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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549-1004

                                   ----------
                                    Form 10-K
                                   ----------

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

                   For the fiscal year ended October 31, 1998

                                       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. _______

                            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)

      Indicate by check mark  whether the  registrant  (1) has 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 ___ No X .

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K 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-K or any amendment to this
Form 10-K. [X]

      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 September 30, 2000, the  Registrant  had 3,999,650  shares of common
stock, par value $.001 per share, outstanding.

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<PAGE>

                            COFFEE HOLDING CO., INC.

                                     PART I

      This  document  contains  forward  looking  statements.   Forward  looking
statements  are  based  on  management's  then  current  views  and  assumptions
regarding future events and operating performance.  These statements are subject
to factors  which could cause  actual  results to differ  materially  from those
statements. For a more detailed discussion of forward looking statements and the
factors  which  could cause  actual  results to differ,  please  refer to Item 7
herein.

                               RECENT DEVELOPMENTS

      On December 10, 1998,  the Company  entered into a  non-binding  letter of
intent with Chock Full O' Nuts  ("Chock")  whereby the Company would be acquired
for an  aggregate  $5.8  million  in  cash,  minus  an  amount  equal to (i) all
liabilities reflected on a final balance sheet, minus (ii) the lesser of (1) the
liabilities  secured by the  Company's  equipment  or (2)  $400,000.  The merger
consideration  is also  subject to other  adjustments.  In  addition,  Chock has
agreed to pay to the Company's  major  stockholders  a deferred  purchase  price
equal  to a  portion  of  Chock's  green  coffee  sales to  parties  who are not
currently  Chock  customers  for the first five years  following  closing of the
merger.

      The consummation of the merger is subject to the negotiation and execution
of a definitive  merger  agreement by February 28, 1999 and the  satisfaction of
conditions,   including  approval  by  the  Company's  board  of  directors  and
stockholders.

Item 1. Business

      Coffee Holding Co., Inc. (sometimes referred to herein as the "Company" or
"Coffee Holding")  conducts  wholesale coffee  operations,  including  roasting,
blending,  packaging,  marketing and distributing coffees for sale under private
labels and under its own brands of  specialty  coffees.  The Company  also sells
unprocessed green coffee to specialty  gourmet roasters.  Coffee Holding's sales
are primarily to customers located throughout the United States.

      Coffee Holding Co., Inc. was originally  incorporated in New York in 1971.
Pursuant to an Agreement and Plan of Merger between Coffee Holding Co., Inc. and
Transpacific International Group Corp. (the "Merger Agreement"),  Coffee Holding
merged with and into Transpacific International Group Corp.  ("Transpacific") in
February,  1998, with Transpacific being the surviving corporation (the "Reverse
Acquisition"). After the merger, Transpacific changed its name to Coffee Holding
Co., Inc.

      Transpacific  was  incorporated  in Nevada in 1995 for the sole purpose of
acquiring or merging with an unspecified operating business. Transpacific had no
operating  assets  and did not  engage in any  business  activities  other  than
seeking and investigating  other businesses for potential merger or acquisition.
On August 12, 1996,  Transpacific commenced a "blank check" offering pursuant to
Rule 419 of the  Securities  Act,  selling 3,000 shares of common stock at $6.00
per share,  which  generated  $18,000 in gross  proceeds from  approximately  35
different  investors.  Pursuant to Rule 419, all of the gross  proceeds from the
offering,  less 10%, and the shares of  Transpacific  purchased by the investors
were  held  in  escrow  pending  distribution  of a  prospectus  to each of them
describing  any  prospective   business  acquisition  by  Transpacific  and  the
subsequent  confirmation  of  holders  of at least 80% of the  shares  that they
elected to remain investors.  All but one investor  reconfirmed their investment
and  the  merger  was  consummated.   Pursuant  to  the  Merger  Agreement,  the
Transpacific common stock was split ten for one and 3,000,000 shares were issued
to Coffee Holding  shareholders in exchange for the outstanding shares of Coffee
Holding.

      All descriptions of the business of Coffee Holding  contained in this Form
10-K prior to the date of the merger  describe  the  operations  of the New York
corporation named Coffee Holding Co., Inc. and, from the date of the merger, the
operations of the Nevada  corporation  currently  named Coffee Holding Co., Inc.
Unless otherwise  specifically stated herein, all descriptions of Coffee Holding
and its operations contained herein are as of the date of this Form 10-K.


