 and
    the results of its operations and cash flows for each of the two years in
    the period ended October 31, 2004, in conformity with accounting principles
    generally accepted in the United States of America. </font></p>
<div style="margin-left: 60%"><font size="2" face="Times New Roman, Times, serif">&nbsp;<u>/s/
      Lazar Levine &amp; Felix, LLP&nbsp;&nbsp;&nbsp;&nbsp;</u> </font> <br>
        <font size="2" face="Times New Roman, Times, serif">&nbsp;LAZAR LEVINE &amp; FELIX,
        LLP </font> </div>
<p align="left"><font size="2" face="serif"></font><font size="2" face="serif"></font></p>
<p align="left"><font size="2" face="serif">New York, New York<br>
</font><font size="2" face="serif">December 10, 2004 </font></p>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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<br>
</b></font><font size="2" face="serif"><b>OCTOBER 31, 2004 AND 2003</b></font></p>
<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;</p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top" >
    <td width="3%" align="left">&nbsp;</td>
    <td align="left"><div align="center"><font size="2">&nbsp;<font face="serif">-
            ASSETS -</font></font></div>
    </td>
    <td align="left">&nbsp;</td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td colspan="2" align="left"><font size="2" face="serif">Current assets:</font></td>
    <td align="left" width="2%"><font size="2">&nbsp;</font></td>
    <td width="1%" align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td width="10%" align="right" valign="bottom"><div align="center"><font size="1"><b><font face="serif">2004</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="1"><b>&nbsp;</b></font></div>
    </td>
    <td width="1%" align="right" valign="bottom"><div align="center"><font size="1"><b>&nbsp;</b></font></div>
    </td>
    <td width="10%" align="right" valign="bottom"><div align="center"><font size="1"><b><font face="serif">2003</font></b></font></div>
    </td>
    <td width="2%" align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 642,145</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 73,832</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">Due from broker</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">873,901</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">894,123</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><div style="margin-left: 3%; text-indent: -3%"><font size="2" face="serif">Accounts
          receivable, net of allowance for doubtful accounts of $150,349 and
          $119,435 for 2004 and 2003, respectively</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">4,005,755</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,154,683</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">Inventories</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,258,289</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">1,781,424</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">676,395</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">431,432</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">Deferred tax asset</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">136,900</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">103,700</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><div style="margin-left: 9%; text-indent: -3%"><font size="2" face="serif">Total
          current assets</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">8,593,385</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">5,439,194</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td colspan="2" align="left"><div style="margin-left: 3%; text-indent: -3%"><font size="2" face="serif">Property
          and equipment, at cost, net of accumulated depreciation of $3,354,418
          and $2,991,206 for 2004 and 2003, respectively</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,286,936</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">1,579,294</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="2" align="left"><font size="2" face="serif">Deposits and other
        assets</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">33,496</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">16,796</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 10,913,817</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 7,035,284</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><div align="center"><font size="2" face="serif">- LIABILITIES
          AND STOCKHOLDERS&#8217; EQUITY -</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="2" align="left"><font size="2" face="serif">Current liabilities:</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 252,000</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 84,000</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <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"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">111,060</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">130,551</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,685,045</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">Accounts payable and accrued
        expenses</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">4,658,836</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">1,861,447</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">160,000</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td colspan="2" align="left"><div style="margin-left: 12%; text-indent: -3%"><font size="2" face="serif">Total
          current liabilities</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">7,866,941</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,075,998</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="2" align="left"><font size="2" face="serif">Term loan, net of
        current portion</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">252,000</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td colspan="2" align="left"><font size="2" face="serif">Obligations under
        capital lease, net of current portion</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">5,855</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">91,895</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="2" align="left"><font size="2" face="serif">Line of credit borrowings</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,376,066</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td colspan="2" align="left"><font size="2" face="serif">Loans from related
        parties</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">79,646</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="2" align="left"><font size="2" face="serif">Income taxes payable-deferred</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">45,200</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">39,200</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><div style="margin-left: 9%; text-indent: -3%"><font size="2" face="serif">Total
          liabilities</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">7,917,996</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">4,914,805</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="2" align="left"><font size="2" face="serif">Commitments and
        contingencies</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="2" align="left"><font size="2" face="serif">Stockholders&#8217; equity:</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">&nbsp;&#151;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">&nbsp;&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <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 for 2004 and 2003, respectively</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">4,000</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">4,000</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">867,887</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">867,887</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">Retained earnings</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,123,934</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">1,248,592</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><div style="margin-left: 9%; text-indent: -3%"><font size="2" face="serif">Total
          stockholders&#8217; equity</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,995,821</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,120,479</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 10,913,817</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 7,035,284</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td></td>
    <td valign="bottom"><hr noshade size="2">
    </td>
    <td valign="bottom"><hr noshade size="2">
    </td>
    <td></td>
    <td valign="bottom"><hr noshade size="2">
    </td>
    <td valign="bottom"><hr noshade size="2">
    </td>
    <td></td>
  </tr>
</table>
<p align="center"><font size="2" face="serif">The accompanying notes are an integral
    part of these financial statements. </font></p>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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 OPERATIONS<br>
</b></font><font size="2" face="serif"><b>YEARS ENDED OCTOBER 31, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" 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 align="right"><div align="center"><b><font size="1" face="serif">2004</font></b></div>
    </td>
    <td align="left"><div align="center"></div>
    </td>
    <td align="right"><div align="center"></div>
    </td>
    <td align="right"><div align="center"><b><font size="1" face="serif">2003</font></b></div>
    </td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="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" >
    <td align="left"><font size="2" face="serif">Net sales</font></td>
    <td align="left" width="2%">&nbsp;</td>
    <td width="1%" align="right"><font size="2" face="serif">$</font></td>
    <td width="10%" align="right"><font size="2" face="serif"> 28,030,389</font></td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="1%" align="right"><font size="2" face="serif">$</font></td>
    <td width="10%" align="right"><font size="2" face="serif"> 20,239,867</font></td>
    <td width="2%" align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Cost of sales</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">20,927,506</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">15,373,127</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <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">7,102,833</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">4,866,740</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Operating expenses:</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Selling,
          general and administrative</font></div>
    </td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">4,777,809</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">3,501,465</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Officers&#8217; salaries</font></div>
    </td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">622,573</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">490,860</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><div style="margin-left: 9%; text-indent: -3%"><font size="2" face="serif">Totals</font></div>
    </td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">5,400,382</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">3,992,325</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <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">1,702,501</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">874,415</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Other income (expense):</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Interest
	income</font></div></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">11,966</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">9,000</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Other
	income</font></div></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">&#151;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">1,640</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">Interest
	expense</font></div></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">(145,930</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">(146,607</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif"><u>Totals</u></font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">(133,964</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">(135,967</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>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Income before income taxes</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">1,568,537</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">738,448</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <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">693,195</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">116,366</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Net income</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 875,342</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 622,082</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">Basic and diluted earnings per
        share</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> .22</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> .16</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Weighted average common shares
        outstanding</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">3,999,650</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">3,999,650</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td></td>
  </tr>
</table>
<p align="center"><font size="2" face="serif">The accompanying notes are an integral
    part of these financial statements. </font></p>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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&#8217; EQUITY<br>
</b></font><font size="2" face="serif"><b>YEARS ENDED OCTOBER 31, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top" >
    <td align="left"><div align="center"></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td colspan="4" align="right" valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Common
            Stock</font></b></div>
        <div align="center"><font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
  </tr>
  <tr valign="top" >
    <td align="left"><div align="center"></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center">
        <hr noshade size="1">
        <font size="1"></font></div>
    </td>
    <td colspan="4" align="right" valign="bottom"><div align="center">
        <hr noshade size="1">
        <font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
  </tr>
  <tr valign="top" >
    <td align="left"><div align="center"></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td colspan="4" align="right" valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">&nbsp;$.001
            Par Value</font></b></div>
        <div align="center"><font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
  </tr>
  <tr valign="top" >
    <td align="left"><div align="center"></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center">
        <hr noshade size="1">
        <font size="1"></font></div>
    </td>
    <td colspan="4" align="right" valign="bottom"><div align="center">
        <hr noshade size="1">
        <font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
        <div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
  </tr>
  <tr valign="top" >
    <td align="left"><div align="center"></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><b><font size="2"><font size="1" face="Times New Roman, Times, serif">Number
              of<br>
        Shares </font></font></b></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Amount</font></b></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><b><font size="2"><font size="1" face="Times New Roman, Times, serif">Additional<br>
        Paid &#150; in<br>
        Capital </font> </font></b></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif"><br>
      </font></b></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"><b><font face="Times New Roman, Times, serif">Retained<br>
        Earnings</font></b></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">Total</font></b></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1"></font></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="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" >
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">Balance, October 31, 2002</font></td>
    <td align="left" width="2%"><font size="2">&nbsp;</font></td>
    <td width="1%" align="right"><font size="2">&nbsp;</font></td>
    <td width="8%" align="right"><font size="2" face="serif">3,999,650</font></td>
    <td width="2%" align="left"><font size="2">&nbsp;</font></td>
    <td width="1%" 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"><font size="2">&nbsp;</font></td>
    <td width="1%" align="right"><font size="2" face="serif">$</font></td>
    <td width="8%" align="right"><font size="2" face="serif"> 867,887</font></td>
    <td width="2%" align="left"><font size="2">&nbsp;</font></td>
    <td width="1%" align="right"><font size="2" face="serif">$</font></td>
    <td width="8%" align="right"><font size="2" face="serif"> 626,510</font></td>
    <td width="2%" align="left"><font size="2">&nbsp;</font></td>
    <td width="1%" align="right"><font size="2" face="serif">$</font></td>
    <td width="8%" align="right"><font size="2" face="serif"> 1,498,397</font></td>
    <td width="2%" align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">Net income</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">622,082</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">622,082</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">Balance, October 31, 2003</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">3,999,650</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">4,000</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">867,887</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">1,248,592</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">2,120,479</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">NET INCOME</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">875,342</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">875,342</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">BALANCE, OCTOBER 31, 2004</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">3,999,650</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 4,000</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 867,887</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 2,123,934</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 2,995,821</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
</table>
<p align="center"><font size="2" face="serif">The accompanying notes are an integral
    part of these financial statements. </font></p>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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<br>
</b></font><font size="2" face="serif"><b>YEARS ENDED OCTOBER 31, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top" bgcolor="#FFFFFF">
    <td width="3%"align="left">&nbsp;</td>
    <td width="3%"align="left"><font size="2">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td width="2%" align="left"><font size="2">&nbsp;</font></td>
    <td width="1%" align="right"><font size="2">&nbsp;</font></td>
    <td width="10%" align="left"><div align="center"><font face="Times New Roman, Times, serif"><b><font size="1">&nbsp;2004</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font face="Times New Roman, Times, serif"></font></div>
    </td>
    <td width="1%" align="right"><div align="center"><font face="Times New Roman, Times, serif"></font></div>
    </td>
    <td width="10%" align="left"><div align="center"><font face="Times New Roman, Times, serif"><b><font size="1">&nbsp;2003</font></b></font></div>
    </td>
    <td width="2%" align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <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 colspan="3"align="left"><font size="2" face="serif">Operating activities:</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</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" >
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2">&nbsp;</font><font size="2" face="serif">Net
        income</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 875,342</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 622,082</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">&nbsp;</font><font size="2" face="serif">Adjustments to reconcile net
    income to net cash (used) provided by operating</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2" face="serif">activities:</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2" face="serif">Depreciation and amortization</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">363,612</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">299,774</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Bad debts</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">30,914</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><font size="2" face="serif">Deferred taxes</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(27,200</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(38,300</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"></td>
    <td colspan="2" align="left"><font size="2" face="serif">Changes
    in operating assets and liabilities:</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Decrease (increase) in due from
        broker</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">20,222</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(125,521</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">(Increase) in accounts receivable</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(1,881,986</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(371,261</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">(Increase) in inventories</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(476,865</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(363,280</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">(Increase) in prepaid expenses
        and other current assets</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(244,963</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(348,165</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Increase (decrease) in accounts
        payable and accrued expenses</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">2,797,389</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(190,015</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Increase (decrease) in income
        taxes payable</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">160,000</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(229,540</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Net
          cash provided (used) by operating activities</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">1,616,465</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(744,226</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="3" align="left"><font size="2">&nbsp;</font><font size="2" face="serif">Investing
        activities:</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Security deposits</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(16,700</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">&#151;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Purchases of property
        and equipment</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(1,039,479</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(62,758</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Net
          cash (used) by investing activities</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(1,056,179</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(62,758</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="3" align="left"><font size="2" face="serif">Financing activities:</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Principal payments
        on term loan</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></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"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(84,000</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Advances under bank
        line of credit</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">28,108,814</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">21,358,723</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Principal payments
        under bank line of credit</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(27,799,835</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(20,304,030</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Principal payments
        of obligations under capital leases</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(221,306</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(120,521</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Repayments of advances
        from related parties</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(79,646</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">(12,924</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></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"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Net
          cash provided (used) in financing activities</font></div>
    </td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">8,027</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">837,248</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td>&nbsp;</td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td colspan="3" align="left"><font size="2" face="serif">Net increase in
        cash</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">568,313</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">30,264</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Cash, beginning
        of year</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">73,832</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">43,568</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td colspan="3" align="left"><font size="2" face="serif">Cash, end of year</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 642,145</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 73,832</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td colspan="3" align="left"><font size="2" face="serif">&nbsp;</font><font size="2" face="serif">Supplemental
        disclosure of cash flow data:</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Interest paid</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 145,930</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 143,682</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td colspan="2" align="left"><font size="2" face="serif">Income taxes paid</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 370,850</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 396,295</font></td>
    <td align="left"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td><font size="2">&nbsp;</font></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td><font size="2">&nbsp;</font></td>
  </tr>
</table>
<p align="center"><font size="2" face="serif">The accompanying notes are an integral
    part of these financial statements. </font></p>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 1 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>BUSINESS ACTIVITIES: </b></font></td>
  </tr>
  <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">Coffee Holding Co., Inc. (&#8220;Coffee&#8221;),
        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&#8217;s sales
        are primarily to customers that are located throughout the United States. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 2 &#150;</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>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>USE OF ESTIMATES: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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 align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>CASH EQUIVALENTS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Cash equivalents represent highly
        liquid investments with maturities of three months or less at the date
        of purchase. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>INVENTORIES: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Inventories are valued at the
        lower of cost (first-in, first-out basis) or market. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>PROPERTY AND EQUIPMENT: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Property and equipment are recorded
        at cost and depreciated using the straight-line method over the estimated
        useful lives of the assets. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>HEDGING: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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&#8217;s
        accounting for options and futures contracts may have the effect of increasing
        earnings volatility in any particular period. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">At October 31, 2004, the Company
        held 101 options covering an aggregate of 3,787,500 pounds of green coffee
        beans at $.75 per pound. The fair market value of these options, which
        was obtained from a major financial institution, was approximately $49,200
        at October 31, 2004. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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 size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font><font size="2" face="serif"><b> </b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 2 &#150;</b></font></td>
    <td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
          POLICIES (CONTINUED): </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td 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>HEDGING (CONTINUED): </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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
        October 31, 2004 and 2003, the Company held 90 and 183 longer-term futures
        contracts for the purchase of 3,375,000 and 6,862,500 pounds of coffee
        at an average price of $.80 and $.65 per pound, respectively. The market
        price of coffee applicable to such contracts was $.77 per pound at October
        31, 2004 and $.62 per pound at October 31, 2003. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The Company historically has
        had short term contracts with some of its customers (generally one to
        two years in duration). The Company currently has agreements with two
        of its wholesale customers in which it is the supplier at fixed prices
        for lines of private label ground coffee. The Company is the exclusive
        supplier of one of these customers. The agreements generally contain
        only pricing terms. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The Company classifies its options
        and future contracts as trading securities and accordingly, unrealized
        holding gains and losses are included in earnings and not reflected as
        a net amount in a separate component of shareholders&#8217; equity until
        realized. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Included in cost of sales and
        due from broker for the years ended October 31, 2004 and 2003, the Company
        recorded realized and unrealized gain and losses respectively, on these
        hedging contracts (using the specific identification method) as follows: </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left" valign="bottom"><div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td colspan="4" align="right" valign="bottom"><div align="center"><font size="1" face="Times New Roman, Times, serif"><b>YEARS
            ENDED OCTOBER, 31</b></font></div>
        <div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
        <div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
        <div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left" valign="bottom"><div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center">
        <hr noshade size="1">
        <font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center">
        <hr noshade size="1">
        <font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center">
        <hr noshade size="1">
        <font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center">
        <hr noshade size="1">
        <font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td align="right" valign="bottom"><div align="center">
        <hr noshade size="1">
        <font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td align="left" valign="bottom"><div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
  </tr>
  <tr valign="top" >
    <td align="left" width="8%">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td width="2%" align="left" valign="bottom"><div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td width="1%" align="right" valign="bottom"><div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
    </td>
    <td width="10%" align="right" valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2004</font></b></div>
    </td>
    <td width="2%" align="left" valign="bottom"><div align="center"></div>
    </td>
    <td width="1%" align="right" valign="bottom"><div align="center"></div>
    </td>
    <td width="10%" align="right" valign="bottom"><div align="center"><b><font size="1" face="Times New Roman, Times, serif">2003</font></b></div>
    </td>
    <td width="2%" align="left" valign="bottom"><div align="center"><font size="1" face="Times New Roman, Times, serif"></font></div>
    </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">
    <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="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">Gross realized gain</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 3,129,479</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 2,063,349</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">Gross realized loss</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> (1,415,205</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> (946,655</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">Unrealized gain and (losses)</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> (92,236</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"> (248,025</font></td>
    <td align="left"><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"><font size="2" face="serif">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>ADVERTISING</b>:</font></td>
  </tr>
  <tr valign="top">
    <td width="8%"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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 $163,007 and 143,130 in 2004 and 2003, respectively.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>INCOME TAXES:</b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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</font><font size="2" face="serif">&nbsp;plus
        or minus the change during the period in deferred tax assets and liabilities
        (see also Note 7).</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 2 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
          POLICIES (CONTINUED): </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>STOCK OPTIONS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In accordance with the provisions
        of Accounting Principles Board Opinion No. 25, &#8220;Accounting for
        Stock Issued to Employees,&#8221; 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, &#8220;Accounting for Stock-Based Compensation&#8221; (&#8220;SFAS
        123&#8221;), of net income or loss as if a fair value based method of
        accounting for stock options had been applied, if such amounts differ
        materially from the historical amounts. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>EARNINGS (LOSS) PER SHARE: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The Company presents &#8220;basic&#8221; and,
        if applicable, &#8220;diluted&#8221; earnings per common share pursuant
        to the provisions of Statement of Financial Accounting Standards No.
        128, &#8220;Earnings per Share&#8221; (&#8220;SFAS 128&#8221;) and certain
        other financial accounting pronouncements. Basic earnings per common
        share are calculated by dividing net income 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 2004 and 2003, only historical basic
        earnings per share amounts are presented in the accompanying statement
        of operations for those years. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The weighted average common
        shares outstanding used in the computation of basic earnings per share
        in 2004 and 2003 was the 3,999,650 shares of common stock actually outstanding
        during those years. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>FAIR VALUE OF FINANCIAL INSTRUMENTS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>REVENUE RECOGNITION: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The Company recognizes revenue
        in accordance with Securities and Exchange Commission Staff Accounting
        Bulletin No. 104, &#8220;Revenue Recognition&#8221; (&#8220;SAB 104&#8221;).
        Under SAB 104, 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>
  <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 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>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<p align="left"><font size="2" face="serif"><b> </b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 2 &#150;</b></font></td>
    <td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
          POLICIES (CONTINUED): </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td 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>REVENUE RECOGNITION (CONTINUED): </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Slotting fees: Certain retailers
        require the payment of slotting fees in order to obtain space for the
        Company&#8217;s products on the retailer&#8217;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>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Discounts and rebates: 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>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Volume-based incentives: 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 Company estimates the anticipated cost of the rebate
        to each underlying sales transaction with the customer. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Cooperative advertising: Under
        these arrangements, the Company will agree to reimburse the reseller
        for a portion of the costs incurred by the reseller to advertise and
        promote certain of the Company&#8217;s products. The Company 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 are included in the determination of net sales. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>MERCHANDISE COSTS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In addition to 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>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>SELLING, GENERAL AND ADMINISTRATIVE
          EXPENSES: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>SHIPPING AND HANDLING FEES
          AND COSTS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In accordance with EITF No.
        00-10 &#8220;Accounting for Shipping and Handling Fees and Costs&#8221; ,
        revenue received from shipping and handling fees is reflected in net
        sales. Costs associated with shipping product to customers aggregating
        approximately $1,197,000 and $877,000 for the years ended October 31,
        2004 and 2003, respectively is included in selling and administrative
        expenses. </font></td>
  </tr>
</table>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</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 2 &#150;</b></font></td>
    <td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
          POLICIES (CONTINUED): </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>RECENT ACCOUNTING PRONOUNCEMENTS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In March 2004, the FASB reached
        a consensus on Emerging Issues Task Force (EITF) Issue No. 03-1, &#8220;The
        Meaning of Other-Than-Temporary Impairment and Its Application to Certain
        Investments,&#8221; which provides guidance to determine the meaning
        of other-than-temporary impairment and its application to investments
        classified as either available-for-sale or held-to-maturity (including
        individual securities and investments in mutual funds), and investments
        accounted for under the cost method or the equity method. The guidance
        for evaluating whether an investment is other-than- temporarily impaired
        should be applied in other-than-temporary impairment evaluations made
        in reporting periods beginning after June 15, 2004. The adoption of Issue
        No. 03-1 has not had any impact on the Company&#8217;s financial statements
        and results of operations. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In April 2004, the EITF reached
        consensus on EITF Issue No. 03-6, &#8220;Participating Securities and
        the Two Class Method under FASB Statement No. 128&#8221; (&#147;EITF
        03-6&#8221;). EITF 03-06 addresses a number of questions regarding the
        computation of earnings per share by companies that have issued securities
        other than common stock that contractually entitle the holder to participate
        in the dividends and earnings o f the company when, and if, it declares
        dividends on its common stock. EITF 03-6 also provides further guidance
        in applying the two-class method of calculating earnings per share, clarifying
        what constitutes a participating security and how to apply the two-class
        method of computing earnings per share once it is determined that a security
        is participating, including how to allocate undistributed earnings to
        such a security. EITF 03-6 is effective for fiscal periods beginning
        after March 31, 2004 and requires retroactive restatement of prior earnings
        per share amounts. The adoption of EITF No. 03-6 has not had a material
        impact on the Company&#8217;s financial statements and results of operations. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In August 2004, Section 409
        of the Sarbanes-Oxley Act required changes and enhancements to Form 8-K
        to provide &#8220;real time&#8221; disclosure of current events for investors
        on a timelier basis. Under Sec. 409, issuers now have only 4 business
        days to file Form 8-K&#8217;s and new reporting sections have been added. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In December 2004, the FASB issued
        a revision of SFAS No. 123 &#8220;Share-Based Payment&#8221; (No. 123R).
        The statement establishes standards for the accounting for transactions
        in which an entity exchanges its equity investments for goods and services.
        It also addresses transactions in which an entity incurs liabilities
        in exchange for goods or services that are based on the fair value of
        the entity&#8217;s equity instruments or that may be settled by the issuance
        of those equity instruments. The statement does not change the accounting
        guidance for share-based payments with parties other than employees.
        The statement requires a public entity to measure the cost of employee
        service received in exchange for an award of equity instruments based
        on the grant-date fair value of the award (with limited exception). That
        cost will be recognized over the period during which an employee is required
        to provide service in exchange for the award (usually the vesting period).
        A public entity will initially measure the cost of employee services
        received in exchange for an award of a liability instrument based on
        its current fair value; the fair value of that award will be remeasured
        subsequently at each reporting date through the settlement date. Changes
        in fair value during the requisite service period will be recognized
        as compensation over that period. The grant-date for fair value of employee
        share options and similar instruments will be estimated using option-pricing
        models adjusted for the unique characteristics of these instruments.
        The Company will be required to comply with this pronouncement for periods
        beginning after December 15, 2005. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 2 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>SUMMARY OF SIGNIFICANT ACCOUNTING
          POLICIES (CONTINUED):</b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td 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>RECENT ACCOUNTING PRONOUNCEMENTS
          (CONTINUED): </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In November 2004, the FASB issued
        Statement No. 151, &#8220;Inventory Costs&#8221; . This statement amends
        the guidance in ARB 43 (Chapter 4 &#150; Inventory Pricing) to clarify
        the accounting for abnormal amounts of idle facility expense, freight,
        handling costs and wasted material (spoilage). SFAS No. 151 requires
        that such items be recognized as current period charges. SFAS 151 is
        effective for fiscal years beginning after June 15, 2005 and is not expected
        to have a material impact on the Company&#8217;s financial statements
        and results of operations. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In December 2004, the FASB issued
        Statement No. 152, &#8220;Accounting for Real Estate Time-Sharing Transactions&#8221; .
        This statement amends SFAS No. 66 (Accounting for Sales of Real Estate)
        and SFAS No. 67 (Accounting for Costs and Initial Rental Operations of
        Real Estate Projects). This standard, which is effective for financial
        statements for fiscal years beginning after June 15, 2005, is not applicable
        to the Company&#8217;s current operations. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In December 2004, the FASB issued
        SFAS No. 153 &#8220;Exchange of Non-monetary Assets &#150; an amendment
        of APB Opinion No. 29&#8221; . Statement 153 eliminates the exception
        to fair value for exchanges of similar productive assets and replaces
        it with a general exception for exchange transactions that do not have
        commercial substance, defined as transactions that are not expected to
        result in significant changes in the cash flows of the reporting entity.
        This statement is effective for exchanges of non-monetary assets occurring
        after June 15, 2005. The application of this statement is not expected
        to have an impact on the Company&#8217;s financial statements considering
        the Company&#8217;s intermittent participation in exchanges of non-monetary
        assets. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>RECLASSIFICATIONS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Certain accounts in the 2003
        financial statements may have been reclassified to conform to the 2004
        presentation. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 3 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>INVENTORIES:</b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Inventories at October 31, 2004
        and 2003 consisted of the following:</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top" >
    <td width="8%" align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td  align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td width="2%" align="left"><div align="center"><font size="2"></font></div>
    </td>
    <td width="1%" align="right"><div align="center"><font size="2"></font></div>
    </td>
    <td width="10%" align="right"><div align="center"><font size="1"><b><font face="serif">2004</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="2"><font size="1"></font></font></div>
    </td>
    <td width="1%" align="right"><div align="center"><font size="2"><font size="1"></font></font></div>
    </td>
    <td width="10%" align="right"><div align="center"><font size="1"><b><font face="serif">2003</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="2"></font></div>
    </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">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><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">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Packed coffee</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 668,413</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 213,062</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"><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">1,051,223</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"><font size="2" face="serif">&nbsp;</font></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">538,653</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>&nbsp;</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"><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" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></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">$</font></td>
    <td align="right"><font size="2" face="serif"> 2,258,289</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 1,781,424</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</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>&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"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top" bgcolor="#FFFFFF">
    <td width="8%"align="left"><font size="2" face="serif"><b>NOTE 4 &#150;</b></font></td>
    <td colspan="11" align="left" valign="bottom"><div align="left"><font size="2" face="serif"><b> PROPERTY
            AND EQUIPMENT: </b></font></div>
    </td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF"> &nbsp;
      <td colspan="11" align="left" valign="bottom">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF"> &nbsp;
      <td colspan="12">
      <font size="2" face="serif">Property and equipment at October 31, 2004
      and 2003 consisted of the following:</font></td> </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><div align="center"></div>
    </td>
    <td width="2%" align="left" valign="bottom"><div align="center"></div>
    </td>
    <td width="1%" align="right" valign="bottom"><div align="center"></div>
    </td>
    <td width="10%" align="left" valign="bottom"><div align="center"><b><font size="1" face="serif">&nbsp;</font></b></div>
    </td>
    <td width="2%" align="left" valign="bottom"><div align="center"></div>
    </td>
    <td width="1%" align="right" valign="bottom"><div align="center"></div>
    </td>
    <td width="10%" align="left" valign="bottom"><div align="center"><b><font size="1" face="serif">&nbsp;</font></b></div>
    </td>
    <td width="2%" align="left" valign="bottom"><div align="center"></div>
    </td>
    <td width="1%" align="right" valign="bottom"><div align="center"></div>
    </td>
    <td width="10%" align="left" valign="bottom"><div align="center"><b><font size="1" face="serif">&nbsp;</font></b></div>
    </td>
    <td width="2%" align="left" valign="bottom"><div align="center"></div>
    </td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" 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"><b><font size="1" face="serif">Estimated<br>
        Useful<br>
        Life</font></b></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"><b><font size="1" face="serif">2004</font></b></div>
    </td>
    <td align="left" 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"><b><font size="1" face="serif">&nbsp;2003</font></b></div>
    </td>
    <td align="left" valign="bottom"><div align="center"></div>
    </td>
  </tr>
  <tr valign="top">
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom"><div align="center"></div>
    </td>
    <td valign="bottom"><div align="center"></div>
    </td>
    <td valign="bottom"><hr align="center" size="1" noshade>
    </td>
    <td valign="bottom"><hr align="center" size="1" noshade>
    </td>
    <td valign="bottom"><div align="center"></div>
    </td>
    <td valign="bottom"><hr align="center" size="1" noshade>
    </td>
    <td valign="bottom"><hr align="center" size="1" noshade>
    </td>
    <td valign="bottom"><div align="center"></div>
    </td>
    <td valign="bottom"><hr align="center" size="1" noshade>
    </td>
    <td valign="bottom"><hr align="center" size="1" noshade>
    </td>
    <td valign="bottom"><div align="center"></div>
    </td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><div align="center"><b><font size="1" face="serif">&nbsp;</font></b></div>
    </td>
    <td align="left" 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"><b><font size="1" face="serif">&nbsp;</font></b></div>
    </td>
    <td align="left" 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"><b><font size="1" face="serif">&nbsp;</font></b></div>
    </td>
    <td align="left" 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"><b><font size="1" face="serif">&nbsp;</font></b></div>
    </td>
    <td align="left" valign="bottom"><div align="center"></div>
    </td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">Building and
        improvements</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">30 years</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 1,358,506</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 1,252,448</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">Machinery and
        equipment</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">7 years</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">3,444,305</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,606,859</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">Machinery and
        equipment under capital leases</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">7 years</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">458,179</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">426,404</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">Automobile</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">3 years</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">43,617</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">&#151;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">Furniture and
        fixtures</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">7 years</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">195,747</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">143,789</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom">&nbsp;</td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">5,500,354</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">&nbsp;4,429,500</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom">&nbsp;</td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><div style="margin-left: 3%; text-indent: -3%"><font size="2" face="serif">Less
          accumulated depreciation (including $172,757 arising from capital leases)</font></div>
    </td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">3,354,418</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,991,206</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom">&nbsp;</td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="right" valign="bottom">&nbsp;</td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">2,145,936</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><div align="right"><font size="2" face="serif">&nbsp;1,438,294</font></div></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">Land</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">141,000</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">141,000</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom">&nbsp;</td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><hr noshade size="1">
    </td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">Totals</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 2,286,936</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif">$</font></td>
    <td align="right" valign="bottom"><font size="2" face="serif"> 1,579,294</font></td>
    <td align="left" valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
  <tr valign="top">
    <td><font size="2">&nbsp;</font></td>
    <td valign="bottom">&nbsp;</td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="2">
    </td>
    <td valign="bottom"><hr noshade size="2">
    </td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
    <td valign="bottom"><hr noshade size="2">
    </td>
    <td valign="bottom"><hr noshade size="2">
    </td>
    <td valign="bottom"><font size="2">&nbsp;</font></td>
  </tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Depreciation expense totaled
        $ 363,612 and $ 299,774 in 2004 and 2003, respectively.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 5 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>CREDIT FACILITY AND OTHER
          BORROWINGS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td 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">As of October 31, 2004, the
        Company had a $5,750,000 credit facility provided by Wells Fargo Business
        Credit. The credit facility consisted of a $5,000,000 revolving line
        of credit and a $750,000 term loan secured by all the assets of the Company. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The line of credit provides
        for borrowing of up to 85% of the Company&#8217;s eligible trade accounts
        receivable and 60% of its eligible inventories up to a maximum of $5,000,000.
        The term loan provides for borrowings of up to the greater of 80% of
        the cost of eligible equipment or $750,000. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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 5% and 5.25% respectively, at October
        31, 2004). 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&#8217;s
        ability to continue to use the credit facility will become subject to
        its ability to meet specified financial covenants and ratios. The term
        loan, has an outstanding balance of $ 252,000 at October 31, 2004 and
        aggregate borrowing of $2,685,045 were outstanding under its credit line
        facility at October 31, 2004. The line of credit can be withdrawn at
        Wells Fargo Business Credit&#8217;s option. The Company was in compliance
        with the required financial covenants at October 31, 2004 and 2003. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 5 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>CREDIT FACILITY AND OTHER
          BORROWINGS (CONTINUED): </b></font></td>
  </tr>
  <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 credit facility contains
        covenants that place restrictions on the Company&#8217;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&#8217;s cash flow from operations be dedicated to servicing its
        debt; limit the Company&#8217;s ability to obtain additional capital
        through financings without the consent of the lender; limit the Company&#8217;s
        ability to pay dividends 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. A breach of the Company of any financial or negative covenant
        constitutes an event of default under the credit facility. The credit
        facility and the Company&#8217;s capital lease contain cross-default
        provisions. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>NEW FINANCING AGREEMENT: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In November 2004, subsequent
        to the balance sheet date, the Company agreed to a new financing arrangement
        with &#8220;Merrill Lynch Business Financial Services Inc.&#8221; and
        terminated its prior agreement with &#147;Wells Fargo Business Credit&#8221; .
        This new line of credit will be for a maximum $4,000,000, expire on October
        31, 2005 and require monthly interest payments at a rate of LIBOR plus
        2.4%. This loan will be secured by a blanket lien on all the assets of
        the Company and the personal guarantees of two of the Company&#8217;s
        officer/shareholders and will also require the Company to comply with
        various financial covenants. As of October 31, 2004, the Company was
        not yet obligated under this credit agreement. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 6 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>LOANS FROM RELATED PARTIES: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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.
        The loans were due on demand but payments were not expected to be required
        in 2004 and accordingly were reflected as long term. These loans which
        bear interest at 6% </font><font size="2" face="serif">per annum were
        repaid prior to October 31, 2004. Interest expense totaled approximately
        $ -0- and $5,400 in 2004 and 2003 respectively.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 7 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>INCOME TAXES: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</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 October 31, 2004 </font><font size="2" face="serif">and 2003 are
        as follows:</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top" >
    <td width="8%" align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td 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="right"><div align="center"><font size="1"><b><font face="serif">2004</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="1"></font></div>
    </td>
    <td width="1%" align="right"><div align="center"><font size="1"></font></div>
    </td>
    <td width="10%" align="right"><div align="center"><font size="1"><b><font face="serif">2003</font></b></font></div>
    </td>
    <td width="2%" 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">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><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">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Deferred tax assets:</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">&nbsp;</font></td>
    <td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Accounts
          receivable</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"> 61,300</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 49,100</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Inventory</font></div>
    </td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">75,600</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">54,600</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 136,900 </font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="left"><div align="right"><font size="2" face="serif">&nbsp;103,700</font></div></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
    <td></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Deferred tax liability:</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><div style="margin-left: 6%; text-indent: -3%"><font size="2" face="serif">Fixed
          assets</font></div>
    </td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 45,200</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 39,200</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</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>&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"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;<b>NOTE 7 &#150; </b></font></td>
    <td colspan="8" align="left"><font size="2" face="serif"><b>INCOME TAXES
          (CONTINUED): </b></font></td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td colspan="8" align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td align="left">&nbsp;</td>
    <td colspan="8" align="left"><font size="2" face="serif">The Company&#8217;s
        provision for income taxes in 2004 and 2003 consisted of the following:</font></td>
  </tr>
  <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="left">&nbsp;</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" >
    <td width="8%" align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td 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="right"><div align="center"><font size="1"><b><font face="serif">2004</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="1"></font></div>
    </td>
    <td width="1%" align="right"><div align="center"><font size="1"></font></div>
    </td>
    <td width="10%" align="right"><div align="center"><font size="1"><b><font face="serif">2003</font></b></font></div>
    </td>
    <td width="2%" 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">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><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">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Federal</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 468,349</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 150,004</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"><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">224,846</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">(33,638</font></td>
    <td align="left"><font size="2" face="serif">)*</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</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"><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">&nbsp;</font></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">$</font></td>
    <td align="right"><font size="2" face="serif"> 693,195</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 116,366</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</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><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>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td colspan="8"><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&#8217;s effective tax rate is as follows: </font></td>
  </tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td width="8%" align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td 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="right"><div align="center"><font size="1"><b><font face="serif">2004</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="1"></font></div>
    </td>
    <td width="1%" align="right"><div align="center"><font size="1"></font></div>
    </td>
    <td width="10%" align="right"><div align="center"><font size="1"><b><font face="serif">2003</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="1"></font></div>
    </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">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><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">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">US Federal income tax statutory
        rate</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">34</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">34</font></td>
    <td align="left"><font size="2" face="serif">%</font></td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <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">8</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</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">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Other &#150; benefit of tax
        refunds</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">2</font></td>
    <td align="left"><font size="2" face="serif">%</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">(26</font></td>
    <td align="left"><font size="2" face="serif">%)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</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"><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" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Effective tax rate</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">44</font></td>
    <td align="left"><font size="2" face="serif">%</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">16</font></td>
    <td align="left"><font size="2" face="serif">%</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</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="8%"><font size="2" face="serif"><b>NOTE 8 &#150; </b></font></td>
    <td colspan="2"><font size="2" face="serif">&nbsp;</font><font size="2" face="serif"><b>COMMITMENTS
          AND CONTINGENCIES: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td colspan="2"><font size="2" face="serif"><b>OPERATING LEASES:</b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><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 31, 2002
        and was originally renewed for an additional two years. In August 2004,
        the company renewed this lease for another year expiring on August 31,
        2005, at a monthly rental of $7,500. The lease requires the Company to
        pay utilities and other maintenance expenses. Rent charged to operations
        amounted to $59,030 and $50,076 in 2004 and 2003, respectively. Future
        minimum rental payments under this the non-cancelable operating lease
        in years subsequent to October 31, 2004 are $75,000 in 2005. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</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>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td><font size="2" face="serif">b) </font></td>
    <td align="left"><font size="2" face="serif">In February 2004, the Company
        entered into a lease for office and warehouse space in La Junta City,
        Colorado, with an unrelated third party. This lease, which is at a monthly
        rental of $8,341 beginning January 2005, expires on January 31, 2024. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</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 and thereafter are as follows: </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>
<table width="80%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top" bgcolor="#FFFFFF">
    <td width="10%" align="left">&nbsp;</td>
    <td width="4%" align="left">&nbsp;</td>
    <td width="10%" align="left">&nbsp;</td>
    <td width="18%" align="left">&nbsp;</td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="10%" align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td width="10%" align="left">&nbsp;</td>
    <td width="10%" align="left">&nbsp;</td>
    <td width="11%" align="left">&nbsp;</td>
    <td width="11%" align="left">&nbsp;</td>
    <td width="4%" align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><div align="center"><b><font size="1" face="serif">&nbsp;October 31 </font></b></div>
    </td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></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">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</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="right"><font size="2" face="serif">2005</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 83,411</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">2006</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">100,093</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</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="right"><font size="2" face="serif">2007</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">100,093</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">2008</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">100,093</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</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="right"><font size="2" face="serif">2009</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">100,093</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="right"><font size="2" face="serif">Thereafter</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">1,426,325</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</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="left">&nbsp;</td>
    <td align="left"><font size="2" face="Times New Roman, Times, serif">$</font></td>
    <td align="left"><font size="2" face="serif">&nbsp; 1,910,108</font></td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </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="left">&nbsp;</td>
    <td align="left"><hr noshade size="2">
    </td>
    <td align="left">
      <hr noshade size="2">
    </td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
    <td></td>
  </tr>
</table>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<p align="left"><font size="2" face="serif"></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td width="8%"><font size="2" face="serif">&nbsp;<b>NOTE 8 &#150;</b></font></td>
    <td align="left"><font size="2" face="serif"><b>COMMITMENTS AND CONTINGENCIES: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>OBLIGATION UNDER CAPITAL
          LEASES: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The Company has leased machinery
        and equipment under capital leases, which expire through July 2006. The
        assets and liabilities under the capital leases are recorded at the lower
        of the present value of the minimum lease payments or the fair value
        of the asset. The assets are being depreciated over the lease term. Depreciation
        expense of assets under capital leases are included in depreciation expense
        and amounted to $62,712 and $60,915 for the years ended October 31, 2004
        and 2003, respectively. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Assets held under capital leases
        are as follows: </font></td>
  </tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><div align="center"><font size="1"><b><font face="serif">&nbsp;</font></b></font></div>
    </td>
    <td align="left"><div align="center"><font size="1"></font></div>
    </td>
    <td align="right"><div align="center"><font size="1"></font></div>
    </td>
    <td align="left"><div align="center"><font size="1"><b><font face="serif">&nbsp;</font></b></font></div>
    </td>
    <td align="left"><div align="center"><font size="1"></font></div>
    </td>
  </tr>
  <tr valign="top" >
    <td width="8%" align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td 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="right"><div align="center"><font size="1"><b><font face="serif">2004</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="1"></font></div>
    </td>
    <td width="1%" align="right"><div align="center"><font size="1"></font></div>
    </td>
    <td width="10%" align="right"><div align="center"><font size="1"><b><font face="serif">2003</font></b></font></div>
    </td>
    <td width="2%" align="left"><div align="center"><font size="1"></font></div>
    </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">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><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">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Machinery and equipment</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"> 458,179</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 426,404</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Less: accumulated depreciation</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">(172,757</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">(91,372</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td>&nbsp;</td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
    <td><hr noshade size="1">
    </td>
    <td><hr noshade size="1">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 285,422</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 335,032</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td></td>
    <td><hr noshade size="2">
    </td>
    <td><hr noshade size="2">
    </td>
    <td></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td colspan="8"><font size="2" face="serif">Minimum annual future lease payments
        under the capital leases for each of the next two years and in the aggregate
        are:</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td></td>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td></td>
  </tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" align="defult" border="0">
  <tr valign="top" >
    <td align="left">&nbsp;</td>
    <td colspan="4" align="left"><font size="2" face="serif">Year ended October
        31,</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top" >
    <td width="8%" align="left">&nbsp;</td>
    <td colspan="2" align="right"><font size="2" face="serif">2005</font></td>
    <td width="2%" align="right">&nbsp;</td>
    <td width="60%" align="right">&nbsp;</td>
    <td width="2%" align="left">&nbsp;</td>
    <td width="1%" align="right"><font size="2" face="serif">$</font></td>
    <td width="10%" align="left"><div align="right"><font size="2" face="serif">&nbsp; 128,448</font></div>
    </td>
    <td width="2%" align="left">&nbsp;</td>
  </tr>
  <tr valign="top" bgcolor="#FFFFFF">
    <td align="left"><font size="2" face="serif">&nbsp;</font></td>
    <td colspan="2" align="right"><font size="2" face="serif">2006</font></td>
    <td align="right">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">6,035</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td width="6%">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</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="right">&nbsp;</td>
    <td colspan="3" align="left"><font size="2" face="serif">Total minimum lease payments</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">134,483</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="right">&nbsp;</td>
    <td colspan="3" align="left"><font size="2" face="serif">Less: amount representing interest</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">(17,568</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td colspan="2">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</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="right">&nbsp;</td>
    <td colspan="3" align="left"><font size="2" face="serif">Present value of minimum lease
    payments</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">116,915</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="right">&nbsp;</td>
    <td colspan="3" align="left"><font size="2" face="serif">Less: current portion</font></td>
    <td align="left">&nbsp;</td>
    <td align="right">&nbsp;</td>
    <td align="right"><font size="2" face="serif">(111,060</font></td>
    <td align="left"><font size="2" face="serif">)</font></td>
  </tr>
  <tr valign="top">
    <td></td>
    <td colspan="2">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</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="right">&nbsp;</td>
    <td colspan="3" align="left"><font size="2" face="serif">Long-term portion</font></td>
    <td align="left">&nbsp;</td>
    <td align="right"><font size="2" face="serif">$</font></td>
    <td align="right"><font size="2" face="serif"> 5,855</font></td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td></td>
    <td colspan="2">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</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"><font size="2" face="serif">The interest rates on the capital
        leases vary from 6.75% to 7.6% per annum, which approximates the Company&#8217;s
        incremental rate of borrowing at the time the leases were entered into.</font></td>
  </tr>
  <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>401 (K) RETIREMENT PLAN: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In 2004, the Company began a
        401(k) Retirement Plan, which covers all full time employees who have
        completed one year of service and have reached their 21st birthday. The
        Company will match 100% of the aggregate salary reduction contribution
        up to the first 3% of compensation and 50% of aggregate contribution
        of the next 2% of compensation. Contributions to the plan aggregated
        approximately $13,000 for 2004. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif"><b>LEGAL PROCEEDINGS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The Company is a party to various
        legal proceedings. In the opinion of management, these actions are routine
        in nature and will not have a material adverse effect on the Company&#8217;s
        financial statements in subsequent years. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 9 &#150;</b></font></td>
    <td align="left"><font size="2" face="serif"><b> CONCENTRATIONS OF CREDIT
          RISK: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Financial instruments that potentially
        subject the Company to concentrations of credit risk consist principally
        of cash and cash equivalents, amounts due from broker and trade accounts
        receivable. The Company maintains its cash and cash equivalents in bank
        and brokerage accounts the balances of which, at times, may exceed Federal
        insurance limits. At October 31, 2003, the Company did not have cash
        balances that exceeded Federal insurance limits. Although at October
        31, 2004 the Company did have cash balances that exceeded Federal insurance
        limits, they have not experienced any losses in such accounts and monitor
        the soundness of the financial institutions on a periodic basis. The
        net balance of the Company&#8217;s investments in derivative financial
        instruments also represents an amount due from a broker. Exposure to
        credit risk is reduced by placing such deposits and investments with
        major financial institutions and monitoring their credit ratings.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="9%"><font size="2" face="serif">&nbsp;</font></td>
    <td align="left"><font size="2" face="serif">Approximately 22% and 11% of
        the Company&#8217;s sales were derived from two customers in 2004. Those
        customers also accounted for approximately $400,000 and $458,000 of the
        Company&#8217;s account receivable balance as of October 31, 2004. Approximately
        16% of the Company&#8217;s sales were derived from each of two customers
        during 2003. Those customers also accounted for approximately $ 266,000
        and $ 61,700 of the Company&#8217;s accounts receivable balance at October
        31, 2003. Concentrations of credit risk with respect to other trade receivables
        are limited due to the short payment terms generally extended by the
        Company; by ongoing credit evaluations of customers; and by maintaining
        an allowance for doubtful accounts that management believes will adequately
        provide for credit losses. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">Management does not believe
        that credit risk was significant at October 31, 2004 or 2003. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 10 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>STOCK OPTION PLAN: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">On February 10, 1998, the Company&#8217;s
        stockholders consented to the adoption of the Company&#8217;s stock option
        plan (the &#8220;Plan&#8221;) whereby incentive and/or non-incentive
        stock options for the purchase of up to 2,000,000 shares of the Company&#8217;s
        common stock may be granted to the Company&#8217;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). On June 21, 2004,
        the plan was amended 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. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">As of October 31, 2004, no options
        had been granted under the Plan. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>

