UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC 20549-1004

                                   Form 10-KSB

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE
      ACT OF 1934

For the fiscal year ended October 31, 2003

                                       OR

[_]   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from ____________ to _______________.

                        Commission file No. 333-00588-NY

                            COFFEE HOLDING CO., INC.
             (Exact name of registrant as specified in its charter)

                   Nevada                                11-2238111
      (state or other jurisdiction of                   (IRS employer
       incorporation or organization)               identification number)

   4401 First Avenue, Brooklyn, New York                 11232-0005
  (address of principal executive offices)               (zip code)

       Registrant's telephone number, including area code: (718) 832-0800

           Securities registered pursuant to Section 12(b) of the Act:

                                      None
                                (Title of Class)

           Securities registered pursuant to Section 12(g) of the Act:

                                      None
                                (Title of Class)

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Securities  and Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes _X_ No ___.

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation S-B is not contained herein,  and will not be contained,  to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

The issuer's revenues for the year ended October 31, 2003 were $20,239,867.

The aggregate market value of the voting common stock held by  non-affiliates of
the Registrant  cannot be determined as the common stock is not quoted or listed
on any quotation system or market

As of December 31, 2003, the  Registrant  had 3,999,650  shares of common stock,
par value $.001 per share, outstanding.
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

PART I

      ITEM 1.  DESCRIPTION OF BUSINESS.........................................1

      ITEM 2.  DESCRIPTION OF PROPERTY........................................11

      ITEM 3.  LEGAL PROCEEDINGS..............................................11

      ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............11

PART II

      ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
               AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.......12

      ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS............................12

      ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................17

      ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
               ON ACCOUNTING AND FINANCIAL DISCLOSURE.........................17

      ITEM 8A. CONTROLS AND PROCEDURES........................................17

PART III

      ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF COFFEE HOLDING CO., INC....18

      ITEM 10. EXECUTIVE COMPENSATION.........................................19

      ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT AND RELATED STOCKHOLDER MATTERS.....................20

      ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................22

PART IV

      ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.........................22

SIGNATURES....................................................................25
<PAGE>

                                     PART I

ITEM 1.     DESCRIPTION OF BUSINESS

General

      We are a leading integrated wholesale coffee roaster and dealer on the
East Coast. We are the one of the few coffee companies that offers a broad array
of branded and private label roasted ground coffees and wholesale green coffee
across the entire spectrum of consumer tastes, preferences and price points. As
a result, we believe that we are uniquely positioned to profitably grow and
endure potential coffee price volatility throughout all cycles of the coffee
market and all economic conditions.

      Our products can be divided into three categories:

      o     Branded Coffee;

      o     Private Label Coffee; and

      o     Wholesale Green Coffee.

      We conduct wholesale coffee operations in accordance with strict freshness
and quality standards. Our primary business is roasting, blending, packaging and
distributing coffee for sale under private labels for companies throughout the
United States and Canada. We also sell unprocessed green coffee to specialty
gourmet roasters throughout the United States. We sell over 70 types of coffee
from all over the world, including fair trade and organic coffees, the fastest
growing area in the specialty coffee segment, at various price points to
wholesale customers primarily located throughout the United States and Canada,
including supermarket, wholesaler and individually owned and multi-unit retail
store customers.

      We have been a family operated business for three generations. Throughout
this time, we have remained committed to the purchase of high quality coffee
beans, which we deep roast for full flavor using a slow roasting process and
ship to most of our wholesale customers within 72 hours of roasting to ensure
freshness. With our rich offering of coffee blends and over 30 years of
experience in the coffee industry, we believe that we have developed a loyal
customer base.

      We were originally incorporated in New York in 1971. Pursuant to an
Agreement and Plan of Merger between us and Transpacific International Group
Corp., we merged with and into Transpacific International Group Corp. in
February, 1998, with Transpacific being the surviving corporation. After the
merger, Transpacific changed its name to The Coffee Holding Co., Inc.

      Our address is 4401 First Avenue, Brooklyn, New York 11232-0005. Our
telephone number is 718-832-0800. You can also reach us at
www.coffeeholding.com.

Industry Overview

      Almost 52% of adult-aged Americans drink some type of coffee and on
average they drink 3.2 cups per day, according to the National Coffee
Association's 2001 study. The United States coffee market consists of two
distinct product categories:

      o     commercial ground roast, mass-merchandised coffee; and


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<PAGE>

      o     specialty  coffees,  which include  gourmet  coffees  (premium grade
            arabica  coffees  sold in whole  bean and ground  form) and  premium
            coffees  (upscale  coffees   mass-marketed  by  the  leading  coffee
            companies).

      Specialty coffee, or what is sometimes called gourmet coffee, is coffee
roasted using mainly high quality Arabica beans. 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.

      Based on estimates supplied by the Specialty Coffee Association of
America, sales of brewed, whole bean and ground specialty coffee totaled
approximately $10.7 billion in 2001 as compared to $7.5 billion in 1999. Aiding
this growth has been the increase in the number of specialty coffee retail
outlets, which grew from 1,650 units in 1991 to over 13,500 in 2001, as reported
by the Specialty Coffee Association of America.

      We believe that several factors have contributed to the increase in demand
for gourmet coffee including:

      o     greater consumer awareness of gourmet coffee as a result of its
            increasing availability;

      o     increased quality differentiation over commercial grade coffees by
            consumers;

      o     increasing  demand for all premium food products,  including gourmet
            coffee,  where the differential in price from the commercial  brands
            is small compared to the perceived  improvement  in product  quality
            and taste;

      o     the overall  low price of Arabica  coffee  beans,  which has allowed
            consumers to afford higher end specialty 100% Arabica coffees; and

      o     ease of preparation of gourmet coffees  resulting from the increased
            use of automatic drip coffee makers and home espresso machines.

      Although the overall coffee industry is mature, the specialty green coffee
market represents the fastest growing segment of the coffee industry, as the
number of gourmet coffee houses have been increasing in all areas of the United
States. According to the Specialty Coffee Association of America, the number of
gourmet coffee houses has grown from 1,650 in 1991 to approximately 13,500 in
2001 and is projected to increase to 18,000 by 2015.

Our Competitive Strengths

      Our objective is to become a leading wholesaler of branded and private
label coffee across multiple price points as well as a leading seller of
unprocessed green coffees. To achieve the objective, we intend to leverage the
following competitive strengths:

      Profitability Across All Price Levels and Economic Conditions. We are the
only wholesale coffee company which offers a broad array of branded and private
label roasted ground coffees and wholesale green coffee across the spectrum of
consumer tastes, preferences and price points. Since we sell several of our
branded and private label roasted ground coffees at each of the premium,
mainstream and value price levels, our profitability does not depend on sales to
any one small segment of coffee market, such as premium specialty coffee and is
less sensitive to economic conditions and potential


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<PAGE>

volatility in the price of coffee. As a result, we believe we are uniquely
positioned to profitably grow and endure potential coffee price volatility
throughout all cycles of the coffee market and economic conditions.

      Portfolio of Differentiated 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 style espresso, 100% Colombian coffee and
blended coffee. Cafe Caribe, our leading name brand by revenue, is a specialty
espresso coffee targeting the Latin American consumer market, which, according
to 2000 census data, is the largest minority and fastest growing demographic in
the U.S. According to the Strategy Research Corporation 2000 U.S. Hispanic
Market Study, Hispanic coffee drinkers in the United States consume up to four
times more coffee than other non-Hispanic coffee drinkers and tend to be more
brand loyal than other coffee drinkers. Currently, our highest net profit margin
is on our branded coffees. 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 marketing specialists to help grow our branded coffee
sales. These specialists have redesigned our packaging and labels and have
enabled us to extend our product lines to include instant cappuccinos, large can
coffees and mini-bricks.

      Wholesale Green Coffee Market Presence. 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 the largest
roaster/dealer of green coffee on the East Coast, we are favorably positioned to
increase our specialty coffee sales. We are a charter member of the Specialty
Coffee Association of America and the largest distributor of Swiss water
processed decaffeinated coffees along the Eastern seaboard. We also have a
11-year relationship with our largest wholesale green coffee customer, Green
Mountain Coffee Roasters (Nasdaq: GMCR). We believe that our relationships with
various wholesale green coffee customers, including Green Mountain, and our
focus on selling green coffee on a wholesale basis has enabled us to participate
in the growth of the specialty coffee market while mitigating the risks
associated with the competitive specialty retail coffee environment. We
currently have relationships with approximately 245 wholesale green coffee
customers, including coffee houses, single store operators, mall coffee stores
and mail order sellers.

      Capacity For Growth. We have made capital investments to improve our
roasting, packaging and fulfillment infrastructure to support the production and
distribution of large quantities of fresh coffee products. At present, we are
operating at approximately 70% of our annual roasting capacity. In addition, we
believe we have ample resources to increase green coffee sales without any
significant additional infrastructure investment. In addition, we are
warehousing specialty green coffee in New Orleans, Louisiana to expand our
United States presence in the South, Southwest and West. We believe that our
presence in New Orleans will allow us to capture additional customers in areas
where potential customers are reluctant to pay the higher freight costs
associated with shipping our products from New York City. We also have the
ability to use independent coffee brokers to enhance our sales of branded and
green coffee. We believe that additional facilities, increased investment in
equipment and increased worker shifts could further increase production
capacity.

      Strong Company Culture. We have been a family owned and operated business
for three generations. Throughout this time, we have remained profitable through
all cycles in the coffee industry and the economy. Our management team and many
of our key employees have been working with us for over ten years. 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.


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<PAGE>

      Track Record of Successful Geographic Expansion. Until 1991, we sold our
coffee products primarily in the northeastern United States. Since that time,
through our commitment to quality and customer service, management expertise and
the use of a network of independent coffee brokers, we have successfully
expanded our sales westward throughout the United States to customers based in
Illinois, Minnesota and Missouri, amongst others, especially in private label
coffee and wholesale green coffee sales. Using the same commitment to quality
and customer service, we plan to expand our sales of branded coffee products
throughout the United States.

Our Growth Strategy

      We believe that significant growth opportunities exist for us by expanding
into new geographical markets, increasing penetration with existing customers by
adding new products, brands and distribution channels and pursuing selective
acquisition, licensing and other strategic alliances. We intend to accomplish
our strategy by:

      Selectively pursuing strategic opportunities. We seek to grow by acquiring
coffee companies, acquiring or licensing brands or seeking other strategic
alliances which would complement our business objectives.

      Developing our food service business. To date, we have had limited
presence in the food service market. We plan to expand into the food service
business to develop a new distribution channel for our products. Since 2001, we
have hired two new full-time salespersons to market our upscale restaurant and
Colombian coffee brands to hotels, restaurants, office coffee services companies
and other food service retailers. We have expanded our food service offerings to
include instant cappuccinos, tea products and an equipment program for our
customers. We attend at least 10 trade shows on an annual basis held by various
buying groups which give us a national audience to sell our food service
products.