                                      -2-
<PAGE>

Products

      Coffee Holding's products can be divided into three categories:

      (i) Private label coffee

      (ii) Branded coffee; and

      (iii) Wholesale green coffee.

      Private  label  coffee.  Coffee  Holding  roasts,  blends,   packages  and
distributes  coffee under  private  labels for companies  throughout  the United
States  and  Canada.  As of March  31,  2000,  the  Company  supplied  coffee to
approximately  35 different  wholesale and retail  companies.  Coffee Holding is
currently  the  leading  supplier  for three of the largest  wholesalers  in the
United States.

      In the year ended October 31, 1998 ("fiscal 1998"),  approximately  42% of
Coffee  Holding's  sales revenues came from private label coffee sales,  and, in
fiscal  years 1997 and 1996,  44% and 22% of revenues,  respectively,  came from
those sales.

      Branded coffee.  Coffee Holding roasts, grinds and blends coffee according
to its own recipes and packages the coffee at its  facilities.  The Company then
sells  the  packaged  coffee in its  proprietary  brand  label to  supermarkets,
wholesalers and individually owned stores throughout the United States, shipping
directly from its factory.

      Coffee Holding's name brands of coffee are: Cafe Caribe, Cafe Supremo, Don
Manuel,   Fifth  Avenue  and  Via  Roma.  The  Company  has  acquired  trademark
registration  rights  for each of Coffee  Holding's  name  brands.  For  further
information    regarding    these    trademark    registration    rights,    see
"Business--Trademark  and Domain Names." Each of Coffee Holding's name brands is
directed at a particular segment of the consumer coffee market.

      Cafe  Caribe,  Coffee  Holding's  leading  name  brand  by  revenue,  is a
specialty espresso coffee that targets espresso coffee drinkers,  in particular,
the Latin  American  consumer  market.  Market  research  indicates  that  Latin
American  coffee  drinkers  consume up to four times as much  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.

      Fifth  Avenue is a blended  coffee  which has  become  popular as a second
alternative to consumers who purchase private label coffee.

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

      In  fiscal  1998,  sales of Coffee  Holding's  branded  coffees  comprised
approximately 10% of its sales revenues and, in fiscal 1997 and 1996, 8% and 15%
of revenues, respectively, came from those sales.

      Wholesale  Green  Coffee.  Coffee  Holding  sells and brokers green coffee
beans to small roasters and coffee shop operators located  throughout the United
States.  The Company purchases its green coffee from suppliers located primarily
within the United  States.  The  suppliers  supply the Company with coffee beans
from many countries,  including Columbia,  Mexico, Kenya, Indonesia,  Brazil and
Ethiopia,  among  others.  In fiscal 1998,  substantially  all of the  Company's
purchases were from fewer than 10 vendors.  Management 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.

      Coffee Holding carries over 50 different  varieties of green coffee beans.
Green  gourmet  coffee  beans  are sold  unroasted,  direct  from the  Company's
warehouse to the small  roasters and gourmet  coffee shop  operators  which then
roast the beans  themselves.  In fiscal 1998,  wholesales  of green coffee beans
accounted for  approximately  48% of Coffee  Holding's sales  revenues,  and, in
fiscal  1997 and 1996,  47% and 64% of  revenues,  respectively,  came from such
sales.


                                      -3-
<PAGE>

      Although the overall  coffee  market is mature,  the green  coffee  market
represents  the fastest  growing area of the industry,  as gourmet coffee houses
are increasing in all areas of the United States. The Company currently has over
150 customers in this area.

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  $.80 to $3.18.  The
price for coffee beans on the  commodities  market as of September  29, 2000 was
$.83.

      The supply and price of coffee  beans are  subject to  volatility  and are
influenced by numerous factors which are beyond Coffee Holding's control. Supply
and  price  can be  affected  by many  factors  such as  weather,  politics  and
economics in the exporting countries. Increases in the cost of coffee beans can,
to a certain extent,  be passed on to Coffee Holding's  customers in the form of
higher prices for coffee beans and processed  coffee.  However,  there can be no
assurance that the Company 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 the Company's business as
it could lead to a decline in overall  consumption of coffee.  Similarly,  rapid
decreases in the cost of coffee beans could force the Company to lower its sales
prices  before  realizing  cost  reductions  in its  purchases.  In addition,  a
worldwide  supply  shortage of gourmet coffee beans could have an adverse impact
on the Company.