<p align="center"><font size="2" face="serif">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="#f1"><font size="2">Back to Index</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, 2004 AND 2003</b></font></p>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
  <tr valign="top">
    <td width="9%"><font size="2" face="serif">&nbsp;<b>NOTE 11 &#150;</b></font></td>
    <td align="left"><font size="2" face="serif"><b> MAJOR VENDORS/RELATED PARTY: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">During fiscal 2004, substantially
        all of the Company&#8217;s purchases were from ten vendors. The ten vendors
        accounted for 81% of total product purchases. Two of these vendors accounted
        for 34% and 11% of total purchases, respectively. These two vendors accounted
        for approximately $1,028,000 and $246,000 of the Company&#8217;s accounts
        payable at October 31, 2004, respectively. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">During fiscal 2003, substantially
        all of the Company&#8217;s purchases were also 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, respectively. These
        two vendors accounted for approximately $66,700 and $124,400 of the Company&#8217;s
        accounts payable at October 31, 2003, respectively. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">In addition, an employee of
        one of these vendors is a director of the Company. Purchases from that
        vendor totaled approximately $6,075,000 and $4,110,900 in 2004 and 2003,
        respectively. 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&#8217;s operations due to the
        availability of alternate suppliers. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 12 &#150; </b></font></td>
    <td align="left"><font size="2" face="serif"><b>PURCHASE OF ASSETS: </b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">On February 4, 2004, the Company
        entered into an agreement to purchase certain assets of an unrelated
        third party. The Company purchased coffee roasting and blending equipment
        located in a facility in Colorado, labels for private coffee products
        produced at the facility and certain other assets. The purchase price
        for these assets was $825,000, based upon an independent appraisal. The
        Company has also reached an agreement with the city of La Junta, Colorado
        to lease the facility formerly operated by the seller.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The Company also entered into
        a 10 year (renewable for an additional 10 years) licensing agreement
        with Del Monte Corp. for the exclusive right to use the &#147;S&amp;W&#148; and &#8220;Il
        Classico&#8221; trademarks in the United States in connection with the
        production, manufacture and sale of roasted whole bean and ground coffee
        for distribution at the retail distribution level. The Company will pay
        Del Monte Corp., 2% of net revenues generated by the sale of these products. </font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td><font size="2" face="serif"><b>NOTE 13 &#150;</b></font></td>
    <td align="left"><font size="2" face="serif"><b> UNDERWRITERS AGREEMENT:</b></font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left"><font size="2" face="serif">The Company has entered into
        an agreement with Maxim Group LLC (&#8220;Maxim&#8221;) for Maxim to
        serve as the Company&#8217;s financial advisors and lead managing underwriters
        for a proposed public offering of the Company&#8217;s common stock which
        would raise approximately $10 million. Maxim 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 upon execution of the agreement
        and paid an additional $25,000 upon the filing of a registration statement
        for the proposed offering with the United States Securities and Exchange
        Commission. If the public offering is successfully completed, the Company
        shall pay to Maxim 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 Maxim 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, anti-dilution and piggyback registration
        rights. To date, no funds have been raised under this agreement.</font></td>
  </tr>
  <tr valign="top">
    <td>&nbsp;</td>
    <td align="left">&nbsp;</td>
  </tr>
</table>