      Adding niche 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 "value" blends and mini-brick, filter packs, instant
cappuccinos and tea line products. We also intend to add specialty instant
coffees to our extensive line of instant coffee products.

      Expanding our geographical presence. We intend to expand the market
presence of our branded products outside our primary northeastern United States
market by building upon our existing network of brokers and independent
distributorships and through acquisitions, licensing agreements and other
strategic alliances. We recently established relationships with additional
independent sales brokers to market our products on a national scale. In
addition, we are warehousing specialty green coffee in New Orleans, Louisiana to
expand our United States presence in the South, Southwest and West. We believe
that our presence in New Orleans will allow us to capture additional customers
in areas where potential customers are reluctant to pay the higher freight costs
associated with shipping our products from New York City.

      Enhancing and developing customer relationships. We believe that our
product mix will enable us to profitably grow and endure commodity price
volatility inherent in the coffee futures market. We seek to achieve
conservative growth by enhancing and developing long-term relationships with our
customers and by expanding our product lines to satisfy changing consumer tastes
and preferences. By this strategy, we hope to establish and grow profitable
business and capitalize on our commitment to quality and service and our
personal contact with our customers. We do not intend to compete on price alone
nor do we intend to expand sales at the expense of profitability. We will
continue to evaluate opportunities for growth consistent with our business
objectives.


                                       4
<PAGE>

Products

      Our products can be divided into three categories:

      o     Branded Coffee;

      o     Private Label Coffee; and

      o     Wholesale Green Coffee.

      Branded Coffee. We roast, grind and blend coffee according to our own
recipes and package the coffee at our facility in Brooklyn, New York. We then
sell the packaged coffee under our proprietary brand labels to supermarkets,
wholesalers and individually owned stores throughout the United States, shipping
directly from our factory or our bonded warehouses.

      Each of our name brands is directed at a particular segment of the
consumer coffee market. Our branded coffees are: Cafe Caribe, Cafe Supremo, Don
Manuel, Fifth Avenue and Via Roma. We have acquired trademark registration
rights for each of our name brands. For further information regarding these
trademark registration rights, see "Business--Trademarks and Domain Names."

      Cafe Caribe, our leading name brand by revenue, is a specialty espresso
coffee that targets espresso coffee drinkers, in particular, the Latin American
consumer market, which, according to 2000 census data, is the largest minority
and fastest growing demographic in the U.S. According to the Strategy Research
Corporation 2000 U.S. Hispanic Market Study, Hispanic coffee drinkers consume up
to four times more coffee than other coffee drinkers and tend to be more brand
loyal than other coffee drinkers.

      Cafe Supremo 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.

      Don Manuel is a 100% Colombian coffee product made from the finest beans
Colombia produces. 100% Colombian coffee is an upscale quality product which
commands a substantial premium at retail compared to the more traditional brown
coffee blends. We also use this known trademark in our food service business
because of the perceived quality level of the brand.

      Fifth Avenue is a blended coffee which has become popular as an
alternative for consumers who purchase private label or national branded coffee.
We also market this brand to wholesalers which do not wish to undertake the
expense of developing a private label coffee program under their own name.

      Via Roma is an Italian-style espresso targeted at the more traditional
espresso drinker.

      In fiscal 2003, sales of our branded coffees comprised approximately 9.7%
of our sales revenues, compared to 9% in fiscal 2002.

      Private label coffee. From our facility in Brooklyn, New York, we roast,
blend, package and distribute coffee under private labels for companies
throughout the United States and Canada. Our private label coffee is distributed
in cans and brick packs in a variety of sizes. As of October 31, 2003, we
supplied coffee to approximately 35 different wholesale and retail companies,
including two of the largest grocery wholesalers in North America based on total
sales according to Private Label magazine. We produce private label coffee for
customers who desire to sell coffee under their own name but do not


                                       5
<PAGE>

want to engage in the manufacturing process. Sellers of private label coffee
seek to achieve a similar quality at a lower cost to the national brands
representing a better value for the consumer.

      In the year ended October 31, 2003, approximately 44.8% of our sales
revenue came from private label coffee sales, compared to 42% of revenues in
fiscal 2002.

      Wholesale Green Coffee. Although the overall coffee market is mature, the
specialty green coffee market represents the fastest growing area of the
industry, as 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 the largest roaster/dealer of green coffee
on the East Coast, we are favorably positioned to increase our specialty coffee
sales. We are a charter member of the Specialty Coffee Association of America
and the largest distributor of Swiss water processed decaffeinated coffees along
the Eastern seaboard. We have a 11-year relationship with our largest wholesale
green coffee customer, Green Mountain Coffee Roasters (Nasdaq: GMCR). We believe
that these relationships and our focus on selling green coffee on a wholesale
basis has enabled us to participate in the growth of the specialty coffee market
while mitigating the risks associated with the competitive specialty retail
coffee environment.

      We currently have relationships with approximately 245 wholesale green
coffee customers, including coffee houses, single store operators, mall coffee
stores and mail order sellers. We sell green coffee beans to small roasters and
coffee shop operators located throughout the United States. We carry over 70
different varieties of green coffee beans. Green gourmet coffee beans are sold
unroasted, direct from warehouses to the 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
needs of the customer. We believe that we can increase sales in the wholesale
green coffee segment of the coffee market without venturing into the already
competitive retail specialty coffee environment. We believe that we can be as
profitable or more profitable than other major specialty roasters by selling
coffee "one bag at a time" rather than "one cup at a time."

      In fiscal 2003, wholesales of green coffee beans accounted for
approximately 45.5% of our sales revenues compared to approximately 49% of
revenues came from such sales in fiscal 2002.

      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
"value" blends and mini-bricks, filter packs, tea line products, instant
cappuccinos and fair trade and organic coffee products. We also intend to add
specialty instant coffees to our extensive line of instant coffee products.

Raw Materials

      Coffee is a commodity traded on the Commodities and Futures Exchange.
Coffee prices are subject to fluctuation. Over the past five years, the average
price per pound of coffee beans ranged from approximately $.42 to $3.18. The
price for coffee beans on the commodities market as of October 31, 2003 was
$.585 per pound.

      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, among others.
In fiscal 2003, substantially all of our purchases were from approximately ten
dealers. The ten vendors accounted for $11.0 million, or 83% of total product
purchases. One of these vendors, Rothfos Corporation, accounted for $4.1
million, or 31% of total purchases. This vendor accounted for approximately
$66,700 of our accounts payable at October 31,


                                       6
<PAGE>

2003. An employee of this vendor is one of our directors. Purchases from that
vendor totaled approximately $4,110,900 and $3,415,200 in 2003 and 2002,
respectively. We do not believe that the loss of any one vendor would have a
material adverse effect on our operations due to the availability of alternate
suppliers.

      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 many factors such as weather, politics and economics in the
coffee exporting countries. Increases in the cost of coffee beans can, to a
certain extent, be passed on to our customers in the form of higher prices for
coffee beans and processed coffee. However, there can be no assurance that we
will be successful in passing coffee price increases to customers without losses
in sales volume or margin. 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 sales prices before realizing cost reductions in our
purchases. In addition, a worldwide supply shortage of gourmet coffee beans
could have an adverse impact on us.

      Gourmet green coffee, unlike most coffee, does not trade directly to
commodities 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.

      From time to time, we engage in the purchase and sale of coffee futures
and option contracts to guard against the effects of fluctuations in the price
of green coffee beans and to supplement our supply of coffee, if necessary. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Commodity Price Risks."

Trademarks and Domain Names

      We hold trademarks, registered with the United States Office of Patent and
Trademark for all five of our proprietary coffee brands. 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.

Customers

      We sell our private label and our branded coffee to the four largest
wholesalers in the United States (according to Supermarket News) and are the
exclusive coffee supplier for the largest and fourth largest wholesalers in the
U.S. Sales to Supervalu, Nash Finch and Topco/Shurfine in the aggregate
accounted for approximately 27.7% and 27.0% of our total net sales for these
periods, respectively. Sales to Supervalu amounted to 15.9% and 17.0% of our net
sales for the year ended October 31, 2003 and the year ended October 31, 2002,
respectively. Sales of green coffee beans to Green Mountain Coffee Roasters
accounted for approximately 15.4% and 18.0% of our total sales for the year
ended October 31, 2003 and the year ended October 31, 2002, respectively.

      We historically have had short-term contracts with some of these customers
(generally one to two years in duration). Although we believe that we have a
strong mutually beneficial relationship with those companies, there can be no
assurance that these relationships will continue. We currently have agreements
with three of our wholesale customers (Supervalu, Shurfine Central and
Sav-a-lot) in which we are the supplier at fixed prices for lines of private
label ground coffee. We are the exclusive supplier for Supervalu and Shurfine
Central. The loss of any one of these relationships would likely have a material
adverse effect on our business and results of operations.


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<PAGE>

      Although our agreements with wholesale customers generally contain only
pricing terms, our contracts with Supervalu and Sav-a-lot also contain minimum
and maximum purchase obligations at fixed prices. Because our profits on a
fixed-price contract could decline if coffee prices increased, we began to
acquire futures contracts with longer terms (generally three to four months)
primarily for the purpose of guaranteeing an adequate supply of green coffee at
favorable prices beginning in the latter half of fiscal 2000 and continuing
through fiscal 2003. The use of these derivative financial instruments has
enabled us to mitigate the effect of changing prices although we generally
remain exposed to loss when prices surge significantly in a short period of time
and remain at higher levels, preventing us from obtaining inventory at favorable
prices. In addition, during fiscal 2002 and fiscal 2003, the historically low
price of coffee allowed us to replace our existing inventory with cheaper new
inventory, locking in additional margins on previously contracted business. We
believe that our favorable inventory position will allow us to increase its
sales and margins if coffee prices continue to rise.

Marketing

      We market our private label and wholesale coffee through trade shows,
industry publications, face to face contact and through the use of non-exclusive
independent food and beverage sales brokers. We also use our web site
(www.coffeeholding.com) as a method of marketing ourselves and our coffee
products.

      For our private label and brand 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.

      We believe that our unique and specialized product mix will enable us to
profitably grow and endure potential commodity price volatility inherent in the
coffee futures market. We seek to achieve conservative growth by enhancing and
developing long-term relationships with our customers by expanding our product
lines to satisfy changing consumer tastes and preferences. We hope to capitalize
on our commitment to quality and service and our personal contact with our
customers. We do not intend to compete on price alone nor do we intend to grow
sales at the expense of profitability. We will continue to evaluate
opportunities for growth consistent with our business strategy.