      Gourmet  coffee,  unlike  most  coffee,  does not  trade on the  commodity
market.  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.

      The Company  from time to time  engages 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 supplement  its supply of coffee,  if necessary.
See "Item 7A -  Quantitative  and  Qualitative  Disclosures  About Market Risks"
herein.

Trademarks and Domain Names

      Coffee Holding holds trademarks,  registered with the United States Patent
and Trademark Office, for all five of its proprietary  coffee brands.  Trademark
registrations  are subject to  periodic  renewals  and the  Company  anticipates
maintaining  its  registrations.  The  Company  believes  that  its  brands  are
recognizable in the  marketplace and that brand  recognition is important to the
success of its branded coffee business.

Customers

      Coffee  Holding sells private label and its branded coffee to three of the
leading  wholesalers in the United States:  Supervalu,  Nash Finch, and Wakefern
Foods.  For  fiscal  1998,   sales  to  these  three  companies   accounted  for
approximately  30% of Coffee Holding's total sales.  Sales of green coffee beans
to Green Mountain  Coffee  Roasters  accounted for  approximately  20% of Coffee
Holding's total sales.

      The Company  historically  has had short term contracts with some of these
customers  (generally  one to three years in duration)  and although the Company
believes  that it has a  strong  mutually  beneficial  relationship  with  those
companies, there can be no assurance that these relationships will continue. The
loss of any one of these  relationships  would  likely  have a material  adverse
effect on the Company's business.

Competition

      The coffee  market is highly  competitive.  Coffee  Holding  competes with
other suppliers and  distributors of green coffee beans,  whole coffee beans and
roasted  coffees.  The Company's  whole bean coffees  compete  directly  against
specialty  coffees sold at retail through  supermarkets  and a growing number of
specialty coffee stores.

      Private Label  Competition.  There are  approximately  six companies  that
produce coffee for private label sale in the United States. Many other companies
produce coffee for sale on a regional basis.  Coffee  Holding's main competitors
are Kroger and Chock Full O' Nuts. Both Kroger and Chock Full O' Nuts are larger
and have more financing and resources than Coffee Holding does and therefore are
able to devote more resources to product development and marketing.  The Company
believes that it remains competitive by providing a high level of quality


                                      -4-
<PAGE>

and customer service. Private label coffee also competes with all of the branded
coffee on the market.  Chock Full O' Nuts also  produces  branded  coffees which
compete with their private label products.

      Brand Competition. Coffee Holding's proprietary brand coffees compete with
many other brand coffees which are sold in  supermarkets  and specialty  stores.
The branded coffee market is dominated by several large companies: Kraft General
Foods, Inc., Proctor & Gamble Co. and Nestle S.A., many of which have also begun
to market gourmet coffee in addition to non-gourmet coffee.  Smaller competitors
include Chock Full O' Nuts, and Tetley.  Coffee Holding's large competitors have
greater access to capital than the Company and have a greater ability to conduct
marketing and  promotions.  The Company  believes that,  while its  competitors'
brands may be more  recognizable  nationwide,  its  proprietary  brands are well
recognized  in the  Northeastern  United States and are  distinguished  by their
distinctive flavors.

      Wholesale  Green Coffee  Competition.  There are many green coffee dealers
throughout  the United  States.  Many of these  dealers have  greater  financial
resources than Coffee Holding. However, Coffee Holding believes that it has both
the  knowledge  and the  capability  to assist small  specialty  gourmet  coffee
roasters with developing and growing their business. Because the Company is also
a roaster,  as well as a seller of green  coffee,  it can provide  its  roasting
experience  as a value added  service to its gourmet  roaster  customers.  While
other  coffee  merchants  may be able to offer a lower  price for coffee  beans,
Coffee Holding markets itself as a partner to small  roasters,  with the ability
to help them market their specialty coffee products and develop a customer base.
The  assistance the Company  provides its customers  includes  training,  coffee
blending and market identification.

Marketing

      The Company  markets its 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. Recently, the Company
began  to use its web site  (www.coffeeholding.com)  as a  method  of  marketing
itself and its coffee products.

      For its private  label and brand  coffees,  the Company  will from time to
time, in  conjunction  with  retailers and with  wholesalers,  conduct  in-store
promotions (e.g. coupons, price reductions, two for one sales).