<p align="center"><font size="2" face="serif">F-18</font></p>
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<p align="left"><font size="2" face="serif">You should rely only on the information contained in or incorporated by reference into this prospectus. We have not, and the underwriters have 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>1,400,000 shares </b></font></p>
<p align="center"><font size="2" face="serif"><b>Common Stock </b></font></p>
<p align="center"><hr align="center" width="15%" size="1" noshade>
<p></p>
<p align="center"><font size="2" face="serif"><b>PROSPECTUS</b></font></p>
<p align="center"><font size="2" face="serif"><b>JOSEPH STEVENS &amp; COMPANY, INC.</b></font></p>

<p align="center"><font size="2" face="serif"><b>, 2005</b></font></p>

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<p align="center">&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 the request of the corporation as a director, officer, employee or agent of another entity, against expenses, including attorneys&#8217; 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&#8217; 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="center"><font size="2" face="serif">II-2</font></p>
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<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 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&#8217; and officers&#8217; 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" align="center" 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"> 1,153</font></td>
<td width="2%" 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;1,480</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;200,000</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">Underwriters&#8217; 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;210,000</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">4,867</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"> 575,000</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>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
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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 1,610,000 shares of common stock to be sold in this offering at $5.50
per share and 140,000 underwriters&#8217; warrants and 140,000 shares of common
stock issuable upon exercise of underwriters&#8217; warrants at an exercise price
of $6.60 per share. All other expenses are estimated.</font></td>
</tr>
</table>
<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
  <td>&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top">
<td width="3%"><font size="2" face="serif">(2)</font></td>
<td align="left">
<font size="2" face="serif">Based on an initial public offering price of $5.00 per share. The non-accountable expense allowance will be $241,500
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" align="left"><b>(a)</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>List of Exhibits.</b>  (Filed herewith unless otherwise noted.)</font></p>
<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b></b></font></p>