      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 historically not marketed and sold our coffee. In
addition, we have targeted the Latin American consumer market which, according
to 2000 census data, is the largest minority and fastest growing demographic in
the U.S. According to the Strategy Research Corporation 2000 U.S. Hispanic
Market Study, Hispanic coffee drinkers in the United States consume up to four
times more coffee than other non-Hispanic coffee drinkers and tend to be more
brand loyal than other coffee drinkers. We have hired third-party marketing
specialists to act as brand managers that will focus exclusively on developing
sales of our ethnic espresso brands.

      We plan to expand into the food service business to develop a new
distribution channel for our products. Since 2001, we have hired two new
full-time salespersons to market our upscale restaurant and Colombian coffee
brands to hotels, restaurants, office coffee services companies and other food
service retailers. We have expanded our food service offerings to include
instant cappuccinos, tea products and an equipment program for our customers. We
attend at least 10 trade shows on an annual basis held by various buying groups
which give us a national audience to sell our food service products.


                                       8
<PAGE>

      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
"value" blends and mini-brick, filter packs, instant cappuccinos and tea line
products. We also intend to add specialty instant coffees to our extensive line
of instant coffee products.

      We intend to expand the market presence of our branded products outside
our primary northeastern United States market by building upon our existing
network of brokers and independent distributorships and through acquisitions,
licensing agreements and other strategic alliances. We recently established
relationships with additional independent sales brokers to market our products
on a national scale. In addition, we are now warehousing specialty green coffee
in New Orleans, Louisiana in order to expand our presence in the South,
Southwest and West. We believe that our presence in New Orleans will allow us to
capture additional customers in areas where potential customers are reluctant to
pay the higher freight costs associated with shipping our products from New York
City.

      We are also seeking to grow by acquiring coffee companies or brands which
would complement our business objectives.

      Coffee Holding is also a supporter of several coffee oriented charitable
organizations. We have been members of Coffee Kids for over 10 years. We are
also members of Grounds for Health, an organization that educates, screens, and
arranges treatment for women of the rural coffee growing communities of Mexico,
who have cancer. Most recently, we are the administrative benefactor to a new
non-profit, Cup for Education. After discovering the lack of schools, teachers,
and basic fundamental learning supplies, "Cup" 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 in
the poor coffee growing communities of Central, and Latin America.

Competition

      The coffee market is highly competitive. We compete with other suppliers
and distributors of green coffee beans, whole bean coffees and roasted coffees.
Our whole bean coffees compete directly against specialty coffees sold at retail
through supermarkets and a growing number of specialty coffee stores. Until
1991, we sold our coffee products primarily in the northeastern United States.
Since that time, through our commitment to quality and customer service,
management expertise and the use of a network of independent coffee brokers, we
have successfully expanded our sales westward throughout the United States to
customers based in Illinois, Minnesota and Missouri, amongst others, especially
in private label coffee and wholesale green coffee sales. Using the same
commitment to quality and customer service, we plan to expand our sales of
branded coffee products throughout the United States. We believe, however, that
we compete primarily across product lines and that competition in regions in
which we do not currently have significant market presence does not differ
significantly from competition in those markets in which we currently do
business.

      Brand Competition. Our proprietary brand coffees compete with many other
branded coffees which are sold in supermarkets and specialty stores, primarily
in the northeastern United States. The branded coffee market in both the
northeast and elsewhere in the United States is dominated by three large
companies: Kraft General Foods, Inc., Proctor & Gamble Co. and Sara Lee, who
also market gourmet coffee in addition to non-gourmet coffee. Our large
competitors have greater access to capital than us and have a greater ability to
conduct marketing and promotions. We believe that, while our competitors' brands
may be more recognizable nationwide, our proprietary brands are well recognized
in the northeastern United States and are distinguished by their distinctive
flavors. We believe we can successfully compete in the branded coffee market by,
among other things, targeting Hispanic consumers.


                                       9
<PAGE>

      We intend to expand the market presence of our branded products outside
our primary northeastern United States market by building upon our existing
network of brokers, independent distributorships, gourmet specialty coffee
distributors and third-party brand managers. We will also seek to expand the
market presence of our branded products through acquisitions, licensing
agreements and other strategic alliances. We do not believe that branded coffee
competition in our targeted markets differs significantly from branded coffee
competition in the northeastern United States. While our competitors' brands
currently may be more recognizable than ours outside the northeastern United
States, we believe that we can successfully expand the name recognition of our
products by, among other things, emphasizing the distinctive flavor of our
proprietary brands and targeting Hispanic consumers. In addition, we recently
established relationships with additional independent sales brokers to market
our products on a national scale. We also are warehousing specialty green coffee
in New Orleans, Louisiana to expand our United States presence in the South,
Southwest and West. We believe that our presence in New Orleans will allow us to
capture additional customers in areas where potential customers are reluctant to
pay the higher freight costs associated with shipping our products from New York
City.

      Private Label Competition. There are approximately four 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 Kroger and the
coffee division of Sara Lee. Both Kroger and Sara Lee are larger and have more
financing and resources than we do and therefore are able to devote more
resources to product development and marketing. However, because Kroger owns the
stores in which it sells coffee and therefore competes directly with potential
purchasers of its private label coffee, many customers will not purchase private
label coffee from Kroger.

      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 delivering the coffee on time in
the proper quantities. We also provide our private label customers with
information on the coffee market on a regular basis. Private label coffee also
competes with all of the branded coffee on the market. Sara Lee also produces
branded coffees which compete directly with their private label products.

      Wholesale Green Coffee Competition. There are many green coffee dealers
throughout the United States. Many of these dealers have greater financial
resources than us. 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
seller 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 a lower price 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 the gourmet 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 gourmet green coffee customers compete
with our private label or branded coffee lines of business.

Government Regulation

      Our coffee roasting operations are subject to various governmental laws,
regulations, and 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 complying with these laws
and regulations, then our product offerings could be limited.


                                       10
<PAGE>

      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.

Employees

      We have 36 full-time employees 27 of whom are employed in the areas of
coffee roasting, blending and packaging and nine 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.

ITEM 2.     DESCRIPTION OF PROPERTY

      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. We believe our headquarters are in good condition and have adequate
insurance coverage.

      We also lease a 7,500 square foot warehouse located at 4425A First Avenue
in Brooklyn from T & O Management. T & O Management is not affiliated with us or
any of our officers, directors or shareholders. We pay annual rent of $50,076
until the expiration of the lease on August 31, 2004. We believe the property is
adequately insured.

      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.

ITEM 3.     LEGAL PROCEEDINGS

      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.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      During the fourth quarter of the fiscal year covered by this report on
Form 10-KSB, no matters were submitted to a vote of security holders.


                                       11
<PAGE>

                                    PART II

ITEM 5.     MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
            BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

      Our common stock is not quoted or listed on any quotation system or
market. No firm makes a market for the common stock. We have applied to have our
common stock quoted for trading on the OTC Bulletin Board. The number of
registered holders of our common stock at October 31, 2003 was 472.

      In January 1998, prior to the date of the merger with Transpacific, while
we were a privately held "S" corporation, we paid a distribution in the amount
of $422,258 to our stockholders to pay personal income taxes. Since the January
1998 payment, we have never paid any cash dividends on our common stock and have
no intention of doing so in the foreseeable future. In addition, under the terms
of our credit facility with Wells Fargo Business Credit, we are prohibited from
paying cash dividends without the lender's written consent.

ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

Cautionary Note on Forward Looking Statements

      Some of the matters discussed under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business" and
elsewhere in this annual report include forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. We have based these forward-looking statements on our current expectations
and projections about future events, including, among other things:

      o     the impact of rapid or persistent fluctuations in the price of
            coffee beans;

      o     fluctuations in the supply of coffee beans;

      o     general economic conditions and conditions which affect the market
            for coffee;

      o     our success in implementing our business strategy or introducing new
            products;

      o     our ability to attract and retain customers;

      o     our success in expanding our market presence in new geographic
            regions;

      o     the effects of competition from other coffee manufacturers and other
            beverage alternatives;

      o     changes in tastes and preferences for, or the consumption of,
            coffee;

      o     our ability to obtain additional financing; and

      o     other risks which we identify in future filings with the SEC.


                                       12
<PAGE>

      In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "predict," "potential," "continue,"
"expect," "anticipate," "future," "intend," "plan," "believe," "estimate" and
similar expressions (or the negative of such expressions). Any or all of our
forward looking statements in this annual report and in any other public
statements we make may turn out to be wrong. They can be affected by inaccurate
assumptions we might make or by known or unknown risks and uncertainties.
Consequently, no forward looking statement can be guaranteed. In addition, we
undertake no responsibility to update any forward-looking statement to reflect
events or circumstances which occur after the date of this annual report.

Critical Accounting Policies and Estimates

      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.

      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:

      o     We recognize revenue in accordance with Securities and Exchange
            Commission Staff Accounting Bulletin No. 101, "Revenue Recognition
            in Financial Statements" ("SAB 101"). Under SAB 101, revenue is
            recognized at the point of passage to the customer of title and risk
            of loss, 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.

      o     The allowance for doubtful accounts is maintained to provide for
            losses arising from customers' inability to make required payments.
            If there is deterioration of our customers' 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.

      o     Inventories are stated at cost (determined on an average cost
            basis). Based on our assumptions about future demand and market
            conditions, inventories are written-down to market value. If our
            assumptions about future demand change and/or actual market
            conditions are less favorable than those projected, additional
            write-downs of inventories may be required.

      o     We account for income taxes in accordance with Statement of
            Financial Accounting Standards No. 109, "Accounting for Income
            Taxes." 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.


                                       13
<PAGE>

Year Ended October 31, 2003 (Fiscal 2003) Compared to the Year Ended October 31,
2002 (Fiscal 2002)

      Net sales totaled $20,239,867 for the year ended October 31, 2003, an
increase of $2,807,125 or 16.1% from $17,432,742 for the year ended October 31,
2002. The increase in net sales reflects increases in the price of coffee and an
increase in coffee pounds sold from 16.1 million pounds in 2002 to 17.4 million
pounds in 2003. The increase in pounds of coffee sold is the result of increased
sales of our private label coffees to current and new customers and a slight
increase in the sales of our branded products.

      The number of our customers in the gourmet green coffee area grew
approximately 8.9% to 245 during the year ended October 31, 2003. These
customers are predominately independent gourmet/specialty roasters, some of whom
own their own retail outlets. Sales to new customers in this area historically
start slowly because many of these companies are start-up ventures. Since
management believes that the specialty gourmet green coffee area is the fastest
growing segment of the coffee market, we believe that our customer base and
sales will expand in this area. We also believe that historically low coffee
prices will continue to encourage consumers to purchase higher quality gourmet
coffee relative to supermarket brands.