Seasonality

      Historically,  consumer coffee consumption is greater in the winter months
as compared to other seasons.

Employees

      Coffee Holding has 28 full-time employees, 22 of which are employed in the
areas of  coffee  roasting,  blending  and  packaging  and six of  which  are in
administration  and sales.  None of its employees are  represented  by unions or
collective  bargaining  agreements.  The Company's  management believes that the
Company maintains a good working  relationship  with its employees.  In order to
supplement its internal sales staff,  Coffee Holding  sometimes uses independent
national and regional sales brokers who work on a commission basis.

Item 2. Properties

      Coffee Holding is headquartered at 4401 First Avenue,  Brooklyn,  New York
where it owns the land and an  approximately  15,000 square foot  building.  The
building houses the Company's  executive  offices as well as the Company's plant
where it roasts, blends and packages its coffee. In March 1999, the Company paid
in full the outstanding  balance of $602,000 of a mortgage note,  which note was
secured by a first mortgage on the property.

      Coffee Holding also leases a 7,500 square foot warehouse  located at 4425A
First  Avenue  in  Brooklyn  from  T & O  Management.  T& O  Management  is  not
affiliated with the Company or any of its officers,  directors or  shareholders.
The Company pays an annual rent of $46,800, plus utilities and other maintenance
expenses. The lease expires on August 31, 2002.

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


                                      -5-
<PAGE>

      Coffee  Holding's  management  believes that the Company's  facilities are
adequate for its current operations and for the foreseeable future.

Item 3. Legal Proceedings

      In the  ordinary  course of its  business,  Coffee  Holding  is a party to
litigation  involving  its  operations.  The Company  does not believe  that the
outcome of any current  litigation will have a material  adverse effect upon its
business, financial condition or results of operations.

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-K, no matters were submitted to a vote of security holders.

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

      The Company's Common Stock is not quoted or listed on any quotation system
or  market.  The  Company  does not know of any firm that makes a market for the
Common Stock.

      The number of registered  holders of the Company's common stock at October
4, 2000 was approximately 472.

      In January 1998, prior to the date of the merger with Transpacific, Coffee
Holding,  while  it  was  still  a  privately  held  "S"  corporation,   paid  a
distribution  in the amount of  $422,258  to its  stockholders  to pay  personal
income  taxes.  Coffee  Holding paid no dividends  to its  stockholders  for the
fiscal year ended  October 31, 1997.  Since the January 1998  distribution,  the
Company has not paid any cash dividends on its common stock and has no intention
to do so in the foreseeable future.


                                      -6-
<PAGE>

Item 6. Selected Financial Data

      The following selected data should be read in conjunction with the audited
financial statements of the Company and management's  discussion and analysis of
the Company's  financial  condition and results of operations included elsewhere
herein:

<TABLE>
<CAPTION>
                                                          As of or for the Year Ended October 31,
                                                         -----------------------------------------
                                                           1998            1997             1996
                                                           -----           -----            -----
<S>                                                    <C>             <C>             <C>
Operating data:
  Net sales ........................................   $ 25,853,791    $ 26,120,519    $ 21,162,100
  Cost of sales ....................................     24,090,666      22,961,911      18,775,383
                                                       ------------    ------------    ------------
  Gross profit .....................................      1,763,125       3,158,608       2,386,717
  Operating expenses ...............................      2,215,134       2,355,548       1,637,095
                                                       ------------    ------------    ------------
  Income (loss) from operations ....................       (452,009)        803,060         749,622
  Other income (expense), net (A) ..................       (650,020)       (301,448)       (310,591)
                                                       ------------    ------------    ------------
  Income (loss) before income taxes ................     (1,102,029)        501,612         439,031
  Provision for state and local income taxes (B) ...                         64,173           8,528
                                                       ------------    ------------    ------------
  Net income (loss) (B) ............................   $ (1,102,029)   $    437,439    $    430,503
                                                       ============    ============    ============
Pro forma (B):
  Historical income (loss) before income taxes .....   $ (1,102,029)   $    501,612    $    439,031
  Unaudited pro forma:
    Provision (credit) for income taxes ............       (424,000)        226,000         198,000
                                                       ------------    ------------    ------------
    Net income (loss) ..............................   $   (678,029)   $    275,612    $    241,031
                                                       ============    ============    ============
    Basic earnings (loss) per share ................   $       (.17)   $        .07    $        .06
                                                       ============    ============    ============
    Basic weighted average common shares outstanding      3,999,650       3,999,650       3,999,650
                                                       ============    ============    ============
Dividends ..........................................   $    422,258    $         --    $         --
                                                       ============    ============    ============
Balance sheet data:
  Total assets .....................................   $  6,524,043    $  6,794,629    $  5,074,429
                                                       ============    ============    ============
  Long-term obligations (including current portion)    $  3,882,804    $  1,486,549    $  1,518,340
                                                       ============    ============    ============
  Stockholders' equity (deficiency) ................   $   (928,082)   $    595,432    $    157,993
                                                       ============    ============    ============
</TABLE>
----------
(A)   Includes  consulting  and  professional  fees and other costs  incurred in
      connection with the reverse acquisition totaling $327,087 in fiscal 1998.