<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">
<tr valign="top" bgcolor="#ffffff">
  <td align="left"><font size="2" face="serif"><b><u>Exhibit No.</u></b></font></td>
  <td align="left">&nbsp;</td>
  <td align="left"><font size="2" face="serif"><b><u>Description</u></b></font></td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">1.1</font></td>
<td align="left" width="2%">&nbsp;</td>
<td width="88%" align="left"><font size="2" face="serif">Form of Underwriting Agreement.</font></td>
<td width="2%" align="left">&nbsp;</td> </tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
  <td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">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>
<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="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>
<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="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, filed with the Securities and Exchange Commission on February 13, 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="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, filed with the Securities and Exchange Commission on October 27, 2000). </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="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, filed with the Securities and Exchange Commission on October 27, 2000).</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="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#ffffff">
<td align="left"><font size="2" face="serif">3.5</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 3.5 to the Coffee Holding Co., Inc. Quarterly Report on Form 10-QSB for the quarter ended April 30, 2001, filed with the Securities and Exchange Commission on June 14, 2001).</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="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>
<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="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 (incorporated herein by reference to Exhibit 4.2 to Amendment No. 2 to the Coffee Holding Co., Inc. Registration Statement on Form SB-2/A, filed with the Securities and Exchange Commission on October 25, 2004).</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="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.</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="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, filed with the Securities and Exchange Commission on October 27, 2000).</font></td>
<td align="left">&nbsp;</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" align="center" border="0">
<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">10.2</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="88%" 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, filed with the Securities and Exchange Commission on October 27, 2000).</font></td>
<td width="2%" 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>
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</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">Working Capital Management Account Loan and Security Agreement with Merrill Lynch Business Financial Services, Inc. (incorporated herein by reference to Exhibit 10.3 to the Coffee Holding Co., Inc. Annual Report on Form 10-KSB for the fiscal year ended October 31, 2004, filed with the Securities and Exchange Commission on February 10, 2004).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
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  <td align="left">&nbsp;</td>
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</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. (incorporated herein by reference to Exhibit 10.9 to Amendment No. 1 to the Coffee Holding Co., Inc. Registration Statement on Form SB-2/A, filed with the Securities and Exchange Commission on August 12, 2004).</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="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 Amendment No. 1 to the Coffee Holding Co., Inc. Annual Report on Form 10-KSB/A for the year ended October 31, 2002, filed with the Securities and Exchange Commission on August 26, 2004) (confidential portions have been redacted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission).</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="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 Amendment No. 1 to the Coffee Holding Co., Inc. Annual Report on Form 10-KSB/A for the year ended October 31, 2002, filed with the Securities and Exchange Commission on August 26, 2004) (confidential portions have been redacted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission).</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="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 (incorporated herein by reference to Exhibit 10.12 to Amendment No. 1 to the Coffee Holding Co., Inc. Registration Statement on Form SB-2/A, filed with the Securities and Exchange Commission on August 12, 2004).</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="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. (incorporated herein by reference to Exhibit 10.13 to the Coffee Holding Co., Inc. Quarterly Report on Form 10-QSB/A for the quarter ended April 30, 2004, filed with the Securities and Exchange Commission on August 26, 2004).</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="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>
<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="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>
<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="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>
<td align="left">&nbsp;</td>
</tr>
</table>

<p align="center"><font size="2" face="serif">II-6</font></p>
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<table width="100%" cellspacing="0" cellpadding="0" align="center" border="0">

<tr valign="top" bgcolor="#FFFFFF">
<td align="left"><font size="2" face="serif">10.17</font></td>
<td width="2%" align="left">&nbsp;</td>
<td width="88%" align="left"><font size="2" face="serif">Corporate Brands Agreement dated as of March 30, 2004 by and between Albertson&#8217;s, Inc. and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.17 to Amendment No. 2 to the Coffee Holding Co., Inc. Registration Statement on Form SB-2/A, filed with the Securities and Exchange Commission on October 25, 2004) (confidential portions have been redacted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission).</font></td>
<td width="2%" 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="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>
<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>
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</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>
<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="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>
<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>
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</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 (incorporated herein by reference to Exhibit 99.1 to Amendment No. 1 to the Coffee Holding Co., Inc. Registration Statement on Form SB-2/A, filed with the Securities and Exchange Commission on August 12, 2004).</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>
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</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 (incorporated herein by reference to Exhibit 99.2 to Amendment No. 1 to the Coffee Holding Co., Inc. Registration Statement on Form SB-2/A, filed with the Securities and Exchange Commission on August 12, 2004).</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>
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</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 (incorporated herein by reference to Exhibit 99.3 to Amendment No. 1 to the Coffee Holding Co., Inc. Registration Statement on Form SB-2/A, filed with the Securities and Exchange Commission on August 12, 2004).</font></td>
<td align="left">&nbsp;</td>
</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td align="left">&nbsp;</td>
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</tr>
<tr valign="top" bgcolor="#FFFFFF">
  <td colspan="3" align="left"><hr align="left" width="20%" size="1" noshade>
  </td>
  <td align="left">&nbsp;</td>
</tr>
</table>

<p align="left"><font size="2" face="serif" align="left">(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 underwriters at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.</font></p>

<p align="left"><font size="2" face="serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of determining any liability under the Securities Act of 1933 (the &#8220;Act&#8221;), 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="center"><font size="2" face="serif">II-7</font></p>
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<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="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>
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<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 February 23, 2005.</font></p>

<table width="100%" cellspacing="0" cellpadding="0" border="0">
<tr valign="top">
<td width="50%"><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>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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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>

<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">&nbsp;&nbsp;&nbsp;&nbsp;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="2" face="serif"><u>Name</u></font></td>
<td align="center"><font size="2" face="serif"><u>Title</u></font></td>
<td align="center"><font size="2" 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, Chief Financial Officer, Treasurer and Director (principal executive officer and principal financial and accounting officer)</font></td>
<td align="center"><font size="2" face="serif">February 23, 2005</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">February 23, 2005</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">February 23, 2005</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">February 23, 2005</font></td>
</tr>
</table>

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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1.1
<SEQUENCE>2
<FILENAME>b332774_ex1-1.txt
<DESCRIPTION>UNDERWRITING AGREEMENT
<TEXT>
<PAGE>

                                                                     Exhibit 1.1




                        1,400,000 SHARES OF COMMON STOCK

                            COFFEE HOLDING CO., INC.

                             UNDERWRITING AGREEMENT

                           _______________ ____, 2005


Joseph Stevens & Company, Inc.
59 Maiden Lane
32nd Floor
New York, New York  10038
As Representative of the several Underwriters
named on Schedule A hereto

Ladies and Gentlemen:

         Coffee Holding Co., Inc., a corporation organized and existing under
the laws of the State of Nevada (the "COMPANY"), confirms its agreement, subject
to the terms and conditions set forth herein, with each of the underwriters
listed on Schedule A hereto (collectively, the "UNDERWRITERS"), for whom Joseph
Stevens & Company, Inc. is acting as Representative (in such capacity, the
"REPRESENTATIVE"), to sell and issue to the Underwriters an aggregate of
1,400,000 shares (the "FIRM SHARES") of its common stock, par value $0.001 per
share (the "COMMON STOCK"). In addition, for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, the Company
proposes to sell and issue to the Underwriters, at the Underwriters' option, up
to an additional 210,000 shares of Common Stock as set forth herein (the
"ADDITIONAL SHARES"). The Firm Shares and any Additional Shares purchased by the
Underwriters are referred to herein as the "SHARES." The Shares are more fully
described in the Registration Statement and Prospectus (as each such term is
hereinafter respectively defined). The offering and sale of the Shares
contemplated by this underwriting agreement (this "AGREEMENT") is referred to
herein as the "OFFERING."

         1. Representations and Warranties of the Company. The Company
represents, warrants and covenants to, and agrees with, each of the Underwriters
that, as of the date hereof and as of the First Closing Date and each Additional
Closing Date (as each such term is hereinafter respectively defined)(the First
Closing Date and each Additional Closing Date, if any, are referred to herein as
the "CLOSING DATE"):

                  (a) The Company has filed with the Securities and Exchange
         Commission (the "COMMISSION") a registration statement on Form SB-2
         (Registration No. 333-116838), and amendments thereto, and related
         preliminary prospectuses for the registration under the Securities Act
         of 1933, as amended (the "SECURITIES ACT"), of the Shares which
         registration statement, as so amended (including post-effective
         amendments, if any), has been declared effective by the Commission and
         copies of which have heretofore been delivered to the Underwriters. The
         registration statement, as amended at the time it became effective,
         including

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                    Page 2 of 36


         the prospectus, financial statements, schedules, exhibits and other
         information (if any) deemed to be part of the registration statement at
         the time of effectiveness pursuant to Rule 430A under the Securities
         Act, is hereinafter referred to as the "REGISTRATION STATEMENT." If the
         Company has filed, or is required pursuant to the terms hereof to file,
         a registration statement pursuant to Rule 462(b) under the Securities
         Act registering additional shares of Common Stock (a "RULE 462(B)
         REGISTRATION STATEMENT"), then, unless otherwise specified, any
         reference herein to the term "REGISTRATION STATEMENT" shall be deemed
         to include such Rule 462(b) Registration Statement. Other than a Rule
         462(b) Registration Statement, which, if filed, becomes effective upon
         filing, no other document with respect to the Registration Statement
         has heretofore been filed with the Commission. All of the Shares have
         been registered under the Securities Act pursuant to the Registration
         Statement or, if any Rule 462(b) Registration Statement is filed, will
         be duly registered under the Securities Act with the filing of such
         Rule 462(b) Registration Statement. Based on communications from the
         Commission, no stop order suspending the effectiveness of either the
         Registration Statement or the Rule 462(b) Registration Statement, if
         any, has been issued and no proceeding for that purpose has been
         initiated or threatened by the Commission. The Company, if required by
         the Securities Act and the rules and regulations of the Commission (the
         "RULES AND REGULATIONS"), shall file the prospectus with the Commission
         pursuant to Rule 424(b) under the Securities Act ("RULE 424(B)"). The
         prospectus, in the form in which it is to be filed with the Commission
         pursuant to Rule 424(b), or, if the prospectus is not to be filed with
         the Commission pursuant to Rule 424(b), the prospectus in the form
         included as part of the Registration Statement at the time the
         Registration Statement became effective, is hereinafter referred to as
         the "PROSPECTUS," except that if any revised prospectus or prospectus
         supplement shall be provided to the Underwriters by the Company for use
         in connection with the Offering which differs from the Prospectus
         (whether or not such revised prospectus or prospectus supplement is
         required to be filed by the Company pursuant to Rule 424(b)), the term
         "PROSPECTUS" shall also refer to such revised prospectus or prospectus
         supplement, as the case may be, from and after the time it is first
         provided to the Underwriters for such use. Any preliminary prospectus
         or prospectus subject to completion included in the Registration
         Statement or filed with the Commission pursuant to Rule 424 under the
         Securities Act is hereafter called a "PRELIMINARY PROSPECTUS." Any
         reference herein to the Registration Statement, any Preliminary
         Prospectus or the Prospectus shall be deemed to refer to and include
         the exhibits incorporated by reference therein pursuant to the Rules
         and Regulations on or before the effective date of the Registration
         Statement, the date of such Preliminary Prospectus or the date of the
         Prospectus, as the case may be. Any reference herein to the terms
         "amend", "amendment" or "supplement" with respect to the Registration
         Statement, any Preliminary Prospectus or the Prospectus shall be deemed
         to refer to and include: (i) the filing of any document under the
         Securities Exchange Act of 1934, as amended, and together with the
         Rules and Regulations promulgated thereunder (the "EXCHANGE ACT"),
         after the effective date of the Registration Statement, the date of
         such Preliminary Prospectus or the date of the Prospectus, as the case
         may be, which is incorporated therein by reference, and (ii) any such
         document so filed. All references in this Agreement to the Registration
         Statement, the Rule 462(b) Registration Statement, a Preliminary
         Prospectus and the Prospectus, or any amendments or supplements to any
         of the foregoing shall be deemed to include any copy thereof filed with
         the Commission pursuant to its Electronic Data Gathering, Analysis and
         Retrieval System ("EDGAR").
<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                    Page 3 of 36


                  (b) At the time (1) of the effectiveness of the Registration
         Statement or any Rule 462(b) Registration Statement or the
         effectiveness of any post-effective amendment to the Registration
         Statement, (2) when the Prospectus is first filed with the Commission
         pursuant to Rule 424(b), (3) when any supplement to or amendment of the
         Prospectus is filed with the Commission and (4) of the First Closing
         Date and each Additional Closing Date, if any, in the case of the items
         referred to in clauses (1) through (4) above, the Registration
         Statement and the Prospectus and any amendments thereof and supplements
         or exhibits thereto complied or will comply in all material respects
         with the applicable provisions of the Securities Act, the Exchange Act
         and the Rules and Regulations, and did not and will not contain an
         untrue statement of a material fact and did not and will not omit to
         state any material fact required to be stated therein or necessary in
         order to make the statements therein: (i) in the case of the
         Registration Statement, not misleading, and (ii) in the case of the
         Prospectus in light of the circumstances under which they were made,
         not misleading. When any Preliminary Prospectus was first filed with
         the Commission (whether filed as part of the Registration Statement for
         the registration of the Shares or any amendment thereto or pursuant to
         Rule 424(a) under the Securities Act) and when any amendment thereof or
         supplement thereto was first filed with the Commission, such
         Preliminary Prospectus and any amendments thereof and supplements
         thereto complied in all material respects with the applicable
         provisions of the Securities Act, the Exchange Act and the Rules and
         Regulations and did not contain an untrue statement of a material fact
         and did not omit to state any material fact required to be stated
         therein or necessary in order to make the statements therein, in light
         of the circumstances under which they were made, not misleading. No
         representation and warranty is made in this subsection (b), however,
         with respect to any information contained in or omitted from the
         Registration Statement or the Prospectus or any related Preliminary
         Prospectus or any amendment thereof or supplement thereto in reliance
         upon and in conformity with information furnished in writing to the
         Company by or on behalf of any Underwriter specifically for use
         therein. The parties acknowledge and agree that such information
         provided by or on behalf of any Underwriter consists solely of the
         information contained in the ___ paragraph of the cover page and in
         paragraphs ___________ under the caption "Underwriting" in the
         Prospectus.

                  (c) Lazar Levine & Felix LLP, whose reports relating to the
         Company are included in the Registration Statement and who have
         delivered the letters referred to in Section 6(e), are independent
         public accountants as required by the Securities Act, the Exchange Act
         and the Rules and Regulations.

                  (d) Subsequent to the respective dates as of which information
         is presented in the Registration Statement and the Prospectus, and
         except as disclosed in the Registration Statement and the Prospectus:
         (i) the Company has not declared, paid or made any dividends or other
         distributions of any kind on or in respect of its capital stock, and
         (ii) there has been no material adverse change or material adverse
         effect (or any development which may result in a material adverse
         change or a material adverse effect in the future), whether or not
         arising from transactions in the ordinary course of business, in or
         affecting: (A) the business, condition (financial or otherwise),
         results of operations, shareholders' equity, properties or prospects of
         the

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                    Page 4 of 36


         Company; (B) the long-term debt or capital stock of the Company; or (C)
         the Offering or consummation of any of the other transactions
         contemplated by this Agreement, the Registration Statement or the
         Prospectus (a "MATERIAL ADVERSE CHANGE" or a "MATERIAL ADVERSE
         EFFECT"). Since the date of the latest balance sheet presented in the
         Registration Statement and the Prospectus, the Company has not incurred
         or undertaken any liabilities or obligations, whether direct or
         indirect, liquidated or contingent, matured or unmatured, or entered
         into any transactions, including any acquisition or disposition of any
         business or asset, which are material to the Company, except for
         liabilities, obligations and transactions which are disclosed in the
         Registration Statement and the Prospectus.

                  (e) As of the dates indicated in the Prospectus, the
         authorized, issued and outstanding shares of capital stock of the
         Company were as set forth in the Prospectus in the column labeled
         "Actual" under the section thereof captioned "Capitalization" and,
         after giving effect to the Offering and the application of the proceeds
         of the Offering as set forth in the Prospectus, the Registration
         Statement and the Prospectus, will be as set forth in the column
         labeled "As Adjusted" in such section. All of the issued and
         outstanding shares of capital stock of the Company are fully paid and
         non-assessable and have been duly and validly authorized and issued, in
         compliance with all applicable state, federal and foreign securities
         laws and not in violation of or subject to any preemptive or similar
         right that does or will entitle any Person (as defined below), upon the
         issuance or sale of any security, to acquire from the Company any
         Relevant Security. As used herein, the term "RELEVANT SECURITY" means
         Common Stock or any other security of the Company that is convertible
         into, or exercisable or exchangeable for, Common Stock or other equity
         securities of the Company (including any other equity security that is
         convertible into, or exercisable or exchangeable for, Common Stock), or
         that holds the right to acquire Common Stock or other equity securities
         of the Company (including any other equity security that is convertible
         into, or exercisable or exchangeable for, Common Stock), except for
         such rights as may have been fully satisfied or waived prior to the
         effectiveness of the Registration Statement. As used herein, the term
         "PERSON" means any individual, corporation, trust, partnership, joint
         venture, limited liability company or other entity, in each such case,
         whether foreign or domestic. The Company has not issued any Relevant
         Security since February 1998. The Company has not granted registration
         rights to any holder of its securities.

                  (f) The Shares have been duly and validly authorized and, when
         issued, delivered and paid for in accordance with this Agreement and as
         described in the Prospectus on each of the First Closing Date and each
         Additional Closing Date, as applicable, will be duly and validly
         issued, fully paid and non-assessable, will have been issued in
         compliance with all applicable state and federal securities laws and
         will not have been issued in violation of or subject to any preemptive
         or similar right that does or will entitle any Person to acquire any
         Relevant Security from the Company upon issuance or sale of Shares in
         the Offering. The Underwriters will receive good title to the Shares
         purchased by them, respectively, free and clear of all liens,
         encumbrances, equities or claims or other defects of title whatsoever.
         No further approval or authority of the shareholders or the Board of
         Directors of the Company will be required for the issuance and sale of
         the Shares as contemplated herein. The shares of Common Stock
         representing the Shares conform to the descriptions thereof contained
         in the Registration

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                    Page 5 of 36


         Statement and the Prospectus. Except as disclosed in the Registration
         Statement and the Prospectus, the Company does not have any outstanding
         warrants, options to purchase, or any preemptive rights or other rights
         to subscribe for or to purchase, or any contracts or commitments to
         issue or sell, any Relevant Security. The shares of Common Stock
         underlying the Stock Purchase Warrant (the "WARRANT SHARES") to be
         issued to the Underwriters (the "STOCK PURCHASE WARRANT") have been
         reserved for issuance upon the exercise of the Stock Purchase Warrant
         and when issued and sold in accordance with the terms of the Stock
         Purchase Warrant, will be duly authorized, validly issued, fully paid
         and non-assessable and free of preemptive rights and no personal
         liability will attach to the ownership thereof.

                  (g) The Company does not have any Subsidiaries (as defined in
         Rule 405 of the Rules and Regulations). The Company holds no ownership
         or other interest, nominal or beneficial, direct or indirect, in any
         corporation, partnership, joint venture or other business entity. No
         director or officer (including Sterling Gordon) of the Company named in
         the Prospectus holds any direct equity, debt or other pecuniary
         interest in any Person with whom the Company does business or is in
         privity of contract with, other than, in each case, indirectly through
         the ownership by such individuals of shares of Common Stock.