      Our sales prices decreased steadily throughout fiscal 2002 due to the
decline in the price of green coffee. Commencing in late 1998, the purchase
price of green coffee began a decline that, with the exception of brief price
surges, continued through to the end of 2002. Declines in green coffee purchase
prices eventually led to declines in selling prices. Sales prices of products
which use commodity coffee react fairly quickly to changes in green coffee
purchase prices. Gourmet green coffee sales prices tend to react more slowly to
changes in purchase prices because demand for gourmet coffee is less price
sensitive. We also experienced some pricing pressure in the private label area
as national brands cut their prices in order to increase market share. The
decrease in national brand prices made private label coffee less attractive to
consumers compared to these national brands. However, the price of green coffee
began to increase in fiscal 2002 and we believe further increases are possible.
If this does occur, national and regional brands will begin either decreasing
their levels of promotion or initiating price increases to cover the added
expense of higher priced green coffee. Based on this, we believe that pricing
pressure will decrease in fiscal 2004, allowing for both an increase in private
label sales and higher prices received for our products.

      Cost of sales for the year ended October 31, 2003 was $15,373,127, or
76.0% of net sales, as compared to $12,452,713 or 71.4% of net sales for the
year ended October 31, 2002. Cost of sales consists primarily of the cost of
green coffee and packaging materials and realized and unrealized gains or losses
on hedging activity. The increase in cost of sales primarily was attributable to
the increase in green coffee purchase prices. As the price of coffee is cyclical
and volatile and subject to many factors, including weather, politics and
economics, we are unable to predict the purchase price of green coffee for
fiscal 2004. As discussed above, although our agreements with wholesale
customers generally contain only pricing terms, our contract with a major
customer also contains minimum and maximum purchase obligations at fixed prices.
Because our profits on a fixed-price contract could decline if coffee prices
increased, we began to acquire futures contracts with longer terms (generally
three to four months) primarily for the purpose of guaranteeing an adequate
supply of green coffee at favorable prices beginning in the latter half of
fiscal 2000 and continuing through fiscal 2003. The use of these derivative
financial instruments has enabled us to mitigate the effect of changing prices
although we generally remain exposed to loss when prices surge significantly in
a short period of time and remain at higher levels, preventing us from obtaining
inventory at favorable prices. We believe that our favorable inventory position
will allow us to increase our sales and margins if coffee prices continue to
rise.


                                       14
<PAGE>

      Our gross profit in fiscal 2003 was $4,866,740, a decrease of $113,289, or
2.3% from $4,980,029 for the year ended October 31, 2002. Gross profit as a
percentage of net sales decreased by 4.6% to 24.0% in fiscal 2003 from 28.6% in
fiscal 2002. Margins decreased primarily due to pricing pressure from national
brands which caused us to increase marketing efforts to maintain sales.

      Total operating expenses increased $487,561, or 13.9%, to $3,992,325 in
fiscal 2003 from $3,504,764 in fiscal 2002 due to increases in selling, general
and administrative expenses, including freight, office and officers' salaries,
partially offset by a decrease in professional fees. Officers' salaries were
$490,860 in fiscal 2003, an increase of $47,638 from $443,222 for the year ended
October 31, 2002. Selling and administrative expenses increased $439,923 during
the period. We expect advertising and promotional expenses to increase in the
future as we continue to increase our participation in national and regional
shows to promote our brands and our private label products. As a percentage of
net sales, total operating expenses decreased 0.4% from 20.1% for the year ended
October 31, 2002 to 19.7% for the year ended October 31, 2003. This change
reflects the fact that selling and administrative expenses in total, increased
proportionate to the increase in sales.

      Interest expense decreased $34,071, or 18.9%, from $180,678 for the year
ended October 31, 2002 to $146,607 for the year ended October 31, 2003. The
decrease was attributable to a decline in the average borrowings outstanding on
our line of credit with Wells Fargo Business Credit and on the term loan. The
decrease is also attributable to lower interest rates on outstanding borrowings.
Rates of interest on our outstanding borrowings are tied to the prime rate. As
the prime rate declined from the prior period, the rate of interest payable on
our outstanding borrowings also declined. See "--Liquidity and Capital
Resources."

      We had income before taxes of $738,448 in fiscal 2003 compared to income
before taxes of $1,313,095 in fiscal 2002. The decrease was primarily
attributable to the increase in operating expenses and the increase in cost of
goods sold as we focused on increasing market share in order to capitalize on
increased prices in the future.

      Our provision for income taxes for the year ended October 31, 2003 totaled
$116,366 compared to $557,720 for the year ended October 31, 2002. The decrease
was primarily attributable to the decrease in income before taxes for the 2003
fiscal year. As a result, we had net income of $622,082, or $.16 per share, in
fiscal 2003 compared to net income of $755,375, or $.19 per share, in fiscal
2002.

Liquidity and Capital Resources

      As of October 31, 2003, we had working capital of approximately
$3,363,000, which represented a $1,634,000 increase from our working capital of
approximately $1,729,000 as of October 31, 2002, and total stockholders' equity
of $2,120,479, which increased by $622,082 from our total stockholders' equity
of $1,498,397 as of October 31, 2002. Our working capital increased primarily as
a result of an increase in accounts receivable and inventories, a decrease in
accounts payable and accrued expenses, offset by a decrease in prepaid expenses
at October 31, 2003 compared to October 31, 2002.

      We have a credit facility with Wells Fargo Business Credit. The credit
facility provides for a revolving line of credit of up to $5,000,000 based on
eligible trade accounts receivable and inventories and a term loan of up to
$750,000 based on eligible equipment. The line of credit provides for borrowings
of up to 85% of our eligible trade accounts receivable and 60% of its eligible
inventories. Interest on the line of credit is payable monthly at the prime rate
plus .25% (an effective rate of 4.25% at October 31, 2003) and interest on the
term loan is payable monthly at the prime rate plus .50% (an effective rate of
4.5% at October 31, 2003). Principal payments on the term loan are payable
monthly at


                                       15
<PAGE>

$7,000. Andrew Gordon and David Gordon, two of our directors and officers, each
have guaranteed borrowings under the credit facility up to $500,000.

      As of October 31, 2003, the line of credit had an outstanding balance of
$2,376,066 as compared to an outstanding balance of $1,321,373 at October 31,
2002. The outstanding balance under the term loan was $336,000 as of October 31,
2003, and was $420,000 at October 31, 2002. We were in compliance with all
required financial covenants at October 31, 2003.

      We had loans payable to our shareholders, all of whom are of the Gordon
family, of $79,646 at October 31, 2003. The loans are due on demand and
currently bear interest at a rate of 6.0% per year. We borrow from our
stockholders from time-to-time to supplement short-term working capital needs.
The stockholders are under no obligation to make such loans.

      In fiscal 2003, our operating activities used net cash of approximately
$744,000 as compared to fiscal 2002 when net cash provided by operating
activities was approximately $823,000. The decline in cash flow from operations
in fiscal 2003 was primarily due to increases in accounts receivable,
inventories, prepaid expenses and other current assets, and decreases in
accounts payable and income taxes payable, offset by net income generated.

      During the year ended October 31, 2003, we used $62,758 of our cash
resources to purchase property and equipment. In addition, we lease machinery
and equipment under a capital lease which expires in July 2005. The interest
rate on the capital lease is 8-1/3% per annum. Under the terms of the capital
lease, our minimum annual future lease payments (including interest) are
$141,249 and $94,165 for the years ended October 31, 2004 and 2005,
respectively. Management does not expect to incur other significant capital
expenditures in fiscal 2004 at our current facility.

      We also received $837,248 of net cash in financing activities in the year
ended October 31, 2003, including $1,054,693 from our bank line of credit offset
by payments on the term loan and capital leases totaling $204,521.

      We expect to fund our operations, including paying our liabilities,
funding capital expenditures and making required payments on our debts, in
fiscal 2004 through cash provided by operating activities and by drawing on our
credit facilities. We expect that we will generate sufficient cash to continue
our business for the next twelve months. In addition, an increase in eligible
accounts receivable and inventory would permit us to make additional borrowings
under our line of credit. We also believe we could, if necessary, obtain
additional loans by mortgaging our headquarters.

Market Risks

      Market risks relating to our operations result primarily from changes in
interest rates and commodity prices as further described below.

Interest Rate Risks

      We are subject to market risk from exposure to fluctuations in interest
rates. At October 31, 2003, our debt consisted of approximately $79,646 of fixed
rate debt and approximately $2,712,000 of variable rate debt under our revolving
line of credit and term loan. Interest on the variable rate debt was payable
primarily at 4.25% (or .25% above the prime rate), with a portion of the
variable rate debt payable at 4.5% (or .5% above the prime rate) at October 31,
2003. We do not expect changes in interest rates to have a material effect on
results of operations or cash flows in fiscal 2003, although there can be no
assurance that interest rates will not significantly change.


                                       16
<PAGE>

Commodity Price Risks

      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 annual report. 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 it generally remains 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.

      At October 31, 2003, we held 150 options (generally with terms of two
months or less) covering an aggregate of 5,625,000 pounds of green coffee beans
at a price of $.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.

      We also hold 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, 2003, we held 183 futures contracts for the purchase of
6,862,500 pounds of coffee at an average price of $.65 per pound. The market
price of coffee applicable to such contracts was $.59 per pound at that date.

ITEM 7.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      See Item 13 herein.

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE.

      None.

ITEM 8A.    CONTROLS AND PROCEDURES

      Management, including the Company's President, Chief Executive Officer and
Director (who is the Company's principal executive officer and principal
accounting officer), has evaluated the effectiveness of the Company's disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) as of the end of the period covered by this report. Based upon that
evaluation, the Company's President, Chief Executive Officer and Treasurer
concluded that the disclosure controls and procedures were effective, in all
material respects, to ensure that information required to be disclosed in the
reports the Company files and submits under the Exchange Act is recorded,
processed, summarized and reported as and when required.

      There have been no changes in the Company's internal control over
financial reporting identified in connection with the evaluation that occurred
during the Company's last fiscal quarter that has materially affected, or that
is reasonably likely to materially affect, the Company's internal control over
financial reporting.


                                       17
<PAGE>

                                    PART III

ITEM 9.     DIRECTORS AND EXECUTIVE OFFICERS OF COFFEE HOLDING CO., INC.

      Set forth below is information concerning our directors and executive
officers. Our board of directors currently consists of six directors. 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.

<TABLE>
<CAPTION>
                                    Director
     Name                Age(1)      Since                              Position
--------------------     ------     --------     ----------------------------------------------------------
<S>                        <C>        <C>        <C>
Andrew Gordon.......       42         1981       Chief Executive Officer, President, Treasurer and Director
David Gordon........       39         1983       Executive Vice President, Secretary and Director
Jorge Arbelaez......       59         2001       Director
Gerard DeCapua......       42         1997       Director
Daniel Dwyer........       47         1998       Director
Sterling Gordon.....       71         1971       Director
</TABLE>

----------
(1)   At December 31, 2003.