(B)   As  further  explained  in  Notes  2 and  9 to  the  financial  statements
      elsewhere herein,  prior to the reverse  acquisition on February 10, 1998,
      the Company had elected to be treated as an "S" Corporation. Therefore, it
      was not required to record any historical  provision or credit for Federal
      income taxes,  whereas it recorded provisions for state and local taxes at
      full or reduced rates.  The unaudited pro forma provisions and credits for
      income  taxes  assume that the  Company  had not made the "S"  Corporation
      elections  during any portion of fiscal 1998, 1997 and 1996 and reflect an
      effective  rate  of  approximately  45% for  each  period.  There  were no
      provisions  or credits for income  taxes in the period  subsequent  to the
      reverse  acquisition  primarily as a result of pre-tax losses  incurred in
      that period and the  inability of the Company to recognize  benefits  from
      the net operating loss  carryforwards due to the uncertainties  related to
      the extent and timing of its future taxable income.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Forward-Looking Statements

      The Private Securities  Litigation Reform Act of 1995 (the "Act") provides
a safe  harbor  for  forward-looking  statements  made  by or on  behalf  of the
Company.  Coffee  Holding  and its  representatives  may from  time to time make
written or oral  forward-looking  statements,  including statements contained in
this report and in our other filings with the Securities and Exchange Commission
("SEC").  These statements use words such as "believes",  "expects",  "intends",
"plans", "may", "will",  "should",  "anticipates" and other similar expressions.
All statements which address operating performance,  events or developments that
the Company expects or anticipates will occur in the future are  forward-looking
statements within the meaning of the Act. The forward-looking statements are and
will be based on  management's  then  current  views and  assumptions  regarding
future  events and  operating  performance.  We cannot  assure that  anticipated
results will be achieved since actual results may differ materially


                                      -7-
<PAGE>

because  of  risks  and  uncertainties.  We do not  undertake  to  revise  these
statements to reflect subsequent developments.

      The following  are some of the factors that could cause actual  results to
differ materially from our forward-looking statements:

      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     the effects of any loss of major customers;

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

      o     changes in consumption of coffee; and

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

      You are strongly  encouraged  to consider  these  factors when  evaluating
forward looking statements in this annual report. We undertake no responsibility
to update any forward-looking statements contained in this report.

Year Ended  October 31, 1998 (fiscal  1998)  Compared to Year Ended  October 31,
1997 (fiscal 1997)

      Net sales totaled $25,853,791 in fiscal 1998, a decrease of $266,728 or 1%
from $26,120,519 in fiscal 1997. Although coffee sold increased by approximately
2 million  pounds,  or 18%, from 11 million  pounds in fiscal 1997 to 13 million
pounds in fiscal 1998, sales revenues remained steady due to lower retail coffee
selling prices,  particularly  in the fourth quarter of fiscal 1998.  Management
attributes  the  decrease in revenue to declines in the selling  price of retail
coffee which began in the second quarter of fiscal 1998 and continued to the end
of fiscal 1998 and the decision of management  to reduce some selling  prices in
order to attract and retain larger customers.

      Cost of sales in fiscal  1998 was  $24,090,666,  or 93% of net  sales,  as
compared  to  $22,961,911,  or 88% of net  sales in fiscal  1997.  Cost of sales
consists primarily of green coffee and packaging materials. The increase in cost
of sales in  fiscal  1998 was  primarily  attributable  to higher  green  coffee
purchase prices.