                  (h) The Company has been duly organized and is validly
         existing as a corporation under the laws of the State of Nevada. The
         Company has all requisite power and authority to carry on its business
         as it is currently being conducted and as described in the Prospectus,
         and to own, lease and operate its properties. The Company is duly
         qualified to do business and is in good standing as a foreign
         corporation in each jurisdiction in which the character or location of
         its properties (owned, leased or licensed) or the nature or conduct of
         its business makes such qualification necessary, except, in each case,
         for those failures to be so qualified or in good standing which
         (individually and in the aggregate) could not reasonably be expected to
         have a Material Adverse Effect.

                  (i) The Company: (i) is not in violation of its articles of
         incorporation or by-laws, and (ii) is not in default under, and no
         event has occurred which, with notice or lapse of time or both, would
         constitute a default under or result in the creation or imposition of
         any Lien (as defined below) upon any of its properties or assets
         pursuant to any indenture, mortgage, deed of trust, loan agreement or
         other agreement or instrument to which it is a party or by which it is
         bound or to which any of its properties or assets is subject, except,
         in the case of clause (ii) above for any Lien disclosed in the
         Registration Statement and the Prospectus. For purposes of this
         Agreement, "LIEN" means any lien, charge, mortgage, pledge, security
         interest, claim, equity, trust or other encumbrance, preferential
         arrangement, defect or restriction of any kind whatsoever.

                  (j) The Company has full right, power and authority to execute
         and deliver this Agreement and the Stock Purchase Warrant, to perform
         its obligations hereunder and thereunder and to consummate each of the
         transactions contemplated by this Agreement and the Stock Purchase
         Warrant. The Company has duly and validly authorized this Agreement and
         the Stock Purchase Warrant and each of the transactions contemplated by
         this Agreement and the

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                    Page 6 of 36


         Stock Purchase Warrant. This Agreement has been duly and validly
         executed and delivered by the Company and constitutes the legal, valid
         and binding obligation of the Company and is enforceable against the
         Company in accordance with its terms, except as enforceability may be
         limited by applicable bankruptcy, insolvency, reorganization,
         moratorium or similar laws affecting creditors' rights generally and
         except as enforceability may be subject to general principles of equity
         (regardless of whether such enforceability is considered in a
         proceeding in equity or at law). The Stock Purchase Warrant, when
         executed and delivered by the Company, will have been duly and validly
         executed and delivered by the Company and will constitute the legal,
         valid and binding obligation of the Company and will be enforceable
         against the Company in accordance with its terms, except as
         enforceability may be limited by applicable bankruptcy, insolvency,
         reorganization, moratorium or similar laws affecting creditors' rights
         generally and except as enforceability may be subject to general
         principles of equity (regardless of whether such enforceability is
         considered in a proceeding in equity or at law).

                  (k) The execution, delivery, and performance of this Agreement
         and the Stock Purchase Warrant and the consummation of the transactions
         contemplated by this Agreement and the Stock Purchase Warrant do not
         and will not: (i) conflict with, require consent under or result in a
         breach of any of the terms and provisions of, or constitute a default
         (or an event which with notice or lapse of time, or both, would
         constitute a default) under, or result in the creation or imposition of
         any Lien upon any of the Company's properties or assets pursuant to any
         indenture, mortgage, deed of trust, loan agreement or other agreement,
         instrument, franchise, license or permit to which the Company is a
         party or by which the Company or its properties, operations or assets
         may be bound or (ii) violate or conflict with any provision of the
         articles of incorporation or by-laws of the Company, or (iii) violate
         or conflict with any law, rule, regulation, ordinance, directive,
         judgment, decree or order of any judicial, regulatory or other legal or
         governmental agency or body, domestic or foreign.

                  (l) The Company has all necessary consents, approvals,
         authorizations, orders, registrations, qualifications, licenses,
         filings and permits of, with and from all judicial, regulatory and
         other legal or governmental agencies and bodies and all third parties,
         foreign and domestic (collectively, the "CONSENTS"), to own, lease and
         operate its properties and conduct its business as it is now being
         conducted and as disclosed in the Registration Statement and the
         Prospectus, and each such Consent is valid and in full force and
         effect. The Company has not received notice of any investigation or
         proceeding which has resulted in or, if decided adversely to the
         Company, could reasonably be expected to result in, the revocation of,
         or imposition of a materially burdensome restriction on, any Consent.
         No Consent contains a materially burdensome restriction not adequately
         disclosed in the Registration Statement and the Prospectus.

                  (m) The Company is in compliance with all applicable laws,
         rules, regulations, ordinances, directives, judgments, decrees and
         orders, foreign and domestic, except for those the non-compliance with
         which would not have a Material Adverse Effect.

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                    Page 7 of 36


                  (n) No Consent of, with or from any judicial, regulatory or
         other legal or governmental agency or body or any third party, foreign
         or domestic, is required for the execution, delivery and performance of
         this Agreement or the Stock Purchase Warrant or the consummation of the
         transactions contemplated by this Agreement or the Stock Purchase
         Warrant, including the issuance, sale and delivery of the Shares and
         the Warrant Shares to be issued, sold and delivered hereunder and
         thereunder, except the registration under the Securities Act of the
         Shares and the Warrant Shares, which has become effective, and such
         Consents as may be required under state securities or blue sky laws or
         the by-laws and rules of the American Stock Exchange ("AMEX"), the
         National Association of Securities Dealers, Inc. (the "NASD") or NASD
         Regulation, Inc. in connection with the purchase and distribution of
         the Shares by the Underwriters, each of which has been obtained and is
         in full force and effect.

                  (o) Except as disclosed in the Registration Statement and the
         Prospectus, there is no judicial, regulatory, arbitral or other legal
         or governmental proceeding or other litigation or arbitration, domestic
         or foreign, pending to which the Company is a party or of which any
         property, operations or assets of the Company is the subject which,
         individually or in the aggregate, if determined adversely to the
         Company, could reasonably be expected to have a Material Adverse
         Effect. To the Company's knowledge, no such proceeding, litigation or
         arbitration is threatened or contemplated.

                  (p) The financial statements of the Company included in the
         Registration Statement and the Prospectus, including the notes thereto,
         and the supporting schedules included in the Registration Statement and
         the Prospectus, present fairly the financial position of the Company as
         of the dates indicated and the cash flows and results of operations of
         the Company for the periods specified. Except as otherwise stated in
         the Registration Statement and the Prospectus, said financial
         statements have been prepared in conformity with United States
         generally accepted accounting principles applied on a consistent basis
         throughout the periods involved. The supporting schedules included in
         the Registration Statement and the Prospectus present fairly the
         information required to be stated therein. No other financial
         statements or supporting schedules are required to be included or
         incorporated by reference in the Registration Statement. The other
         financial and statistical information included in the Registration
         Statement and the Prospectus present fairly the information included
         therein and have been prepared on a basis consistent with that of the
         financial statements that are included in the Registration Statement
         and the Prospectus and the books and records of the Company.

                  (q) There are no pro forma or as adjusted financial statements
         which are required to be included in the Registration Statement and the
         Prospectus in accordance with Regulation S-X which have not been
         included as so required. The pro forma and pro forma as adjusted
         financial information included in the Registration Statement and the
         Prospectus has been properly compiled and prepared in accordance with
         the applicable requirements of the Securities Act and the Rules and
         Regulations and includes all adjustments necessary to present fairly in
         accordance with generally accepted accounting principles the pro forma
         and as adjusted financial position of the Company at the respective
         dates indicated and its cash flows and results of operations for the
         respective periods specified. The assumptions used in preparing the pro

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                    Page 8 of 36


         forma and pro forma as adjusted financial information included in the
         Registration Statement and the Prospectus provide a reasonable basis
         for presenting the significant effects directly attributable to the
         transactions or events described therein. The related pro forma and pro
         forma as adjusted adjustments give appropriate effect to those
         assumptions; and the pro forma and pro forma as adjusted financial
         information reflect the proper application of those adjustments to the
         corresponding historical financial statement amounts.

                  (r) The statistical, industry-related and market-related data
         included in the Registration Statement and the Prospectus are based on
         or derived from sources which the Company reasonably and in good faith
         believes are reliable and accurate, and such data agree with the
         sources from which they are derived.

                  (s) The Company maintains a system of internal accounting and
         other controls sufficient to provide reasonable assurances that: (i)
         transactions are executed in accordance with management's general or
         specific authorizations, (ii) transactions are recorded as necessary to
         permit preparation of financial statements in conformity with United
         States generally accepted accounting principles and to maintain
         accountability for assets, (iii) access to assets is permitted only in
         accordance with management's general or specific authorization, and
         (iv) the recorded accounting for assets is compared with existing
         assets at reasonable intervals and appropriate action is taken with
         respect to any differences.

                  (t) As of the effective date of the Registration Statement,
         the Company's Board of Directors shall have validly appointed an audit
         committee, nominating committee and compensation committee whose
         composition satisfies the requirements of the Rules of AMEX (the "AMEX
         RULES") and the Board of Directors and/or audit committee and the
         nominating committee has each adopted a charter that satisfies the
         requirements the AMEX Rules. Neither the Board of Directors nor the
         audit committee has been informed, nor is any director of the Company
         aware, of: (i) any significant deficiencies and material weaknesses in
         the design or operation of internal control over financial reporting
         which are reasonably likely to adversely affect the Company's ability
         to record, process, summarize and report financial information; or (ii)
         any fraud, whether or not material, that involves management or other
         employees who have a significant role in the Company's internal control
         over financial reporting.

                  (u) The Company has not violated: (i) the Bank Secrecy Act, as
         amended, (ii) the Money Laundering Control Act of 1986, as amended,
         (iii) the Foreign Corrupt Practices Act, or (iv) the Uniting and
         Strengthening of America by Providing Appropriate Tools Required to
         Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and/or
         the rules and regulations promulgated under any such law, or any
         successor law, except for such violations which, singly or in the
         aggregate, would not have a Material Adverse Effect.

                  (v) Neither the Company nor any of its Affiliates (within the
         meaning of Rule 144 under the Securities Act) (collectively,
         "AFFILIATES") has taken, directly or indirectly, any action which
         constitutes or is designed to cause or result in, or which could
         reasonably be

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                    Page 9 of 36


         expected to constitute, cause or result in, the stabilization or
         manipulation of the price of any security to facilitate the sale or
         resale of the Shares.

                  (w) Neither the Company nor any of its Affiliates has, prior
         to the date hereof, made any offer or sale of any securities which are
         required to be "integrated" pursuant to the Securities Act or the Rules
         and Regulations with the offer and sale of the Shares pursuant to the
         Registration Statement. Except as disclosed in the Registration
         Statement, the Prospectus or in any public filings relating to the
         Company filed with the Commission, neither the Company nor any of its
         Affiliates has sold or issued any Relevant Security during the
         six-month period preceding the date of the Prospectus, including but
         not limited to any sales pursuant to Rule 144A or Regulation D or S
         under the Securities Act, other than shares of Common Stock issued
         pursuant to employee benefit plans, qualified stock option plans or
         employee compensation plans or pursuant to outstanding options, rights
         or warrants as described in the Registration Statement and the
         Prospectus.

                  (x) Except as disclosed in the Registration Statement and the
         Prospectus, no holder of any Relevant Security has any rights to
         require registration of any Relevant Security as part or on account of,
         or otherwise in connection with, the offer and sale of the Shares
         contemplated hereby, and any such rights so disclosed have either been
         fully complied with by the Company or effectively waived by the holders
         thereof, and any such waivers remain in full force and effect.

                  (y) The documents, exhibits or other materials incorporated or
         deemed to be incorporated by reference in the Prospectus, at the time
         they were or hereafter are filed with the Commission, complied and will
         comply in all material respects with the requirements of the Securities
         Act, the Exchange Act and the Rules and Regulations, and, when read
         together with the other information in the Prospectus, do not and, in
         the case of any Prospectus filed after the date hereof, will not
         contain an untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary to make the
         statements therein, in the light of the circumstances under which they
         were made, not misleading.

                  (z) The conditions for use of Form SB-2 to register the
         Offering under the Securities Act, as set forth in the General
         Instructions to such Form, have been satisfied.

                  (aa) The Company is not and, at all times up to and including
         consummation of the transactions contemplated by this Agreement, and
         after giving effect to application of the net proceeds of the Offering,
         will not be, subject to registration as an "investment company" under
         the Investment Company Act of 1940, as amended, and is not and will not
         be an entity "controlled" by an "investment company" within the meaning
         of such act.

                  (bb) There are no contracts or other documents (including,
         without limitation, any voting agreement), which are required to be
         described in the Registration Statement and the Prospectus or filed as
         exhibits to the Registration Statement by the Securities Act, the
         Exchange

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 10 of 36


         Act or the Rules and Regulations and which have not been so described,
         filed or incorporated by reference.

                  (cc) No relationship, direct or indirect, exists between or
         among any of the Company or its Affiliates, on the one hand, and any
         director, officer, shareholder, customer or supplier of the Company or
         any of their respective Affiliates, on the other hand, which is
         required by the Securities Act, the Exchange Act or the Rules and
         Regulations to be described in the Registration Statement or the
         Prospectus which is not so described and described as required. There
         are no outstanding loans, advances (except normal advances for business
         expenses in the ordinary course of business) or guarantees of
         indebtedness by the Company to or for the benefit of any of the
         officers or directors of the Company or any of their respective family
         members, except as disclosed in the Registration Statement and the
         Prospectus. The Company has not, in violation of the Sarbanes-Oxley Act
         of 2002 ("SARB-OX"), directly or indirectly, extended or maintained
         credit, arranged for the extension of credit, or renewed an extension
         of credit, in the form of a personal loan to or for any director or
         executive officer of the Company.

                  (dd) The Company is in material compliance with the provisions
         of Sarb-Ox and the Rules and Regulations promulgated thereunder and
         related or similar rules and regulations promulgated by AMEX or any
         other governmental or self regulatory entity or agency, except for such
         violations which, singly or in the aggregate, would not have a Material
         Adverse Effect. Without limiting the generality of the foregoing, as of
         the effective date of the Registration Statement: (i) all members of
         the Company's Board of Directors who are required to be "independent"
         (as that term is defined under applicable laws, rules and regulations),
         including, without limitation, all members of the audit committee of
         the Company's Board of Directors, meet the qualifications of
         independence as set forth under applicable laws, rules and regulations
         and (ii) the audit committee of the Company's Board of Directors has at
         least one member who is an "audit committee financial expert" (as that
         term is defined under applicable laws, rules and regulations).

                  (ee) Except as disclosed in the Registration Statement and the
         Prospectus, there are no contracts, agreements or understandings
         between the Company and any Person that would give rise to a valid
         claim against the Company or any Underwriter for a brokerage
         commission, finder's fee or other like payment in connection with the
         transactions contemplated by this Agreement and the Stock Purchase
         Warrant or, to the Company's knowledge, any arrangements, agreements,
         understandings, payments or issuances with respect to the Company or
         any of its officers, directors, shareholders, partners, employees, or
         Affiliates that may affect the Underwriters' compensation as determined
         by the NASD.

                  (ff) The Company owns or leases all such properties as are
         necessary to the conduct of its business as presently operated and as
         proposed to be operated as described in the Registration Statement and
         the Prospectus. The Company has good and marketable title in fee simple
         to all real property and good and marketable title to all personal
         property owned by it, in each case, free and clear of all Liens, except
         such Liens as are described in the Registration Statement and the
         Prospectus or such Liens as do not (individually or in the aggregate)

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 11 of 36


         materially affect the business or prospects of the Company. Any real
         property and buildings held under lease or sublease by the Company are
         held by the Company under valid, subsisting and enforceable leases with
         such exceptions as are not material to, and do not interfere with, the
         use made and proposed to be made of such property and buildings by the
         Company. The Company has not received any notice of any claim adverse
         to its ownership of any real or personal property or of any claim
         against the continued possession of any real property, whether owned or
         held under lease or sublease by the Company.

                  (gg) The Company: (i) owns or possesses adequate right to use
         all patents, patent applications, trademarks, service marks, trade
         names, trademark registrations, service mark registrations, copyrights,
         licenses, formulae, customer lists, and know-how and other intellectual
         property (including trade secrets and other unpatented and/or
         unpatentable proprietary or confidential information, systems or
         procedures, "INTELLECTUAL PROPERTY") necessary for the conduct of its
         business as being conducted and as described in the Registration
         Statement and Prospectus and (ii) has no knowledge that the conduct of
         its business does or will conflict with, and the Company has not
         received any notice of any claim of conflict with, any such right of
         others. To the Company's knowledge, all material technical information
         developed by and belonging to the Company which has not been patented
         has been kept confidential so, among other things, all such information
         may be deemed proprietary to the Company. Except as set forth in the
         Registration Statement or the Prospectus, the Company has not granted
         or assigned to any other Person any right to sell the current products
         and services of the Company. To the Company's knowledge, there is no
         infringement by third parties of any such Intellectual Property owned
         by the Company; there is no pending or, to the Company's knowledge,
         threatened action, suit, proceeding or claim by others challenging the
         Company's rights in or to any such Intellectual Property, and the
         Company is unaware of any facts which would form a reasonable basis for
         any such claim; and there is no pending or, to the Company's knowledge,
         threatened action, suit, proceeding or claim by others that the Company
         infringes or otherwise violates any patent, trademark, copyright, trade
         secret or other proprietary rights of others, and the Company is
         unaware of any other fact which would form a reasonable basis for any
         such claim.