      Andrew Gordon is our Chief Executive Officer, President, Treasurer and one
of our directors. He was previously a Vice President from 1993 to 1997. Mr.
Gordon received his B.B.A. degree from Emory University. He is the brother of
David Gordon and the son of Sterling Gordon.

      David Gordon is our Executive Vice President - Operations, Secretary and
one of our directors. He was previously an Operating Manager from 1989 to 1995
and a Vice President from 1995 to the present. Mr. Gordon attended Baruch
College in New York City. He is the brother of Andrew Gordon and the son of
Sterling Gordon.

      Jorge Arbelaez has been our National Branded Sales Manager of Coffee
Holding since 1985.

      Gerard DeCapua has had his own law practice in Rockville Centre, New York
since 1986. Mr. DeCapua received his law degree from Pace University.

      Daniel Dwyer has been a senior coffee trader at Rothfos Corporation, a
green coffee bean supplier, since 1995. Mr. Dwyer is responsible for our
account. We paid Rothfos approximately $4,110,900 for green coffee purchases in
fiscal 2003 and expect to pay it a similar amount in fiscal 2004. All purchases
are made on arms' length terms.

      Sterling Gordon is the founder of Coffee Holding and has been an employee
of Coffee Holding since its inception in 1971. Mr. Gordon has over 40 years of
experience in the coffee business, during which time he has developed
significant expertise in coffee quality. Sterling Gordon is the Father of Andrew
Gordon and David Gordon.


                                       18
<PAGE>

Compliance with Section 16(a)

      Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of the Company's common stock, to report to the SEC their initial ownership
of the Company's common stock and any subsequent changes in that ownership.
Specific due dates for these reports have been established by the SEC and the
Company is required to disclose in this proxy statement any late filings or
failures to file.

      Based solely on its review of the copies of such reports furnished to the
Company and written representations that no other reports were required during
the fiscal year ended October 31, 2003, all Section 16(a) filing requirements
applicable to Charter Financial Corporation's executive officers and directors
during fiscal 2003 were met.

Code of Ethics

      The Company has not yet adopted a "code of ethics" as defined by Item 406
of Regulation S-B, as our securities are not currently quoted or listed on any
quotation system or market. We are in the process of developing and intend to
adopt a "code of ethics" prior to the quoting of our stock on the OTC Bulletin
Board.

ITEM 10.    EXECUTIVE COMPENSATION

      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 31, 2003.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                     Annual Compensation
                                                          ----------------------------------------
                                                                                        All Other
Name and                                     Fiscal       Salary         Bonus        Compensation
Principal Position                            Year          ($)         ($) (1)          ($) (2)
-------------------------------------        ------       -------       -------       ------------
<S>                                           <C>         <C>           <C>              <C>
Andrew Gordon                                 2003        245,000       33,000           28,719
Chief Executive Officer and President         2002        190,254       49,500               --
                                              2001        175,000       30,000           19,838

David Gordon                                  2003        204,000       33,000            9,887
Executive Vice President - Operations         2002        153,467       49,500               --
                                              2001        140,000       25,000            7,311
</TABLE>

----------
(1)   Amounts shown as bonuses were earned in the fiscal year shown.

(2)   The amounts set forth consist of amounts paid by Coffee Holding for the
      use of an automobile and automobile insurance.

      Our Board of Directors did not have a compensation committee in fiscal
2003. During that year, salaries and bonuses were determined by the Board of
Directors. Andrew Gordon's base salary for fiscal 2004 is $245,000. David
Gordon's base salary for fiscal 2004 is $204,000. Once established, the
compensation committee will determine the salaries and bonuses of Andrew Gordon
and David Gordon.


                                       19
<PAGE>

Stock Option Plan

      We have a stock option plan, The 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. We have reserved 2,000,000
shares of our common stock for issuance under the plan, 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.

Compensation of Directors

      Directors 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.

ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
            RELATED STOCKHOLDER MATTERS

      The following table sets forth information regarding ownership of shares
of our common stock, as of October 31, 2003, by each person known to be the
owner of 5% or more of our common stock, by each person who is a director or
executive officer and by all directors and executive officers as a group. Except
as otherwise indicated, each person and each group shown in the table has sole
voting and investment power with respect to the shares of common stock
indicated. For purposes of the table below, in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, a person is deemed to be the
beneficial owner, for purposes of any shares of common stock: (1) over which he
or she has or shares, directly or indirectly, voting or investment power; or (2)
of which he or she has the right to acquire beneficial ownership at any time
within 60 days after October 31, 2003. As used in this annual report, "voting
power" is the power to vote or direct the voting of shares and "investment
power" includes the power to dispose or direct the disposition of shares. Common
stock beneficially owned and percentage ownership were based on 3,999,650 shares
outstanding. The address of each beneficial owner is c/o The Coffee Holding Co.,
Inc., 4401 First Avenue, Brooklyn, New York 11232-0005.


                                       20
<PAGE>

     Name of Beneficial Owners,          Amount and Nature of
       Officers and Directors            Beneficial Ownership     Percentage
------------------------------------     --------------------     ----------
Andrew Gordon.......................             619,500             15.5%
David Gordon........................             619,500             15.5%
Jorge Arbelaez......................                  --                 *
Gerard DeCapua......................                 100                 *
Daniel Dwyer........................                 100                 *
Rachelle L. Gordon(1)...............           1,269,200             31.7%
Sterling A. Gordon(2)...............           1,269,200             31.7%

All directors and executive
officers as a group (9 persons).....           2,508,400             62.7%

----------
*     Less than 1%.

(1)   Includes 199,600 shares owned by Mrs. Gordon directly; 870,000 shares
      owned by the Rachelle L. Gordon 2002 Grantor Retained Annuity Trust of
      which Rachelle L. Gordon is the grantor, beneficiary and trustee, with
      sole power to vote and dispose of the shares; and 199,600 shares of common
      stock owned by Rachelle Gordon's husband, Sterling A. Gordon. Mrs. Gordon
      is the mother of Andrew Gordon and David Gordon.

(2)   Includes 199,600 shares owned by Mr. Gordon directly; 870,000 shares owned
      by the Sterling A. Gordon 2002 Grantor Retained Annuity Trust of which
      Sterling A. Gordon is the grantor, beneficiary and trustee, with sole
      power to vote and dispose of the shares; and 199,600 shares of common
      stock owned by Sterling Gordon's wife, Rachelle Gordon. Mr. Gordon is the
      father of Andrew Gordon and David Gordon.

      The following table sets forth the aggregate information of our equity
compensation plans in effect as of October 31, 2003.

<TABLE>
<CAPTION>
                                                                                      Number of securities
                                Number of securities                                 remaining available for
                                    to be issued          Weighted-average        future issuance under equity
                                  upon exercise of        exercise price of            compensation plans
                                outstanding options,     outstanding options,          (excluding securities
    Plan category               warrants and rights      warrants and rights        reflected in column (a))
------------------------        --------------------     --------------------     ----------------------------
                                        (a)                      (b)                           (c)
<S>                                     <C>                      <C>                        <C>
Equity compensation
   plans approved by
   security holders........              --                       --                        2,000,000

Equity compensation
   plans not approved by
   security holders........              --                       --                               --

      Total................              --                       --                        2,000,000
</TABLE>


                                       21
<PAGE>

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      From time to time, certain of our stockholders, directors and officers
have made loans to us for working capital purposes.

      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
are unsecured, due on demand and currently bear interest at a rate of 6% per
year.

      Andrew Gordon and David Gordon have guaranteed up to $500,000 of the
payment of our borrowings under our outstanding credit facilities from Wells
Fargo Business Credit.

      Daniel Dwyer, a director, is a senior coffee trader for Rothfos
Corporation, a coffee trading company. Mr. Dwyer is responsible for our account.
We paid Rothfos approximately $4.1 million for green coffee purchases in fiscal
2003 and expect to pay it a similar amount in fiscal 2004. All purchases are
made on arms' length terms.

                                     PART IV

ITEM 13.    EXHIBITS, list AND REPORTS ON FORM 8-K

      (a)   The financial statements listed below are filed as a part of this
report. See Index to Financial Statements beginning on Page F-1.

      1.    Financial Statements:

            -     Index to Financial Statements

            -     Report of Independent Public Accountants.

            -     Balance sheet as of October 31, 2003.

            -     Statements of Operations for the Years Ended October 31, 2003
                  and 2002.

            -     Statements of Changes in Stockholders' Equity for the Years
                  Ended October 31, 2003 and 2002.

            -     Statements of Cash Flows for the Years Ended October 31, 2003
                  and 2002.

            -     Notes to Financial Statements.

      (b)   Reports on Form 8-K.

            None.


                                       22
<PAGE>

      (c)   Exhibits. (Filed herewith unless otherwise noted)

      Exhibit No.                         Description
      -----------                         -----------

          2.1     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).

          3.1     Articles  of  Incorporation  of  Coffee  Holding,  as  amended
                  (incorporated  herein by  reference  to Exhibit  3.1 to Coffee
                  Holding's  Annual  Report on Form  10-KSB for the fiscal  year
                  ended October 31, 2002).

          3.2     Certificate  of  Amendment  of  Articles of  Incorporation  of
                  Coffee Holding Co., Inc.  (incorporated herein by reference to
                  Exhibit 3.2 to Coffee Holding's  Quarterly Report on Form 10-Q
                  for the quarter ended April 30, 1998).

          3.3     Coffee Holding's By-Laws, as amended  (incorporated  herein by
                  reference to Exhibit 3.3 to Coffee Holding's  Quarterly Report
                  on Form 10-Q for the quarter ended April 30, 1998).

          4.1     Form  of  Stock   Certificate  of  Coffee  Holding  Co.,  Inc.
                  (incorporated  herein by  reference  to Exhibit  4.1 to Coffee
                  Holding's  Annual  Report on Form  10-KSB for the fiscal  year
                  ended October 31, 2002).

         10.1     Lease  with  T&O  Management   Corp.  dated  August  15,  1997
                  (incorporated  herein by  reference  to Exhibit 10.1 to Coffee
                  Holding's  Quarterly Report on Form 10-Q for the quarter ended
                  April 30, 1998).

         10.2     1998 Stock  Option Plan  (incorporated  herein by reference to
                  Exhibit 10.2 to Coffee  Holding's  Annual  Report on Form 10-Q
                  for the quarter ended April 30, 1998).

         10.3     Loan and  Security  Agreement  dated as of  November  21, 1997
                  between   Coffee   Holding   and   NationsCredit    Commercial
                  Corporation  (incorporated herein by reference to Exhibit 10.3
                  to Coffee  Holding's Annual Report on Form 10-K for the fiscal
                  year ended October 31, 2000).

         10.4     First Amendment to Loan and Security Agreement dated as of May
                  22, 1998 between Coffee Holding and  NationsCredit  Commercial
                  Corporation  (incorporated herein by reference to Exhibit 10.4
                  to Coffee  Holding's Annual Report on Form 10-K for the fiscal
                  year ended October 31, 2000).

         10.5     Second  Amendment  dated as of  November  29, 2000 to Loan and
                  Security  Agreement  between  Coffee  Holding  and Wells Fargo
                  Business  Credit,  Inc., as assignee  (incorporated  herein by
                  reference to Exhibit 10.5 to Coffee Holding's Annual Report on
                  Form 10-K for the fiscal year ended October 31, 2000).

         10.6     Term Note dated as of November 29, 2000 made by Coffee Holding
                  in  favor  of  Wells  Fargo  Business  Credit,  Inc.,  in  the
                  principal amount of $600,000 (incorporated herein by reference
                  to Exhibit 10.6 to Coffee Holding's Annual Report on Form 10-K
                  for the fiscal year ended October 31, 2000).

         10.7     Third  Amendment  dated  as of  October  1,  2002 to Loan  and
                  Security  Agreement  between  Coffee  Holding  and Wells Fargo
                  Business  Credit,  Inc., as assignee  (incorporated  herein by
                  reference to Exhibit 10.7 to Coffee Holding's Annual Report on
                  Form 10-KSB for the fiscal year ended October 31, 2002).


                                       23
<PAGE>

         10.8     Term Note dated as of  October 1, 2002 made by Coffee  Holding
                  in  favor  of  Wells  Fargo  Business  Credit,  Inc.,  in  the
                  principal amount of $750,000 (incorporated herein by reference
                  to  Exhibit  10.8 to Coffee  Holding's  Annual  Report on Form
                  10-KSB for the fiscal year ended October 31, 2002).

         10.9     Capital Lease Agreement with HSBC Business Credit (USA),  Inc.
                  (incorporated  herein by  reference  to Exhibit 10.9 to Coffee
                  Holding's  Annual  Report on Form  10-KSB for the fiscal  year
                  ended October 31, 2002).

        10.10     Sales  contract  with  Supervalu  and Cub Foods  (incorporated
                  herein by  reference  to  Exhibit  10.10 to  Coffee  Holding's
                  Annual  Report on Form  10-KSB for the year ended  October 31,
                  2002) (confidential treatment request pending).

        10.11     Sales contract with Shurfine Central  (incorporated  herein by
                  reference to Exhibit 10.11 to Coffee  Holding's  Annual Report
                  on  Form  10-KSB  for  the  year  ended   October  31,   2002)
                  (confidential treatment request pending).

         31.1     Rule 13a-14(a)/15d-14(a) Certification.

         32.1     Section 1350 Certification.


                                       24
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.

                                                  COFFEE HOLDING CO., INC.

                                                  By: /s/ Andrew Gordon
                                                      --------------------------
                                                          Andrew Gordon

      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Signature                    Title
---------                    -----

/s/ Andrew Gordon            Chief Executive Officer, President, Treasurer and
----------------------       Director (principal executive officer and principal
Andrew Gordon                financial and accounting officer)
Date: January 25, 2004

/s/ David Gordon             Executive Vice President -- Operations, Secretary
----------------------       and Director
David Gordon
Date: January 25, 2004

/s/ Gerard DeCapua           Director
----------------------
Gerard DeCapua
Date: January 25, 2004

/s/ Dan Dwyer                Director
----------------------
Dan Dwyer
Date: January 25, 2004

/s/ Jorge Arbelaez           Director
----------------------
Jorge Arbelaez
Date: January 25, 2004

/s/ Sterling Gordon          Director
----------------------
Sterling Gordon
Date: January 25, 2004


                                       25
<PAGE>

                                  Exhibit Index

Exhibit No.                             Description
-----------                             -----------

    2.1        Agreement and Plan of Merger by and Among Transpacific
               International Group Corp. and Coffee Holding Co., Inc.       *

    3.1        Articles of Incorporation of Coffee Holding, as amended.    **

    3.2        Certificate of Amendment of Articles of Incorporation
               of Coffee Holding Co., Inc.                                 ***

    3.3        Coffee Holding's By-Laws, as amended                        ***

    4.1        Form of Stock Certificate of Coffee Holding Co., Inc.       **

   10.1        Lease with T&O Management Corp. dated August 15, 1997       ***

   10.2        1998 Stock Option Plan                                      ***

   10.3        Loan and Security Agreement dated as of November 21,
               1997 between Coffee Holding and NationsCredit
               Commercial Corporation.                                     ++

   10.4        First Amendment to Loan and Security Agreement dated
               as of May 22, 1998 between Coffee Holding and
               NationsCredit Commercial Corporation.                       ++

   10.5        Second Amendment dated as of November 29, 2000 to Loan
               and Security Agreement between Coffee Holding and
               Wells Fargo Business Credit, Inc., as assignee.             ++

   10.6        Term Note dated as of November 29, 2000 made by Coffee
               Holding in favor of Wells Fargo Business Credit, Inc.,
               in the principal amount of $600,000.                        ++

   10.7        Third Amendment dated as of October 1, 2002 to Loan
               and Security Agreement between Coffee Holding and
               Wells Fargo Business Credit, Inc., as assignee.             **

   10.8        Term Note dated as of October 1, 2002 made by Coffee
               Holding in favor of Wells Fargo Business Credit, Inc.,
               in the principal amount of $750,000.                        **

   10.9        Capital Lease Agreement with HSBC Business Credit
               (USA), Inc.                                                 **

   10.10       Sales contract with Supervalu and Cub Foods.                **

   10.11       Sales contract with Shurfine Central.                       **

   31.1        Rule 13a-14(a)/15d-14(a) Certification.                    Filed
                                                                        Herewith

   32.1        Section 1350 Certification.                                Filed
                                                                        Herewith


*     Incorporated herein by reference to the Registration Statement on Form
      SB-2(file No. 333-00588-NY) as filed with the Commission on November 10,
      1997.

                                       26
<PAGE>

**    Incorporated herein by reference to Coffee Holding's Annual Report on Form
      10-KSB for the fiscal year ended October 31, 2002.

***   Incorporated herein by reference to Coffee Holding's Quarterly Report on
      Form 10-Q for the quarter ended April 30, 1998.

++    Incorporated herein by reference to Coffee Holding's Annual Report on Form
      10-K for the fiscal year ended October 31, 2000.


                                       27
<PAGE>

                            COFFEE HOLDING CO., INC.

                          INDEX TO FINANCIAL STATEMENTS

                                                                            PAGE
                                                                            ----

FINANCIAL STATEMENTS:

         REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                 F-2

         BALANCE SHEET AS OF OCTOBER 31, 2003                               F-3

         STATEMENTS OF OPERATIONS YEARS ENDED
              OCTOBER 31, 2003 AND 2002                                     F-4

         STATEMENTS OF CHANGES IN STOCKHOLDERS'
              EQUITY YEARS ENDED
              OCTOBER 31, 2003 AND 2002                                     F-5

         STATEMENTS OF CASH FLOWS YEARS ENDED
              OCTOBER 31, 2003 AND 2002                                     F-6

         NOTES TO FINANCIAL STATEMENTS                                    F-7/14


                                      * * *


                                      F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
Coffee Holding Co., Inc.

We have audited the accompanying balance sheet of Coffee Holding Co., Inc. as of
October  31,  2003  and  the  related  statements  of  operations,   changes  in
stockholders'  equity  and cash  flows  for the two  years in the  period  ended
October 31, 2003.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Coffee Holding Co., Inc. as of
October 31, 2003 and its results of operations  and cash flows for the two years
in the period ended October 31, 2003, in conformity with  accounting  principles
generally accepted in the United States of America.


                                        /s/ LAZAR LEVINE & FELIX, LLP
                                  ----------------------------------------------
                                            LAZAR LEVINE & FELIX, LLP

New York, New York
December 10, 2003


                                      F-2
<PAGE>

                            COFFEE HOLDING CO., INC.
                                  BALANCE SHEET
                                OCTOBER 31, 2003

<TABLE>
<S>                                                                  <C>              <C>
                                   - ASSETS -
Current assets:
     Cash                                                                             $   73,832
     Due from broker                                                                     894,123
     Accounts receivable, net of allowance for doubtful
        accounts of $119,435                                                           2,154,683
     Inventories                                                                       1,781,424
     Prepaid expenses and other current assets                                           431,432
     Deferred tax asset                                                                  103,700
                                                                                      ----------
         Total current assets                                                          5,439,194
Property and equipment, at cost, net of accumulated
  depreciation of $2,991,206                                                           1,579,294
Deposits and other assets                                                                 16,796
                                                                                      ----------
                                                                                      $7,035,284
                                                                                      ==========

                    - LIABILITIES AND STOCKHOLDERS' EQUITY -
Current liabilities:
     Current portion of term loan                                                     $   84,000
     Current portion of obligations under capital lease                                  130,551
     Accounts payable and accrued expenses                                             1,861,447
                                                                                      ----------
         Total current liabilities                                                     2,075,998
Term loan, net of current portion                                                        252,000
Obligations under capital lease, net of current portion                                   91,895
Line of credit borrowings                                                              2,376,066
Loans from related parties                                                                79,646
Income taxes payable-deferred                                                             39,200
                                                                                      ----------
         Total liabilities                                                             4,914,805

Commitments and contingencies

Stockholders' equity:
     Preferred stock, par value $.001 per share;  10,000,000
       shares  authorized; none issued
     Common stock, par value $.001 per share;  30,000,000
       shares authorized, 3,999,650 shares issued and
       outstanding for 2003 and 2002, respectively                   $    4,000
     Additional paid-in capital                                         867,887
     Retained earnings                                                1,248,592
                                                                     ----------
         Total stockholders' equity                                                    2,120,479
                                                                                      ----------
                                                                                      $7,035,284
                                                                                      ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                      F-3
<PAGE>

                            COFFEE HOLDING CO., INC.
                            STATEMENTS OF OPERATIONS
                      YEARS ENDED OCTOBER 31, 2003 AND 2002


                                                       2003           2002
                                                   -----------    -----------
Net sales                                          $20,239,867    $17,432,742

Cost of sales                                       15,373,127     12,452,713
                                                   -----------    -----------

Gross profit                                         4,866,740      4,980,029
                                                   -----------    -----------

Operating expenses:
     Selling, general and administrative             3,501,465      3,061,542
     Officers' salaries                                490,860        443,222
                                                   -----------    -----------
         Totals                                      3,992,325      3,504,764
                                                   -----------    -----------

Income from operations                                 874,415      1,475,265
                                                   -----------    -----------

Other income (expense):
     Interest income                                     9,000         18,508
     Other income                                        1,640             --
     Interest expense                                 (146,607)      (180,678)
                                                   -----------    -----------
         Totals                                       (135,967)      (162,170)
                                                   -----------    -----------

Income before income taxes                             738,448      1,313,095

Provision for income taxes                             116,366        557,720
                                                   -----------    -----------

Net income                                         $   622,082    $   755,375
                                                   ===========    ===========

Basic earnings per share                           $       .16    $       .19
                                                   ===========    ===========

Basic weighted average common shares outstanding     3,999,650      3,999,650
                                                   ===========    ===========

   The accompanying notes are an integral part of these financial statements.