                  (hh) The Company maintains insurance of the types and in the
         amounts which are customary for companies engaged in similar
         businesses, including, but not limited to: (A) directors' and officers'
         insurance (including insurance covering the Company, its directors and
         officers for liabilities or losses arising in connection with this
         Offering, including, without limitation, liabilities or losses arising
         under the Securities Act, the Exchange Act, the Rules and Regulations
         and applicable foreign securities laws), (B) insurance covering real
         and personal property owned or leased by the Company against theft,
         damage, destruction, acts of vandalism and all other risks customarily
         insured against and (C) business interruption insurance. There are no
         claims by the Company under any policy or instrument described in this
         subparagraph as to which any insurance company is denying liability or
         defending under a reservation of rights clause. All of the insurance
         policies described in this subparagraph are in full force and effect.
         The Company has not been refused any insurance coverage sought or
         applied for, and the Company has no reason to believe that it will not
         be able to renew its existing insurance

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 12 of 36


         coverage as and when such coverage expires or to obtain similar
         coverage from similar insurers as may be necessary to continue its
         business at a cost that would not materially adversely affect the
         business, business prospects, properties, condition (financial or
         otherwise) or results of operations of the Company.

                  (ii) The Company has accurately prepared and timely filed all
         federal, state, foreign and other tax returns that are required to be
         filed by it and has paid or made provision for the payment of all
         taxes, assessments, governmental or other similar charges, including
         without limitation, all sales and use taxes and all taxes which the
         Company is obligated to withhold from amounts owing to employees,
         creditors and third parties, with respect to the periods covered by
         such tax returns (whether or not such amounts are shown as due on any
         tax return). No deficiency assessment with respect to a proposed
         adjustment of the Company's federal, state, local or foreign taxes is
         pending or, to the Company's knowledge, threatened. The accruals and
         reserves on the books and records of the Company in respect of tax
         liabilities for any taxable period not finally determined are adequate
         to meet any assessments and related liabilities for any such period
         and, since the date of the Company's most recent audited financial
         statements, the Company has not incurred any liability for taxes other
         than in the ordinary course of its business. There is no tax Lien,
         whether imposed by any federal, state, foreign or other taxing
         authority, outstanding against the assets, properties or business of
         the Company.

                  (jj) No material labor dispute by the employees of the Company
         currently exists or, to the Company's knowledge, is imminent.

                  (kk) The Company has at all times operated its business in
         material compliance with all Environmental Laws (as defined below), and
         no expenditures are or will be required in order to comply therewith
         that are reasonably likely to result in a Material Adverse Effect. The
         Company has not received any notice or communication that relates to or
         alleges any actual or potential violation or failure to comply with any
         Environmental Laws that are reasonably likely to result in a Material
         Adverse Effect. As used herein, the term "ENVIRONMENTAL LAWS" means all
         applicable laws and regulations, including any licensing, permits or
         reporting requirements, and any action by a Federal, state or local
         governmental entity pertaining to the protection of the environment,
         protection of public health, protection of worker health and safety, or
         the handling of hazardous materials, including without limitation, the
         Clean Air Act, 42 U.S.C. ss. 7401, et seq., the Comprehensive
         Environmental Response, Compensation and Liability Act of 1980, 42
         U.S.C. ss. 9601, et seq., the Federal Water Pollution Control Act, 33
         U.S.C. ss. 1321, et seq., the Hazardous Materials Transportation Act,
         49 U.S.C. ss. 1801, et seq., the Resource Conservation and Recovery
         Act, 42 U.S.C. ss. 690-1, et seq., and the Toxic Substances Control
         Act, 15 U.S.C. ss. 2601, et seq.

                  (ll) Except as set forth in the Registration Statement or the
         Prospectus, the Company is not a party to an "employee benefit plan,"
         as defined in Section 3(3) of the Employee Retirement Income Security
         Act of 1974 ("ERISA") which: (i) is subject to any provision of ERISA
         and (ii) is or was at any time maintained, administered or contributed
         to by the Company and covers any employee or former employee of the
         Company or any ERISA

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 13 of 36


         Affiliate (as defined hereafter). These plans are referred to
         collectively herein as the "EMPLOYEE PLANS." The term "ERISA AFFILIATE"
         of any Person means any other Person which, together with that Person,
         could be treated as a single employer under Section 414(m) of the
         Internal Revenue Code of 1986, as amended (the "CODE"), or is an
         "affiliate," whether or not incorporated, as defined in Section
         407(d)(7) of ERISA, of such Person.

                  (mm) The Registration Statement and the Prospectus identify
         each employment, severance or other similar arrangement or policy and
         each material plan or arrangement providing for insurance coverage
         (including any self-insured arrangements), workers' compensation,
         disability benefits, severance benefits, supplemental unemployment
         benefits, vacation benefits, retirement benefits or for deferred
         compensation, profit-sharing, bonuses, stock options, stock
         appreciation or other forms of incentive compensation, or
         post-retirement insurance, compensation or benefits which: (i) is not
         an Employee Plan, (ii) is entered into, maintained or contributed to,
         as the case may be, by the Company or any of its ERISA Affiliates, and
         (iii) covers any employee or former employee of the Company or any of
         its ERISA Affiliates. These contracts, plans and arrangements are
         referred to collectively in this Agreement as the "BENEFIT
         ARRANGEMENTS." Each Benefit Arrangement has been maintained in
         substantial compliance with its terms and with the requirements
         prescribed by any and all statutes, orders, rules and regulations that
         are applicable to that Benefit Arrangement.

                  (nn) Except as set forth in the Registration Statement or the
         Prospectus, there is no liability in respect of post-retirement health
         and medical benefits for retired employees of the Company or any of its
         ERISA Affiliates other than medical benefits required to be continued
         under applicable law. With respect to any of the Company's Employee
         Plans which are "group health plans" under Section 4980B of the Code
         and Section 607(1) of ERISA, there has been material compliance with
         all requirements imposed thereunder such that that the Company or its
         ERISA Affiliates have no (and will not incur any) loss, assessment, tax
         penalty, or other sanction with respect to any such Company Employee
         Plan.

                  (oo) Except: (i) as set forth in the Registration Statement or
         the Prospectus or (ii) for employment agreements between the Company
         and each of Andrew Gordon, the Company's Chief Executive Officer and
         President, and David Gordon, the Company's Executive Vice
         President-Operations, the Company is not a party to or subject to any
         employment contract or arrangement providing for annual future
         compensation, or the opportunity to earn annual future compensation
         (whether through fixed salary, bonus, commission, options or otherwise)
         of more than $60,000 to any officer, consultant, director or employee.

                  (pp) The execution of this Agreement and the Stock Purchase
         Warrant and consummation of the Offering does not constitute a
         triggering event under any Employee Plan or any other employment
         contract, whether or not legally enforceable, which (either alone or
         upon the occurrence of any additional or subsequent event) will or may
         result in any payment (of severance pay or otherwise), acceleration,
         increase in vesting, or increase in benefits to any current or former
         participant, employee or director of the Company other than an event
         that is not material to the financial condition or business of the
         Company.

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 14 of 36


                  (qq) No "prohibited transaction" (as defined in either Section
         406 of the ERISA or Section 4975 of Code), "accumulated funding
         deficiency" (as defined in Section 302 of ERISA) or other event of the
         kind described in Section 4043(b) of ERISA (other than events with
         respect to which the 30-day notice requirement under Section 4043 of
         ERISA has been waived) has occurred with respect to any Employee Plan
         for which the Company would have any liability; each Employee Plan of
         the Company is in compliance in all material respects with applicable
         law, including without limitation ERISA and the Code; the Company has
         not incurred and does not expect to incur liability under Title IV of
         ERISA with respect to the termination of, or withdrawal from any
         "pension plan"; and each Employee Plan of the Company that is intended
         to be qualified under Section 401(a) of the Code is so qualified and
         nothing has occurred, whether by action or by failure to act, which
         could cause the loss of such qualification.

                  (rr) Neither the Company nor, to the Company's knowledge, any
         of its employees or agents has at any time: (i) made any unlawful
         contribution to any candidate for foreign office, or failed to disclose
         fully any contribution in violation of law, or (ii) made any payment to
         any federal or state governmental officer or official, or other Person
         charged with similar public or quasi-public duties, other than payments
         that are not prohibited by the laws of the United States of any
         jurisdiction thereof.

                  (ss) The Company has not offered, or caused the Underwriters
         to offer, the Firm Shares to any Person with the intention of
         unlawfully influencing: (i) a customer or supplier of the Company to
         alter the customer's or supplier's level or type of business with the
         Company or (ii) a journalist or publication to write or publish
         favorable information about the Company or its products or services.

                  (tt) The Shares have been authorized for listing on the AMEX.

                  (uu) The Company has not distributed, nor will it distribute
         prior to the First Closing Date (as defined in Section 2(b) below), any
         offering materials in connection with the offering and sale of the
         Shares other than the Preliminary Prospectus, the Prospectus, the
         Registration Statement or any other materials permitted by the
         Securities Act, if any.

                  (vv) Since October 27, 2000, the Company has timely filed all
         reports, schedules, forms, statements and other documents required to
         be filed by it with the Commission pursuant to the reporting
         requirements of the Exchange Act (all of the foregoing, and all other
         documents and registration statements heretofore filed by the Company
         with the Commission being hereinafter referred to as the "SEC
         DOCUMENTS"). None of the SEC Documents, at the time they were filed
         with the Commission (except those SEC Documents that were subsequently
         amended), contained any untrue statement of a material fact or omitted
         to state a material fact required to be stated therein or necessary in
         order to make the statements therein, in light of the circumstances
         under which they were made, not misleading. As of their respective
         dates, the financial statements of the Company included (or
         incorporated by reference) in the SEC Documents complied as to form in
         all material respects with applicable accounting requirements

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 15 of 36


         and the published rules and regulations of the Commission or other
         applicable rules and regulations with respect thereto (except those SEC
         Documents that were subsequently amended).

                  (ww) As used in this Agreement, references to matters being
         "material" with respect to the Company shall mean a material event,
         change, condition, status or effect related to the condition (financial
         or otherwise), properties, assets (including intangible assets),
         liabilities, business, prospects, operations or results of operations
         of the Company.

                  (xx) As used in this Agreement, the term "knowledge of the
         Company" (or similar language) shall mean the knowledge of the officers
         and directors of the Company who are named in the Prospectus, with the
         assumption that such officers and directors shall have made reasonable
         and diligent inquiry of the matters presented (with reference to what
         is customary and prudent for the applicable individuals in connection
         with the discharge by the applicable individuals of their duties as
         officers or directors of the Company, as applicable.

         Any certificate signed by or on behalf of the Company and delivered to
the Underwriters or to Lowenstein Sandler PC, counsel for the Underwriters
("UNDERWRITERS' COUNSEL"), shall be deemed to be a representation and warranty
by the Company to each Underwriter listed on Schedule A hereto as to the matters
covered thereby.

         2. Purchase, Sale and Delivery of the Shares.

         (a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at a purchase
price per share of $__________, the number of Firm Shares set forth opposite
their respective names on Schedule A hereto together with any additional number
of Shares which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 9 hereof.

         (b) Payment of the purchase price for, and delivery of certificates
representing, the Firm Shares shall be made at the offices of the Underwriters'
Counsel, 1251 Avenue of the Americas, 18th Floor, New York, New York 10020, or
at such other place as shall be agreed upon by the Underwriters and the Company,
at 10:00 A.M., New York City time, on the third (3rd) or, as permitted under
Rule 15c6-1 under the Exchange Act, fourth (4th) business day (unless postponed
in accordance with the provisions of Section 9 hereof) following the date of the
effectiveness of the Registration Statement, or such other time not later than
ten (10) business days after such date as shall be agreed upon by the
Underwriters and the Company as permitted under Rule 15c6-1 under the Exchange
Act (such time and date of payment and delivery being herein called the "FIRST
CLOSING DATE"). The closing of the payment of the purchase price for, and
delivery of certificates representing, the Firm Shares is referred to herein as
the "FIRST CLOSING."

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 16 of 36


         (c) Payment of the purchase price for the Firm Shares shall be made by
wire transfer in immediately available funds to or as directed by the Company
upon delivery of certificates for the Firm Shares to the Underwriters through
the facilities of The Depository Trust Company for the respective accounts of
the several Underwriters. Certificates for the Firm Shares shall be registered
in such name or names and shall be in such denominations as the Underwriters may
request at least two (2) business days before the First Closing Date. The
Company will permit the Underwriters to examine and package such certificates
for delivery at least one (1) full business day prior to the First Closing Date.

         (d) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants to the Underwriters an
option to purchase up to an aggregate of 210,000 Additional Shares at the same
purchase price per share to be paid by the Underwriters for the Firm Shares as
set forth in Section 2(a) above, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the Underwriters. This option may
be exercised at any time and from time to time on or before the forty-fifth
(45th) day following the final date of the Prospectus, by written notice from
the Underwriters to the Company. Such notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised and the
date and time, as reasonably determined by the Underwriters, when the Additional
Shares are to be delivered (any such date and time being herein sometimes
referred to as an "ADDITIONAL CLOSING DATE"; the closing of the payment of the
purchase price for, and delivery of certificates representing, any Additional
Shares is referred to herein as an "ADDITIONAL CLOSING"); provided, however,
that no Additional Closing Date shall occur earlier than the First Closing Date
or earlier than the second (2nd) full business day after the date on which the
option shall have been exercised nor later than the eighth (8th) full business
day after the date on which the option shall have been exercised (unless such
time and date are postponed in accordance with the provisions of Section 9
hereof). Upon any exercise of the option as to all or any portion of the
Additional Shares, each Underwriter, acting severally and not jointly, agrees to
purchase from the Company the number of Additional Shares that bears the same
proportion of the total number of Additional Shares then being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto (or such number increased as set forth in Section 9 hereof)
bears to the total number of Firm Shares that the Underwriters have agreed to
purchase hereunder, subject, however, to such adjustments to eliminate
fractional shares as the Underwriters in their sole discretion shall make. In
the event the Company declares or pays a dividend or distribution on its Common
Stock, whether in the form of cash, shares of Common Stock or any other
consideration, following the First Closing Date and prior to any Additional
Closing Date, such dividend or distribution shall also be paid on the Additional
Shares issued on such Additional Closing Date.

         (e) Payment of the purchase price for, and delivery of certificates
representing, the Additional Shares shall be made at the office of Underwriters'
Counsel, or at such other place as shall be agreed upon by the Underwriters and
the Company, at 10:00 A.M., New York City time, on the Additional Closing Date
(unless postponed in accordance with the provisions of Section 9 hereof), or
such other time as shall be agreed upon by the Underwriters and the Company.

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 17 of 36



         (f) Payment of the purchase price for the Additional Shares shall be
made by wire transfer in immediately available funds to or as directed by the
Company upon delivery of certificates for the Additional Shares to the
Underwriters through the facilities of The Depository Trust Company for the
respective accounts of the several Underwriters. Certificates for the Additional
Shares shall be registered in such name or names and shall be in such
denominations as the Underwriters may request at least two (2) business days
before the Additional Closing Date. The Company will permit the Underwriters to
examine and package such certificates for delivery at least one full business
day prior to the Additional Closing Date.

         3. Offering. Upon authorization of the release of the Firm Shares by
the Representative, the Underwriters propose to offer the Shares for sale to the
public upon the terms and conditions set forth in the Prospectus. The
Underwriters may from time to time change the public offering price after the
closing of the initial public offering and increase or decrease the concessions
and discounts to dealers as they may determine.

         4. Covenants of the Company. The Company acknowledges, covenants and
agrees with the Underwriters that:

                  (a) The Registration Statement and any amendments thereto have
         been declared effective, and if Rule 430A is used or the filing of the
         Prospectus is otherwise required under Rule 424(b), the Company will
         file the Prospectus (properly completed if Rule 430A has been used)
         pursuant to Rule 424(b) within the prescribed time period and will
         provide evidence satisfactory to the Underwriters of such timely
         filing.

                  The Company will notify the Underwriters immediately (and, if
         requested by the Underwriters, will confirm such notice in writing):
         (i) when any amendments to the Registration Statement become effective,
         (ii) of any request by the Commission for any amendment of or
         supplement to the Registration Statement or the Prospectus or for any
         additional information, (iii) of the Company's intention to file or
         prepare any supplement or amendment to the Registration Statement or
         the Prospectus, (iv) of the mailing or the delivery to the Commission
         for filing of any amendment of or supplement to the Registration
         Statement or the Prospectus, including but not limited to Rule 462(b)
         under the Securities Act, (v) of the issuance by the Commission of any
         stop order suspending the effectiveness of the Registration Statement
         or any post-effective amendment thereto or of the initiation, or the
         threatening, of any proceedings therefor, it being understood that the
         Company shall make every effort to avoid the issuance of any such stop
         order, (vi) of the receipt of any comments from the Commission, and
         (vii) of the receipt by the Company of any notification with respect to
         the suspension of the qualification of the Shares for sale in any
         jurisdiction or the initiation or threatening of any proceeding for
         that purpose. If the Commission shall propose or enter a stop order at
         any time, the Company will make every reasonable effort to prevent the
         issuance of any such stop order and, if issued, to obtain the lifting
         of such order as soon as possible. The Company will not file any
         amendment to the Registration Statement or any amendment of or
         supplement to the Prospectus (including the prospectus required to be
         filed pursuant to Rule 424(b)) that differs from the Prospectus on

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 18 of 36


         file at the time of the effectiveness of the Registration Statement or
         file any document under the Exchange Act if such document would be
         deemed to be incorporated by reference into the Prospectus to which the
         Underwriters shall object in writing after being timely furnished in
         advance a copy thereof. The Company will provide the Underwriters with
         copies of all such amendments, filings and other documents a sufficient
         time prior to any filing or other publication thereof to permit the
         Underwriters a reasonable opportunity to review and comment thereon.

                  (b) The Company shall comply with the Securities Act, the
         Exchange Act and all applicable Rules and Regulations to permit
         completion of the distribution as contemplated in this Agreement, the
         Registration Statement and the Prospectus. If, at any time when a
         Prospectus relating to the Shares is required to be delivered under the
         Securities Act, the Exchange Act and all applicable Rules and
         Regulations in connection with the sales of Shares, any event shall
         have occurred as a result of which the Prospectus as then amended or
         supplemented would, in the judgment of the Underwriters or the Company,
         include an untrue statement of a material fact or omit to state any
         material fact required to be stated therein or necessary to make the
         statements therein, in the light of the circumstances existing at the
         time of delivery to the purchaser, not misleading, or if, to comply
         with the Securities Act, the Exchange Act or the Rules and Regulations,
         it shall be necessary at any time to amend or supplement the Prospectus
         or Registration Statement, or to file any document which is an exhibit
         to the Registration Statement or the Prospectus or in any amendment
         thereof or supplement thereto, the Company will notify the Underwriters
         promptly and prepare and file with the Commission, subject to Section
         4(a) hereof, an appropriate amendment or supplement (in form and
         substance satisfactory to the Underwriters) which will correct such
         statement or omission or which will effect such compliance and will use
         its best efforts to have any amendment to the Registration Statement
         declared effective as soon as possible.