                                      F-4
<PAGE>

                            COFFEE HOLDING CO., INC.
           STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                      YEARS ENDED OCTOBER 31, 2003 AND 2002

<TABLE>
<CAPTION>

                                                                        Retained
                                                          Additional    Earnings
                                                          Paid - in   (Accumulated
                                    Common Stock           Capital      Deficit)        Total
                              -----------------------   -----------   ------------   -----------
                                  $.001 Par Value
                              -----------------------
                              Number of
                                Shares      Amount
                              ---------   -----------
<S>                           <C>         <C>           <C>           <C>            <C>
Balance, October 31, 2001     3,999,650   $     4,000   $   867,887   $  (128,865)   $   743,022

Net income                           --            --            --       755,375        755,375
                              ---------   -----------   -----------   -----------    -----------

Balance, October 31, 2002     3,999,650         4,000       867,887       626,510      1,498,397

Net income                                                                622,082        622,082
                              ---------   -----------   -----------   -----------    -----------

Balance, October 31, 2003     3,999,650   $     4,000   $   867,887   $ 1,248,592    $ 2,120,479
                              =========   ===========   ===========   ===========    ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                      F-5
<PAGE>

                            COFFEE HOLDING CO., INC.
                            STATEMENTS OF CASH FLOWS
                      YEARS ENDED OCTOBER 31, 2003 AND 2002

<TABLE>
<CAPTION>

                                                                               2003            2002
                                                                          ------------    ------------
<S>                                                                       <C>             <C>
Operating activities:
     Net income                                                           $    622,082    $    755,375
     Adjustments to reconcile net income to net cash (used)
         provided by operating activities:
           Depreciation and amortization                                       299,774         270,994
           Bad debts                                                                --              --
           Deferred taxes                                                      (38,300)        (26,200)
         Changes in operating assets and liabilities:
           (Increase) in due from broker                                      (125,521)       (494,037)
           (Increase) decrease in accounts receivable                         (371,261)        118,327
           (Increase) in inventories                                          (363,280)        (66,994)
           (Increase) in prepaid expenses and other current assets            (348,165)        (42,378)
           (Decrease) increase in accounts payable and accrued expenses       (190,015)        301,128
           (Decrease) increase in income taxes payable                        (229,540)          7,225
                                                                          ------------    ------------
              Net cash (used) provided by operating activities                (744,226)        823,440
                                                                          ------------    ------------

Investing activities:
  Purchases of property and equipment                                          (62,758)       (435,538)
                                                                          ------------    ------------

Financing activities:

   Advances on term loan                                                            --          40,000
   Principal payments on term loan                                             (84,000)       (120,000)
   Decrease in cash and cash equivalents restricted under
     credit facility and mortgage note                                              --         279,518
   Advances under bank line of credit                                       21,358,723      18,037,747
   Principal payments under bank line of credit                            (20,304,030)    (19,055,590)
   Advances of obligations under capital leases                                     --         383,764
   Principal payments of obligations under capital leases                     (120,521)        (40,797)
   Repayments of advances from related parties                                 (12,924)        (68,410)
                                                                          ------------    ------------
              Net cash provided (used) in financing activities                 837,248        (543,768)
                                                                          ------------    ------------
Net increase (decrease) in cash                                                 30,264        (155,866)
Cash, beginning of year                                                         43,568         199,434
                                                                          ------------    ------------
Cash, end of year                                                         $     73,832    $     43,568
                                                                          ============    ============
Supplemental disclosure of cash flow data:
    Interest paid                                                         $    143,682    $    145,969
                                                                          ============    ============
    Income taxes paid                                                     $    396,295    $    494,669
                                                                          ============    ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                      F-6
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2003 AND 2002


Note 1 -    Business activities and reverse acquisition:

            Coffee Holding Co., Inc.  ("Coffee"),  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's
            sales are  primarily to customers  that are located  throughout  the
            United States.


Note 2 -    Summary of significant accounting policies:

            Use of estimates:

            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.

            Cash equivalents:

            Cash equivalents represent highly liquid investments with maturities
            of three months or less at the date of purchase.

            Inventories:

            Inventories  are  valued at the lower of cost  (first-in,  first-out
            basis) or market.

            Property and equipment:

            Property and  equipment are recorded at cost and  depreciated  using
            the  straight-line  method over the  estimated  useful  lives of the
            assets.

            Hedging:

            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's
            accounting for options and futures  contracts may have the effect of
            increasing earnings volatility in any particular period.

            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.

            At  October  31,  2002,  the  Company  held 75 options  covering  an
            aggregate  of  2,812,500  pounds  of green  coffee  beans at  prices
            ranging from $.60 to $.65 per pound.  The fair market value of these
            options, which was obtained from a major financial institution,  was
            approximately $145,000 at October 31, 2002.


                                      F-7
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2003 AND 2002


Note 2 -    Summary of significant accounting policies (Continued):

            Hedging (Continued):

            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, 2003 and 2002, the
            Company  held  183  and 70  longer-term  futures  contracts  for the
            purchase of 6,862,500 and  2,625,000  pounds of coffee at an average
            price of $.65 and $.62 per pound, respectively.  The market price of
            coffee  applicable to such  contracts was $.59 and $.62 per pound at
            October 31, 2003 and $.66 per pound at October 31, 2002.

            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.

            Included  in cost of sales and due from  broker for the years  ended
            October  31,  2003 and  2002,  the  Company  recorded  realized  and
            unrealized gain and losses respectively,  on these hedging contracts
            as follows:

                                                        Years Ended October, 31
                                                       -------------------------
                                                          2003            2002
                                                       ----------       --------
                 Realized Gain and (losses)            $1,116,694       $776,580
                 Unrealized Gain and (losses)          $ (248,025)      $  1,830

            Advertising:

            The Company  expenses  the cost of  advertising  and  promotions  as
            incurred.  Advertising costs charged to operations  totaled $143,130
            and $109,751 in 2003 and 2002 respectively.

            Income taxes:

            The  Company  accounts  for income  taxes  pursuant to the asset and
            liability  method  which  requires  deferred  income  tax assets and
            liabilities  to be computed for  temporary  differences  between the
            financial  statement  and tax bases of assets and  liabilities  that
            will result in taxable or deductible  amounts in the future based on
            enacted  tax laws and rates  applicable  to the periods in which the
            differences  are  expected  to  affect  taxable  income.   Valuation
            allowances are  established  when  necessary to reduce  deferred tax
            assets  to the  amount  expected  to be  realized.  The  income  tax
            provision or credit is the tax payable or refundable  for the period
            plus or minus the change  during the period in  deferred  tax assets
            and liabilities (see also Note 7).

            Stock options:

            In accordance  with the  provisions of Accounting  Principles  Board
            Opinion No. 25,  "Accounting  for Stock  Issued to  Employees,"  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, "Accounting for Stock-Based
            Compensation" ("SFAS 123"), 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.


                                      F-8
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2003 AND 2002


Note 2 -    Summary of significant accounting policies (Continued):

            Earnings (loss) per share:

            The Company presents "basic" and, if applicable,  "diluted" earnings
            per  common  share  pursuant  to  the  provisions  of  Statement  of
            Financial  Accounting Standards No. 128, "Earnings per Share" ("SFAS
            128") and certain other financial accounting  pronouncements.  Basic
            earnings  (loss) per common  share are  calculated  by dividing  net
            income or loss by the  weighted  average  number  of  common  shares
            outstanding  during each period. The calculation of diluted earnings
            per common  share is similar  to that of basic  earnings  per common
            share,  except  that the  denominator  is  increased  to include the
            number of additional  common shares that would have been outstanding
            if all potentially  dilutive  common shares,  such as those issuable
            upon the exercise of stock  options,  were issued during the period.
            Since the Company had no potentially dilutive securities outstanding
            in 2003 and 2002, only  historical  basic earnings per share amounts
            are presented in the accompanying  statement of operations for those
            years.

            The  weighted   average  common  shares   outstanding  used  in  the
            computation  of basic  earnings  per  share in 2003 and 2002 was the
            3,999,650 shares of common stock actually  outstanding  during those
            years.

            Fair value of financial instruments:

            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.

            Revenue recognition:

            The  Company  recognizes  revenues at the point of passage of title,
            which is generally at the time of shipment.

            Recent accounting pronouncements:

            On July 30, 2002, the FASB issued Statement of Financial  Accounting
            Standards No. 146,  "Accounting  for Costs  Associated  with Exit or
            Disposal  Activities"  ("SFAS  146"),  that is applicable to exit or
            disposal activities initiated after December 31, 2002. This standard
            requires  companies  to  recognize  costs  associated  with  exit or
            disposal  activities  when they are incurred rather than at the date
            of a commitment to an exit or disposal plan.  This standard does not
            apply where SFAS 144 is applicable.  This new standard does not have
            any impact on the Company's operating results and financial position
            at this time.

            On  December  31,  2002,  the FASB  issued  Statement  of  Financial
            Accounting   Standards   No.  148,   "Accounting   for   Stock-Based
            Compensation-Transition   and  Disclosure"  ("SFAS  148"),  that  is
            applicable  to financial  statements  issued for fiscal years ending
            after December 15, 2002. In addition,  interim disclosure provisions
            are applicable for financial  statements  issued for interim periods
            beginning after December 15, 2002. This standard amends SFAS 123 and
            provides guidance to companies electing to voluntarily change to the
            fair value method of accounting  for  stock-based  compensation.  In
            addition,  this standard  amends SFAS 123 to require more  prominent
            and more frequent  disclosures in financial statements regarding the
            effects of stock-based compensation. This new standard does not have
            any impact on the Company's operating results and financial position
            at this time.


                                      F-9
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2003 AND 2002


Note 2 -    Summary of significant accounting policies (Continued):

            Recent accounting pronouncements (Continued):

            In  January  2003,  FASB  Interpretation  No.  46  ("FIN  No.  46"),
            "Consolidation of Variable Interest  Entities,  an interpretation of
            Accounting  Research  Bulletin  No. 51," was issued.  In general,  a
            variable  interest entity is a corporation,  partnership,  trust, or
            any other legal structure used for business purposes that either (a)
            does not have equity  investors with voting rights or (b) has equity
            investors that do not provide sufficient financial resources for the
            entity to support  its  activities.  FIN No. 46  requires a variable
            interest  entity to be  consolidated by a company if that company is
            subject to a majority of the risk of loss from the variable interest
            entity's  activities  or is  entitled  to receive a majority  of the
            entity's residual returns or both.  Currently,  this standard has no
            effect on the Company's financial statements.

            During April 2003, the Financial  Accounting  Standards Board issued
            SFAS 149, "Amendment of Statement 133 on Derivative  Instruments and
            Hedging  Activities."  SFAS 149 amends and clarifies  accounting for
            derivative  instruments,  including certain  derivative  instruments
            embedded in other contracts,  and for hedging  activities under SFAS
            133, "Accounting for Derivative Instruments and Hedging Activities."
            The   statement    requires   that   contracts    with    comparable
            characteristics  be accounted for  similarly  and  clarifies  when a
            derivative  contains a financing  component  that  warrants  special
            reporting in the statement of cash flows.  SFAS 149 is effective for
            contracts  entered into or modified  after June 30, 2003,  except in
            certain  circumstances,  and for  hedging  relationships  designated
            after June 30, 2003. Currently, this standard has not had a material
            effect on the Company's financial statements.

            In May 2003,  the FASB issued  "SFAS 150",  "Accounting  for Certain
            Financial  Instruments with  Characteristics of both Liabilities and
            Equity".  "SFAS 150"  requires that certain  financial  instruments,
            which under previous guidance were accounted for as equity, must now
            be accounted for as liabilities.  The financial instruments affected
            include mandatorily  redeemable stock, certain financial instruments
            that  require  or may  require  the  issuer  to buy back some of its
            shares in exchange for cash or other assets and certain  obligations
            that can be settled with shares of stock.  SFAS 150 is effective for
            all  financial  instruments  entered into or modified  after May 31,
            2003,  and  otherwise  is  effective  at the  beginning of the first
            interim  period  beginning  after  June 15,  2003.  Currently,  this
            standard has no effect on the Company's financial statements.

            Reclassifications:

            Certain  accounts  in the 2002  financial  statements  may have been
            reclassified to conform to the 2003 presentation.


Note 3 -    Inventories:

            Inventories at October 31, 2003 consisted of the following:

                    Packed coffee                        $  213,062
                    Green coffee                            999,137
                    Packaging supplies                      569,225
                                                         ----------
                    Totals                               $1,781,424
                                                         ==========


                                      F-10
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2003 AND 2002


Note 4 -    Property and equipment:

            Property  and  equipment  at  October  31,  2003  consisted  of  the
            following:

                                                          Estimated
                                                         Useful Life
                                                         -----------
            Building and improvements                     30 years    $1,252,448
            Machinery and equipment                        7 years     2,606,859
            Machinery and equipment under capital leases   7 years       426,404
            Furniture and fixtures                         7 years       143,789
                                                                      ----------
                                                                       4,429,500
            Less accumulated depreciation (including
              $277,692 arising from capital leases)                    2,991,206
                                                                      ----------
                                                                       1,438,294
            Land                                                         141,000
                                                                      ----------
            Totals                                                    $1,579,294
                                                                      ==========

            Depreciation expense totaled $299,774 and $270,994 in 2003 and 2002,
            respectively.


Note 5 -    Credit facility and other borrowings:

            As of October  2003,  the Company was  obligated  under a $5,750,000
            credit facility  provided by Well 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.

            The  line  of  credit  provides  for  borrowing  of up to 85% of the
            Company'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.

            As a result of  amendments  to prior  agreements  with  Wells  Fargo
            Business Credit,  that became effective on October 1, 2002, interest
            on borrowings under the line of credit and the term loan are payable
            monthly  at the prime  rate plus  .25% and  .50%,  respectively  (an
            effective  rate of 4.25%  and 4.50%  respectively,  at  October  31,
            2003).  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's  ability to continue to use the
            credit facility will become subject to its ability to meet specified
            financial  covenants  and  ratios.  In  addition,   the  outstanding
            balances   under  the  term  loan  were   classified   as  long-term
            liabilities in the accompanying October 31, 2003 balance sheet based
            on the Company's  ability to either defer  payments  until,  or make
            installment payments through,  November 20, 2004. The term loan, has
            an outstanding  balance of $336,000  (including a current portion of
            $84,000) and  aggregate  borrowing of  $2,376,066  were  outstanding
            under its credit  line  facility at October  31,  2003.  The line of
            credit can be withdrawn at Wells Fargo Business Credit's option. The
            Company was in compliance with the required  financial  covenants at
            October 31, 2003.


                                      F-11
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2003 AND 2002

Note 6 -    Loans from related parties:

            The  Company  had  loans  payable  to  certain  of its  stockholders
            aggregating $79,646 at October 31, 2003. The loans are due on demand
            but  payments  are not  expected  to be  required in the next twelve
            months. These loans bear interest at 6% per annum.  Interest expense
            totaled   approximately   $5,405  and   $13,000  in  2003  and  2002
            respectively.


Note 7 -    Income taxes:

            The tax effects of the temporary  differences  that give rise to the
            deferred  tax assets and  liabilities  as of October 31, 2003 are as
            follows:

                     Deferred tax assets:
                        Accounts receivable                 $ 49,100
                        Inventory                             54,600
                                                            --------
                                                            $103,700
                                                            ========
                     Deferred tax liability:
                        Fixed assets                        $ 39,200
                                                            ========

            The Company's  provision for income taxes in 2003 and 2002 consisted
            of the following:

                                                 2003             2002
                                               --------         --------
                   Federal                     $150,004         $387,265
                   State and local              (33,638)*        170,455
                                               --------         --------
                   Total                       $116,366         $557,720
                                               ========         ========

                  * Includes prior year over accrual of state franchise taxes.

            A reconciliation  of the difference  between the expected income tax
            rate  using  the  statutory  federal  tax  rate  and  the  Company's
            effective tax rate is as follows:

                                                                    2003    2002
                                                                    ----    ----
                   US Federal income tax statutory rate             34%     34%
                   State income taxes, net of federal tax benefit    8%      8%
                   Other                                           (26%)     --
                                                                   ----     ---
                   Effective tax rate                               16%     42%
                                                                   ====     ===

Note 8 -    Commitments and contingencies:

            Operating lease:

            The Company occupies warehouse  facilities under an operating lease,
            which  expired on August 31, 2002 and was renewed for an  additional
            two years. The lease requires the Company to pay utilities and other
            maintenance expenses. Rent charged to operations amounted to $50,076
            and $47,346 in 2003 and 2002,  respectively.  Future  minimum rental
            payments under the noncancelable operating lease in years subsequent
            to October 31, 2003 are $41,730 in 2004.

            The Company also uses a variety of  independent,  bonded  commercial
            warehouses to store its green coffee beans.


                                      F-12
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2003 AND 2002


Note 8 -    Commitments and contingencies (Continued):

            Obligation under capital leases:

            During the year the Company leased  machinery and equipment  under a
            capital  lease,  which expires in July 2005. The asset and liability
            under the  capital  lease is  recorded  at the lower of the  present
            value of the minimum lease  payments or the fair value of the asset.
            The asset is being  depreciated  over the lease  term.  Depreciation
            expense of assets under capital  lease are included in  depreciation
            expense and  amounted to $60,915  for the period  ended  October 31,
            2003.

            At October 31, 2003, assets held under capital lease are as follows:

            Machinery and equipment                         $426,404
            Less:  accumulated depreciation                  (91,372)
                                                            --------
                                                            $335,032
                                                            ========

            Obligation under capital leases:

            Minimum  annual  future lease  payments  under the capital lease for
            each of the next two years and in the aggregate are:

                Year ended October 31,
                                 2004                             $ 141,249
                                 2005                                94,165
                                                                  ---------
                Total minimum lease payments                        235,414
                Less:  amount representing interest                 (12,968)
                                                                  ---------
                Present value of minimum lease payments             222,446
                Less:  current portion                             (130,551)
                                                                  ---------
                Long-term portion                                 $  91,895
                                                                  =========

            The interest  rate on the capital  lease is 8 1/3% per annum,  which
            approximates the Company's incremental rate of borrowing at the time
            the lease was entered into.

            Legal proceedings:

            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's  financial  statements in
            subsequent years.


Note 9 -    Concentrations of credit risk:

            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.  The net
            balance  of  the  Company'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.


                                      F-13
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2003 AND 2002


Note 9 -    Concentrations of credit risk (Continued):

            Approximately  16% of the Company's  sales were derived from each of
            two  customers  in  2003.   Those   customers   also  accounted  for
            approximately   $266,000  and  $61,700  of  the  Company's   account
            receivable balance as of October 31, 2003. Approximately 18% and 17%
            of the Company's sales were derived from two customers  during 2002.
            Those  customers  also accounted for  approximately  $ 132,000 and $
            141,000 of the Company's accounts  receivable balance at October 31,
            2002.  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.

            Management  does not believe  that credit  risk was  significant  at
            October 31, 2003.


Note 10 -   Stock option plan:

            On February 10, 1998,  the Company's  stockholders  consented to the
            adoption of the  Company's  stock option plan (the  "Plan")  whereby
            incentive and/or  nonincentive  stock options for the purchase of up
            to 2,000,000  shares of the Company's common stock may be granted to
            the  Company'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).

            As of October 31, 2003, no options had been granted under the Plan.


Note 11 -   Major vendors/Related party:

            During fiscal 2003,  substantially  all of the  Company's  purchases
            were from ten vendors.  The ten vendors  accounted  for 84% of total
            product purchases. Two of these vendors accounted for 31% and 11% of
            total purchases.  These vendors accounted for approximately  $66,700
            and $124,400 of the Company's accounts payable at October 31, 2003.

            During fiscal 2002,  substantially  all of the  Company's  purchases
            were from ten vendors.  The ten vendors  accounted  for 89% of total
            product  purchases.  One of these vendors accounted for 33% of total
            purchases  and  approximately  $128,700  of the  Company's  accounts
            payable at October 31, 2002. In addition, an employee of this vendor
            is a director of the  Company.  Purchases  from that vendor  totaled
            approximately   $4,110,900   and   $3,415,200   in  2003  and  2002,
            respectively.  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's operations due
            to the availability of alternate suppliers.


Note 12 -   Consulting agreement:

            On July 26, 2002,  the Company  entered  into an agreement  with two
            investment banking firms (collectively "Managing  Underwriters") for
            the  Managing  Underwriters  to  serve  as the  Company's  exclusive
            financial advisors and Managing Underwriters for 12 months. The main
            function of the  Managing  Underwriters  was to  facilitate a public
            offering of the Company's common stock. The Company  terminated this
            agreement  on December  11,  2002.  No funds were raised  under this
            agreement.


                                      F-14