                  (c) The Company will promptly deliver to the Underwriters and
         Underwriters' Counsel a signed copy of the Registration Statement, as
         initially filed and all amendments thereto, including all consents and
         exhibits filed therewith, and will maintain in the Company's files
         manually signed copies of such documents for at least five (5) years
         after the date of filing thereof. The Company will promptly deliver to
         each of the Underwriters such number of copies of any Preliminary
         Prospectus, the Prospectus, the Registration Statement, and all
         amendments of and supplements to such documents, if any, and all
         documents which are exhibits to the Registration Statement and
         Prospectus or any amendment thereof or supplement thereto, as the
         Underwriters may reasonably request. Prior to 10:00 A.M., New York
         time, on the business day next succeeding the date of this Agreement
         and from time to time thereafter, the Company will furnish the
         Underwriters with copies of the Prospectus in New York City in such
         quantities as the Underwriters may reasonably request.

                  (d) The Company consents to the use and delivery of the
         Preliminary Prospectus by the Underwriters in accordance with Rule 430
         and Section 5(b) of the Securities Act.

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 19 of 36


                  (e) If the Company elects to rely on Rule 462(b) under the
         Securities Act, the Company shall both file a Rule 462(b) Registration
         Statement with the Commission in compliance with Rule 462(b) and pay
         the applicable fees in accordance with Rule 111 of the Act by the
         earlier of: (i) 10:00 p.m., New York City time, on the date of this
         Agreement, and (ii) the time that confirmations are given or sent, as
         specified by Rule 462(b)(2).

                  (f) The Company will use its best efforts, in cooperation with
         the Underwriters, at or prior to the time of effectiveness of the
         Registration Statement, to qualify the Shares for offering and sale
         under the securities laws relating to the offering or sale of the
         Shares of such jurisdictions, domestic or foreign, as the Underwriters
         may designate and to maintain such qualification in effect for so long
         as required for the distribution thereof, except that in no event shall
         the Company be obligated in connection therewith to qualify as a
         foreign corporation or to execute a general consent to service of
         process.

                  (g) The Company will make generally available to its security
         holders and to the Underwriters as soon as practicable, but in any
         event not later than twelve (12) months after the effective date of the
         Registration Statement (as defined in Rule 158(c) under the Securities
         Act), an earnings statement of the Company (which need not be audited)
         complying with Section 11(a) of the Securities Act and the Rules and
         Regulations (including, at the option of the Company, Rule 158).

                  (h) During the twelve (12) months following the First Closing
         Date, without the consent of the Underwriters which shall not be
         unreasonably withheld: the Company will not file any registration
         statement relating to the offer or sale of any of the Company's
         securities, including any Registration Statement on Form S-8.
         Notwithstanding the foregoing, the Company shall be permitted to file a
         Registration Statement on Form S-4 for an acquisition transaction and a
         Registration Statement and Form S-8 with respect to the Company's stock
         option plan described in the Registration Statement.

                  (i) For a period of nine (9) months from the date of the
         Prospectus, the Company shall not, directly or indirectly, (1) offer
         for sale, sell, pledge or otherwise dispose of (or enter into any
         transaction or device which is designed to, or could be expected to,
         result in the disposition by any Person at any time in the future of)
         any Relevant Securities (other than (x) the Shares, (y) the grant of
         options to purchase shares of Common Stock under its existing stock
         option plan and the issuance of Common Stock to employees or
         prospective employees as incentive compensation in an amount (with
         respect to the shares of Common Stock underlying the option grants and
         the issuance of Common Stock to employees or prospective employees) not
         to exceed 100,000 shares of Common Stock in the aggregate; and (z) the
         issuance of shares of Common Stock pursuant to currently outstanding
         options, warrants or rights), or (2) enter into any swap or other
         derivatives transaction that transfers to another, in whole or in part,
         any of the economic benefits or risks of ownership of such shares of
         Common Stock or other Relevant Securities, whether any such transaction
         described in clause (1) or (2) above is to be settled by delivery of
         Common Stock or other securities, in cash or otherwise, in each case,
         without the prior written consent of the Underwriters; and to cause
         each officer, director and each

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 20 of 36


         shareholder of the Company set forth on Annex III hereto to furnish to
         the Company, prior to the First Closing Date, a letter or letters,
         substantially in the form of Annex II hereto. During the nine (9) month
         period from the date of the final Prospectus, the Company shall obtain
         an executed letter in the form of Annex II from each new officer and
         director who has not previously executed such a letter.

                  (j) During the twelve (12) month period following the First
         Closing Date, without the consent of the Underwriters, which consent
         shall not be unreasonably withheld, the Company shall not grant any
         registration rights relating to securities of the Company.

                  (k) During the twelve (12) month period following the First
         Closing Date, the Company will not offer or sell any convertible
         securities convertible at a price that may, at the time of conversion,
         be less than the Fair Market Value of the Common Stock of the date of
         the original sale. For purposes of this Section 4, the term "FAIR
         MARKET VALUE" shall mean the last sale price of the Common Stock,
         during normal operating hours, as reported on AMEX.

                  (l) For a period of one year from the effective date of the
         Registration Statement, the Company, at its expense, shall provide the
         Underwriters on a weekly basis with a copy of the Company's weekly
         transfer sheets from the previous week and securities positions
         listings.

                  (m) During the period of three (3) years from the effective
         date of the Registration Statement, the Company will furnish to the
         Underwriters copies of all reports or other communications (financial
         or other) furnished to security holders or from time to time published
         or publicly disseminated by the Company, and will deliver to the
         Underwriters: (i) as soon as they are available, copies of any reports,
         financial statements and proxy or information statements furnished to
         or filed with the Commission or any national securities exchange on
         which any class of securities of the Company is listed; and (ii) such
         additional information concerning the business and financial condition
         of the Company as the Underwriters may from time to time reasonably
         request.

                  (n) The Company will not issue press releases or engage in any
         other publicity, without the Underwriters's prior written consent, for
         a period ending at 5:00 p.m. New York time on the first business day
         following the thirtieth (30th) day following the First Closing Date,
         other than normal and customary releases issued in the ordinary course
         of the Company's business.

                  (o) On or prior to the First Closing Date, the Company will
         have engaged and will continue to engage for no less than one (1) year
         from the date of the First Closing Date, a financial public relations
         firm mutually acceptable to the Company and the Underwriters. The
         Company further agrees to consult with the Underwriters as is customary
         within the securities industry prior to distribution to third parties
         of any financial information, news releases, and/or other publicity
         regarding the Company, its business, or any terms of the Offering, it
         being agreed that the Company shall give the Underwriters prior notice
         of any such distribution and a

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 21 of 36


         reasonable opportunity during or prior to such period to review the
         contents of the proposed distribution.

                  (p) The Company has or will retain a transfer agent reasonably
         acceptable to the Underwriters for the Shares and shall continue to
         retain such transfer agent for a period of three (3) years following
         the Closing Date. Notwithstanding the foregoing, the Underwriters agree
         that OTR, Inc. is a transfer agent reasonably acceptable to it.

                  (q) The Company will apply the net proceeds from the sale of
         the Shares as set forth under the caption "Use of Proceeds" in the
         Prospectus. Without the written consent of the Underwriters, no
         proceeds of the Offering will be used to pay outstanding loans from
         officers, directors or shareholders or to pay any accrued salaries or
         bonuses to any employees or former employees.

                  (r) The Company will use its commercially reasonable efforts
         to maintain the listing of the Shares on AMEX or other national
         securities exchange acceptable to the Underwriters for a period of at
         least five (5) years from the date of this Agreement.

                  (s) The Company, during the period when the Prospectus is
         required to be delivered under the Securities Act or the Exchange Act,
         will file all documents required to be filed with the Commission
         pursuant to the Securities Act, the Exchange Act and the Rules and
         Regulations within the time periods required thereby.

                  (t) The Company will use its best efforts to perform all of
         its obligations under this Agreement prior to the First Closing Date or
         any Additional Closing Date, as the case may be, and to satisfy all
         conditions precedent to the delivery of the Firm Shares and the
         Additional Shares.

                  (u) The Company will not take, and will cause its Affiliates
         not to take, directly or indirectly, any action which constitutes or is
         designed to cause or result in, or which could reasonably be expected
         to constitute, cause or result in, the stabilization or manipulation of
         the price of any security to facilitate the sale or resale of the
         Shares.

                  (v) The Company shall cause to be prepared and delivered to
         the Underwriters, at its expense, within one (1) business day from the
         effective date of this Agreement, an Electronic Prospectus to be used
         by the Underwriters in connection with the Offering. As used herein,
         the term "ELECTRONIC PROSPECTUS" means a form of prospectus, and any
         amendment or supplement thereto, that meets each of the following
         conditions: (i) it shall be encoded in an electronic format,
         satisfactory to the Underwriters, that may be transmitted
         electronically by the other Underwriters to offerees and purchasers of
         the Shares for at least the period during which a Prospectus relating
         to the Shares is required to be delivered under the Securities Act;
         (ii) it shall disclose the same information as the paper prospectus and
         prospectus filed pursuant to EDGAR, except to the extent that graphic
         and image material cannot be disseminated electronically, in which case
         such graphic and image material shall be replaced in

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                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 22 of 36


         the electronic prospectus with a fair and accurate narrative
         description or tabular representation of such material, as appropriate;
         and (iii) it shall be in or convertible into a paper format or an
         electronic format, satisfactory to the Underwriters, that will allow
         recipients thereof to store and have continuously ready access to the
         prospectus at any future time, without charge to such recipients (other
         than any fee charged for subscription to the Internet as a whole and
         for on-line time). The Company hereby confirms that it has included or
         will include in the Prospectus filed pursuant to EDGAR or otherwise
         with the Commission and in the Registration Statement at the time it
         was declared effective an undertaking that, upon receipt of a request
         by an investor or his or her representative within the period when a
         prospectus relating to the Shares is required to be delivered under the
         Securities Act, the Company shall transmit or cause to be transmitted
         promptly, without charge, a paper copy of the Prospectus.

                  (w) The Company will reserve and keep available that maximum
         number of its authorized but unissued securities which are issuable
         upon exercise of the Stock Purchase Warrant outstanding from time to
         time.

                  (x) The Company shall take all actions as shall be necessary
         to ensure that it shall not become an "investment company" as defined
         in the Investment Company Act of 1940, as amended, and the rules and
         regulations of the Commission thereunder.

         5. Consideration; Payment of Expenses.

         (a) In consideration of the services to be provided for hereunder, the
Company shall pay and/or issue to the Underwriters or their respective designees
their pro rata portion (based on the Shares purchased) of the following
compensation:

                  (i) A cash fee equal to nine percent (9%) of the gross
         proceeds of the Offering (including proceeds from the sale of
         Additional Shares, if any), which fee is to be paid by means of a
         discount from the public offering price in the Offering or, at the
         Underwriters' option, as a cash fee at the First Closing (with respect
         to the gross proceeds from the sale of the Firm Shares and the
         Additional Shares, if any, at the First Closing) and at each Additional
         Closing (with respect to the gross proceeds from the sale of the
         Additional Shares at such Additional Closing);

                  (ii) A non-accountable expense allowance, to the Underwriters
         equal to three percent (3%) of the gross proceeds of the Offering
         (including proceeds from the sale of Additional Shares, if any). The
         Company has heretofore paid a $50,000 advance to the Underwriters,
         which shall be applied against the non-accountable expense allowance;
         and

                  (iii) The Stock Purchase Warrant to the Underwriters as set
         forth in Section 12 of this Agreement.

         (b) The Underwriters reserve the right to reduce any item of the
Underwriters' compensation or adjust the terms thereof as specified herein in
the event that a determination

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                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 23 of 36


shall be made by the NASD to the effect that the Underwriters' aggregate
compensation is in excess of NASD rules or that the terms thereof require
adjustment.

         (c) Whether or not the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus are consummated or this Agreement is
terminated (regardless of the reason for such termination), the Company hereby
agrees to pay all costs and expenses incident to the performance of its
obligations hereunder, including the following:

                  (i) all expenses in connection with the preparation, printing,
         "edgarization" and filing of the Registration Statement, any
         Preliminary Prospectus and the Prospectus and any and all amendments
         and supplements thereto and the mailing and delivering of copies
         thereof to the Underwriters and dealers;

                  (ii) the fees, disbursements and expenses of the Company's
         counsel and accountants in connection with the registration of the
         Shares under the Securities Act and the Offering;

                  (iii) the cost of producing this Agreement and any agreement
         among Underwriters, the blue sky survey and memorandum, closing
         documents and other instruments, agreements or documents (including any
         compilations thereof) in connection with the Offering and the cost of
         five (5) bound volumes of such documents for the Underwriters;

                  (iv) all expenses in connection with the qualification of the
         Shares for offering and sale under state or foreign securities or blue
         sky laws, including the fees and disbursements of Underwriters' Counsel
         in connection with such qualification and in connection with any blue
         sky survey undertaken by such counsel;

                  (v) the filing fees incident to, and the fees and
         disbursements of Underwriters' Counsel in connection with, securing any
         required review by the NASD of the terms of the Offering;

                  (vi) all fees and expenses in connection with listing the
         Shares on AMEX;

                  (vii) all travel expenses of the Company's officers and
         employees and any other expense of the Company incurred in connection
         with attending or hosting meetings with prospective purchasers of the
         Shares ("ROAD SHOW EXPENSES");

                  (viii) any stock transfer taxes incurred in connection with
         this Agreement or the Offering;

                  (ix) the cost of preparing stock certificates representing the
         Shares;



<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 24 of 36


                  (x) the cost and charges of any transfer agent or registrar
         for the Shares;

                  (xi) the cost of two (2) "tombstone" advertisements to be
         placed in appropriate daily or weekly periodicals of the Underwriters's
         choice (i.e., The Wall Street Journal and The New York Times); and

                  (xii) all other costs and expenses incident to the performance
         of the Company obligations hereunder which are not otherwise
         specifically provided for in this Section 5.

Notwithstanding the foregoing, unless otherwise approved in advance by the
Company, the fees and expenses of Underwriters' Counsel payable by the Company
under subparagraphs (iv) and (v), excluding filing fees in either case, shall be
limited to $15,000 ($10,000 of which was paid upon the initial filing of the
Registration Statement) plus disbursements.

         (d) The Company shall also pay, as due, state registration,
qualification and filing fees, and accountable out-of-pocket disbursements in
connection with such registration, qualification or filing.

         (e) It is understood, however, that except as provided in this Section
or elsewhere in this Agreement, the Underwriters will pay all of their own costs
and expenses, including the fees of their counsel. Notwithstanding anything to
the contrary in this Section 5, in the event that this Agreement is terminated
as a result of the failure of the Company to satisfy the conditions set forth in
Section 6 or pursuant to 11(b) hereof, or subsequent to a Material Adverse
Change, the Company will pay all accountable expenses of the Underwriters
(including but not limited to fees and disbursements of counsel to the
Underwriters) incurred in connection herewith.

         (f) No person is entitled either directly or indirectly to compensation
from the Company, from the Underwriters or from any other person for services as
a finder in connection with the proposed offering, and the Company agrees to
indemnify and hold harmless the Underwriters, against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), to which the Underwriters may become
subject insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon the claim of any person (other
than an employee of the party claiming indemnity) or entity that he or it is
entitled to a finder's fee in connection with the proposed offering by reason of
such person's or entity's influence or prior contact with the indemnifying
party.

         6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares
as provided herein shall be subject to: (i) the accuracy of the representations
and warranties of the Company herein contained, as of the date hereof and as of
each Closing Date, (ii) the absence of any misstatement or omission from any
certificates, opinions, written statements or letters furnished to the



<PAGE>

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                                                         _____________ ___, 2005
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Underwriters' Counsel pursuant to this Section 6, (iii) the performance by the
Company of its obligations hereunder, and (iv) each of the following additional
conditions set forth in Section 6 hereof. For purposes of this Section 6, the
term "Closing" shall refer to the First Closing Date for the Firm Shares and any
Additional Closing Date, if different, for the Additional Shares, and each of
the foregoing and following conditions must be satisfied as of each Closing.

         (a) The Registration Statement shall have become effective and all
necessary regulatory or listing approvals shall have been received not later
than 5:30 P.M., New York time, on the date of this Agreement, or at such later
time and date as shall have been consented to in writing by the Underwriters. If
the Company shall have elected to rely upon Rule 430A under the Securities Act,
the Prospectus shall have been filed with the Commission in a timely fashion in
accordance with the terms hereof and a form of the Prospectus containing
information relating to the description of the Shares and the method of
distribution and similar matters shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period; and, at or prior to
the Closing Date or the actual time of the Closing, no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof shall have been issued and no proceedings therefor shall have been
initiated or threatened by the Commission.

         (b) The Underwriters shall have received the favorable written opinion
of Thacher Proffitt & Wood LLP, legal counsel for the Company, dated as of each
Closing Date addressed to the Underwriters in the form attached hereto as Annex
I.

         (c) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory in
form and substance to the Underwriters' Counsel, and the Underwriters shall have
received from such counsel a signed opinion, dated as of each Closing Date, in
form and substance satisfactory to the Underwriters. The Company shall have
furnished to Underwriters' Counsel such documents as it may reasonably request
for the purpose of enabling it to render such opinion.

         (d) The Underwriters shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company, dated as of each
Closing Date, to the effect that: (i) the condition set forth in subsection (a)
of this Section 6 has been satisfied, (ii) as of the date hereof and as of each
Closing Date, the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of each Closing Date, all agreements,
conditions and obligations of the Company to be performed or complied with
hereunder on or prior thereto have been duly performed or complied with, (iv)
the Company has not sustained any material loss or interference with their
respective businesses, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding, (v) no stop order suspending
the effectiveness of the Registration Statement or any post-effective amendment
thereof has been issued and no proceedings therefor have been initiated or
threatened by the Commission, (vi) there are no pro forma or as adjusted
financial statements that are required to be included or incorporated by
reference in the Registration Statement and the Prospectus pursuant to the Rules
and Regulations which are not so included or incorporated by reference, and
(vii) subsequent to

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 26 of 36


the respective dates as of which information is given in the Registration
Statement and the Prospectus there has not occurred any Material Adverse Change.

         (e) On the date of this Agreement and on each Closing Date, the
Underwriters shall have received a "cold comfort" letter from Lazar Levine &
Felix LLP, independent public accountants for the Company, dated, respectively,
as of the date of the date of delivery and addressed to the Underwriters and in
form and substance satisfactory to the Underwriters and Underwriters' Counsel,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Securities Act and the Rules and
Regulations, and stating, as of the date of delivery (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five (5) days prior to the date of such letter), the conclusions and
findings of such firm with respect to the financial information and other
matters relating to the Registration Statement covered by such letter and, with
respect to letters issued in respect of an Additional Closing Date, confirming
the conclusions and findings set forth in such prior letter(s).

         (f) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock or long-term debt of the Company or any change or development involving a
change, whether or not arising from transactions in the ordinary course of
business, in the business, condition (financial or otherwise), results of
operations, shareholders' equity, properties or prospects of the Company,
including but not limited to the occurrence of any fire, flood, storm,
explosion, accident, act of war or terrorism or other calamity, the effect of
which, in any such case described above, is, in the sole judgment of the
Underwriters, so material and adverse as to make it impracticable or inadvisable
to proceed with the Offering on the terms and in the manner contemplated in the
Prospectus (exclusive of any supplement).

         (g) The Underwriters shall have received a duly executed lock-up
agreement from each officer, director and shareholder of the Company set forth
on Annex III, in each case substantially in the form attached hereto as Annex
II.

         (h) The Underwriters shall have received a duly executed management
confirmation letter from the Company's directors and officers relating to
certain information appearing in the Registration Statement, which letter shall
be in the form previously delivered to the Underwriters in connection with the
filing of the Preliminary Prospectus.

         (i) The Shares shall have been approved for listing on AMEX.

         (j) The NASD shall have confirmed that it it is satisfied with respect
to the fairness and reasonableness of the underwriting terms and arrangements.

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 27 of 36



         (k) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any federal, state or
foreign governmental or regulatory authority that would, as of each Closing
Date, prevent the issuance or sale of the Shares; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of
each Closing Date, prevent the issuance or sale of the Shares.

         (l) The Company shall have furnished the Underwriters and Underwriters'
Counsel with such other certificates, opinions or other documents as they may
have reasonably requested.

         (m) On the First Closing Date and simultaneously with the delivery of
the Shares, the Company shall execute and deliver to the Underwriters, the Stock
Purchase Warrant. The Stock Purchase Warrant will be substantially in the form
of the Stock Purchase Warrant filed as an exhibit to the Registration Statement.

         If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Underwriters or to Underwriters' Counsel pursuant to this Section 6 shall not be
satisfactory in form and substance to the Underwriters and to Underwriters'
Counsel, all obligations of the Underwriters hereunder may be cancelled by the
Underwriters at, or at any time prior to, the consummation of the First Closing,
and the obligations of the Underwriters to purchase any Additional Shares may be
cancelled by the Underwriters at, or at any time prior to, the Additional
Closing Date. Notice of such cancellation shall be given to the Company in
writing, or by telephone. Any such telephone notice shall be confirmed promptly
thereafter in writing.

         7. Indemnification.

         (a) The Company shall indemnify and hold harmless each Underwriter and
each Person, if any, who controls each Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and reimbursement of any and all
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation) to which they or any
of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, as originally filed or any amendment thereof, or any related
Preliminary Prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 28 of 36


statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter expressly for use therein. The
parties agree that such information provided by or on behalf of any Underwriter
consists solely of the material referred to in the last sentence of Section 1(b)
hereof. This indemnity agreement will be in addition to any liability, which the
Company may otherwise have, including but not limited to other liability under
this Agreement.

         (b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other Person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation) to which they or any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, as
originally filed or any amendment thereof, or any related Preliminary Prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such
Underwriter or responsible for any amount in excess of the underwriting discount
applicable to the Shares to be purchased by such Underwriter hereunder. The
parties agree that such information provided by or on behalf of any Underwriter
consists solely of the material referred to in the last sentence of Section 1(b)
hereof.

         (c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of any claims or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the claim or the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
the indemnifying party from any liability which it may have under this Section 7
to the extent that it is not materially prejudiced as a result thereof and in
any event shall not relieve it from any liability that such indemnifying party
may have otherwise than on account of the indemnity agreement hereunder). In
case any such claim or action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate, at its own expense, in the defense of
such action, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 29 of 36


satisfactory to such indemnified party; provided however, that counsel to the
indemnifying party shall not (except with the written consent of the indemnified
party) also be counsel to the indemnified party. Notwithstanding the foregoing,
the indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
(iii) the indemnifying party does not diligently defend the action after
assumption of the defense, or (iv) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 7 or Section 8 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and
(ii) does not include a statement as to or an admission of fault, culpability or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.

         8. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from Persons, other than the Underwriters, who may also be liable
for contribution, including Persons who control the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, officers
of the Company who signed the Registration Statement and directors of the
Company) as incurred to which the Company and one or more of the Underwriters
may be subject, in such proportions as is appropriate to reflect the relative
benefits received by the Company and such Underwriters from the Offering or, if
such allocation is not permitted by applicable law, in such proportions as are
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
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equitable considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the Offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company bears to (y) the underwriting
discount or commissions received by the Underwriters, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault of each of
the Company and of the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any judicial, regulatory or
other legal or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of this Section 8:
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the discounts and commissions applicable to the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission and (ii)
no Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each Person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of the immediately preceding sentence. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 8 or
otherwise. The obligations of the Underwriters to contribute pursuant to this
Section 8 are several in proportion to the respective number of Shares to be
purchased by each of the Underwriters hereunder and not joint.

         9. Underwriter Default.

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 31 of 36


         (a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates (the
"DEFAULT SHARES") do not (after giving effect to arrangements, if any, made by
the Underwriters pursuant to subsection (b) below) exceed in the aggregate 10%
of the number of Firm Shares or Additional Shares, each non-defaulting
Underwriter, acting severally and not jointly, agrees to purchase from the
Company that number of Default Shares that bears the same proportion of the
total number of Default Shares then being purchased as the number of Firm Shares
set forth opposite the name of such Underwriter on Schedule A hereto bears to
the aggregate number of Firm Shares set forth opposite the names of the
non-defaulting Underwriters, subject, however, to such adjustments to eliminate
fractional shares as the Underwriters in their sole discretion shall make.

         (b) In the event that the aggregate number of Default Shares exceeds
10% of the number of Firm Shares or Additional Shares, as the case may be, the
Underwriters may in their discretion arrange for itself or for another party or
parties (including any non-defaulting Underwriter or Underwriters who so agree)
to purchase the Default Shares on the terms contained herein. In the event that
within five calendar days after such a default the Underwriters does not arrange
for the purchase of the Default Shares as provided in this Section 9, this
Agreement or, in the case of a default with respect to the Additional Shares,
the obligations of the Underwriters to purchase and of the Company to sell the
Additional Shares shall thereupon terminate, without liability on the part of
the Company with respect to such Additional Shares (except as otherwise provided
herein) or the Underwriters, but nothing in this Agreement shall relieve a
defaulting Underwriter or Underwriters of its or their liability, if any, to the
other Underwriters and the Company for damages occasioned by its or their
default hereunder.

         (c) In the event that any Default Shares are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, the Underwriters or the Company shall have the right to postpone
the First Closing Date or any Additional Closing Date, as the case may be, for a
period, not exceeding five (5) business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company agrees to
file promptly any amendment or supplement to the Registration Statement or the
Prospectus which, in the reasonable opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9 with like
effect as if it had originally been a party to this Agreement with respect to
such Firm Shares and Additional Shares.

         10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Company and the Underwriters
contained in this Agreement or in certificates of officers of the Company
submitted pursuant hereto, including the covenants contained in Section 4, the
agreements contained in Section 5, the indemnity agreements contained in Section
7 and the contribution agreements contained in Section 8 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling Person thereof or by or on
behalf

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 32 of 36


of the Company, any of its officers and directors or any controlling
Person thereof, and shall survive delivery of and payment for the Shares to and
by the Underwriters. The representations contained in Section 1 hereof and the
covenants and agreements contained in Sections 5, 7, 8, this Section 10 and
Sections 14 and 15 hereof shall survive any termination of this Agreement,
including any termination pursuant to Section 9 or 11 hereof.

         11. Effective Date of Agreement; Termination.

         (a) This Agreement shall become effective upon the later of: (i)
receipt by the Underwriters and the Company of notification of the effectiveness
of the Registration Statement or (ii) the execution of this Agreement.
Notwithstanding any termination of this Agreement, the provisions of this
Section 11 and of Sections 1, 4 through 16, inclusive, shall remain in full
force and effect at all times after the execution hereof.

         (b) The Underwriters shall have the right to terminate this Agreement
at any time prior to the First Closing Date or to terminate the obligations of
the Underwriters to purchase the Additional Shares at any time prior to the
consummation of any closing to occur on any Additional Closing Date, as the case
may be, if: (i) any domestic or international event or act or occurrence has
materially disrupted, or in the opinion of the Underwriters will in the
immediate future materially disrupt, the market for the Company's securities or
securities in general; or (ii) trading on the New York Stock Exchange, The
NASDAQ National Market or AMEX shall have been suspended or been made subject to
material limitations, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, on
the New York Stock Exchange, The NASDAQ National Market or AMEX or by order of
the Commission or any other governmental authority having jurisdiction; or (iii)
a banking moratorium has been declared by any state or federal authority or if
any material disruption in commercial banking or securities settlement or
clearance services shall have occurred; or (iv) (A) there shall have occurred
any outbreak or escalation of hostilities or acts of terrorism involving the
United States or there is a declaration of a national emergency or war by the
United States or (B) there shall have been any other calamity or crisis or any
change in political, financial or economic conditions if the effect of any such
event in (A) or (B), in the judgment of the Underwriters, makes it impracticable
or inadvisable to proceed with the offering, sale and delivery of the Firm
Shares or the Additional Shares, as the case may be, on the terms and in the
manner contemplated by the Prospectus.

         (c) Any notice of termination pursuant to this Section 11 shall be in
writing.

         (d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 9(b) hereof), or if the sale
of the Shares provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth herein is not satisfied or because
of any refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will, subject
to demand by

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 33 of 36


the Underwriters, reimburse the Underwriters for all out-of-pocket
expenses (including the fees and expenses of their counsel), incurred by the
Underwriters in connection herewith.

         12. Stock Purchase Warrant.

         At or before the First Closing Date, the Company will sell to the
Underwriters, or its designees, as permitted by the NASD, for a consideration of
$________, and upon the terms and conditions set forth in the form of Stock
Purchase Warrant annexed as an exhibit to the Registration Statement, a Stock
Purchase Warrant to purchase an aggregate of _______ shares of Common Stock of
the Company. In the event of conflict in the terms of this Agreement and the
Stock Purchase Warrant, the language of the Stock Purchase Warrant shall
control.


         13. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing, and:

                  (a) if sent to the Underwriters or any Underwriter, shall be
         mailed, delivered, or faxed and confirmed in writing, to Maxim Group
         LLC, 405 Lexington, New York, New York 10174, Attention: Clifford A.
         Teller, Managing Director, with a copy to Underwriters' Counsel at
         Lowenstein Sandler PC, 65 Livingston Avenue, Roseland, New Jersey
         07068, Attention: Steven M. Skolnick, Esq.; and

                  (b) if sent to the Company, shall be mailed, delivered, or
         faxed and confirmed in writing to the Company and its counsel at the
         addresses set forth in the Registration Statement,

provided, however, that any notice to an Underwriter pursuant to Section 7 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to the Underwriters, which
address will be supplied to any other party hereto by the Underwriters upon
request. Any such notices and other communications shall take effect at the time
of receipt thereof.

         14. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company and the controlling
Persons, directors, officers, employees and agents referred to in Sections 7 and
8 hereof, and their respective successors and assigns, and no other Person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and said
controlling Persons and their respective successors, officers, directors, heirs
and legal representative, and it is not for the benefit of any other Person. The
term "successors and assigns" shall not include a purchaser, in its capacity as
such, of Shares from any of the Underwriters.

         15. Governing Law. This Agreement shall be deemed to have been executed
and delivered in New York and both this Agreement and the transactions
contemplated hereby shall

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 34 of 36


be governed as to validity, interpretation, construction, effect, and in all
other respects by the laws of the State of New York, without regard to the
conflicts of laws principals thereof (other than Section 5-1401 of The New York
General Obligations Law). Each of the Underwriters and the Company: (a) agrees
that any legal suit, action or proceeding arising out of or relating to this
Agreement and/or the transactions contemplated hereby shall be instituted
exclusively in the Supreme Court of the State of New York, New York County, or
in the United States District Court for the Southern District of New York, (b)
waives any objection which it may have or hereafter to the venue of any such
suit, action or proceeding, and (c) irrevocably consents to the jurisdiction of
Supreme Court of the State of New York, New York County, or in the United States
District Court for the Southern District of New York in any such suit, action or
proceeding. Each of the Underwriters and the Company further agrees to accept
and acknowledge service of any and all process which may be served in any such
suit, action or proceeding in the Supreme Court of the State of New York, New
York County, or in the United States District Court for the Southern District of
New York and agrees that service of process upon the Company mailed by certified
mail to the Company's address or delivered by Federal Express via overnight
delivery shall be deemed in every respect effective service of process upon the
Company, in any such suit, action or proceeding, and service of process upon the
Underwriters mailed by certified mail to the Underwriters' address or delivered
by Federal Express via overnight delivery shall be deemed in every respect
effective service process upon the Underwriter, in any such suit, action or
proceeding. THE COMPANY (ON BEHALF OF ITSELF, AND, TO THE FULLEST EXTENT
PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS)
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE
PROSPECTUS.

         16. Entire Agreement. This Agreement, together with the schedules,
annexes and exhibits attached hereto as the same may be amended from time to
time in accordance with the terms hereof and together with the engagement
letter, dated as of March 17, 2004, by and between the Company and the
Underwriters (the "ENGAGEMENT LETTER"), contains the entire agreement among the
parties hereto relating to the subject matter hereof and there are no other or
further agreements outstanding not specifically mentioned herein. The Company
and the Underwriters agree that the terms of the Engagement Letter shall survive
the termination of this Agreement.

         17. Severability. If any term or provision of this Agreement or the
performance thereof shall be invalid or unenforceable to any extent, such
invalidity or unenforceability shall not affect or render invalid or
unenforceable any other provision of this Agreement and this Agreement shall be
valid and enforced to the fullest extent permitted by law.

         18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one

<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 35 of 36


and the same instrument. Delivery of a signed counterpart of this Agreement by
facsimile transmission shall constitute valid and sufficient delivery thereof.

         19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.

         20. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.



                            [Signature Pages Follow]






<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005
                                                                   Page 36 of 36


         If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.

                                            Very truly yours,

                                            COFFEE HOLDING CO., INC.



                                            By: ________________________________
                                                   Name:
                                                   Title:


<PAGE>

                                                  Joseph Stevens & Company, Inc.
                                                         _____________ ___, 2005




ACCEPTED BY THE REPRESENTATIVE, ACTING FOR ITESLF AND AS
REPRESENTATIVE OF THE UNDERWRITERS NAMED ON SCHEDULE A ATTACHED HERETO,
AS OF THE DATE FIRST WRITTEN ABOVE:

JOSEPH STEVENS & COMPANY, INC.



By: _______________________________________
       Name: Joseph Sorbara
       Title: Chief Executive Officer





               [End of Signature Pages to Underwriting Agreement]



<PAGE>


                                   SCHEDULE A

                                  UNDERWRITERS

<TABLE>
<CAPTION>
- --------------------------------------------- ------------------------------ ----------------------------------------
                UNDERWRITER                    TOTAL NUMBER OF FIRM SHARES      NUMBER OF ADDITIONAL SHARES TO BE
                                                     TO BE PURCHASED         PURCHASED IF OPTION IS FULLY EXERCISED
- --------------------------------------------- ------------------------------ ----------------------------------------
<S>                                           <C>                            <C>
Joseph Stevens & Company, Inc.
- --------------------------------------------- ------------------------------ ----------------------------------------
Maxim Group LLC
- --------------------------------------------- ------------------------------ ----------------------------------------

- --------------------------------------------- ------------------------------ ----------------------------------------
TOTAL
- --------------------------------------------- ------------------------------ ----------------------------------------

</TABLE>



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

                                                                    Exhibit 5.1



                                                               February 23, 2005



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

                  Re:      Coffee Holding Co., Inc.

Ladies and Gentlemen:

         We have acted as special counsel to Coffee Holding Co., Inc., a Nevada
corporation in organization (the "Company"), in connection with the proposed
registration under the Securities Act of 1933, as amended, by the Company of an
aggregate of 1,400,000 shares of common stock, $0.001 par value per share, of
the Company (the "Shares"), and the related preparation and filing by the
Company with the Securities and Exchange Commission of a Registration Statement
on Form SB-2 (the "Registration Statement"). In rendering the opinion set forth
below, we do not express any opinion concerning law other than the laws of the
State of Nevada and the federal law of the United States.

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


<PAGE>

                                                                         Page 2



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

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

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


                                     Very truly yours,

                                     THACHER PROFFITT & WOOD LLP



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>4
<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, 2004 in the registration statement
on Form SB-2/A - Amendment #3 of Coffee Holding Co., Inc. to be submitted to the
Securities and Exchange Commission on or about February 22, 2005.


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




New York, NY
February 22, 2005

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