      The Company's  gross profit in fiscal 1998 was  $1,763,125,  a decrease of
$1,395,483 or 44% from  $3,158,608 in fiscal 1997.  Gross profit as a percentage
of net sales  decreased by 5% to 7% in fiscal 1998 from 12% in fiscal 1997.  The
decrease of gross profit as a percentage of sales was primarily  attributable to
lower  margins on private  label  coffee and  wholesale  green coffee sales as a
result of higher green coffee  purchase  prices and higher Company  inventories.
Margins were also reduced by management's decision to reduce some selling prices
to attract larger customers.

      Selling and  administrative  expenses  were  $1,921,864  in fiscal 1998, a
decrease of $175,867 or 8.4% from  $2,097,731 in fiscal 1997. As a percentage of
net sales, this change represented a 1% decrease from 8% in fiscal 1997 to 7% in
fiscal 1998.  The reduction in expenses was related to lower bad debt expense in
fiscal 1998 versus fiscal 1997 which was partially offset by higher advertising,
promotional and freight expenses as well as office salaries in fiscal 1998.

      Interest expense  increased $39,100 or 12% from $324,345 in fiscal 1997 to
$363,445 in fiscal 1998. The increase in fiscal 1998 was  attributable  to costs
incurred in connection with the cancellation of a factoring  agreement that were
charged to  interest  expense.  Also,  the  average  balances  on the  Company's
replacement  line of credit were higher although the applicable rate of interest
was lower.

      Other income (expense) in fiscal 1998 was a net expense of $650,020, which
included  $327,087 of consulting and professional  fees and other costs incurred
in connection with the Reverse Acquisition by Transpacific, that was effectively
completed on February 10, 1998. Other income (expense) in 1997 was a net expense
of $301,448.

      Primarily  as a result of the  decrease in gross profit and the charge for
costs  incurred in connection  with the reverse  acquisition,  the Company had a
loss of  $1,102,029  before  income  taxes in fiscal 1998  compared to income of
$501,612 before income taxes in fiscal 1997.

      As  further  explained  in  Notes 2 and 9 of the  notes  to the  financial
statements  elsewhere herein, the Company was not required to record a provision
for Federal income taxes in 1998, 1997 and 1996 because it had a pre-tax


                                      -8-
<PAGE>

loss in 1998 and it had elected to be taxed as an "S"  Corporation  prior to the
Reverse  Acquisition  on February 10, 1998.  Although the Company had  potential
benefits of approximately  $363,000 from the net operating loss carryforwards as
of October 31,  1998,  it did not record a credit for income  taxes based on the
pre-tax loss in fiscal 1998 due to the  uncertainties  related to the extent and
timing  of its  future  taxable  income.  The  Company  also  had no  historical
provision or credit for state and local income taxes in fiscal 1998,  whereas it
had a historical  provision for state and local income taxes of $64,173 in 1997.
Accordingly  the Company had a historical  net loss of $1,102,029 in fiscal 1998
compared to  historical  net income of $437,439  before  income  taxes in fiscal
1997.

      The statement of operations included in the financial statements elsewhere
herein presents unaudited pro forma provisions and credits for income taxes, net
income and losses and related  earnings  (loss) per share  information  for each
year assuming the Company had not elected to be taxed as an "S" Corporation. The
Company  would have had a credit for income taxes of  approximately  $424,000 in
fiscal 1998 and a provision for income taxes of approximately $226,000 in fiscal
1997 assuming the "S" Corporation  elections had not been made and it would have
been  able to  carryback  its net  operating  losses.  The  unaudited  pro forma
provisions   and  credits  for  income  taxes  reflect  an  effective   rate  of
approximately  45% for each period  comprised of an 11% rate for state and local
income  taxes,  net of the related  Federal  income tax effect,  and a statutory
Federal  income tax rate of 34%. On an unaudited  pro forma  basis,  the Company
would  have had a net  loss of  $678,029,  or $.17 per  share,  in  fiscal  1998
compared to net income of $275,612, or $.07 per share, in fiscal 1997.

Year Ended  October 31, 1997 (fiscal  1997)  Compared to Year Ended  October 31,
1996 (fiscal 1996)

      Net sales totaled $26,120,519 in fiscal 1997, an increase of $4,958,419 or
23% from  $21,162,100  in fiscal 1996.  The increase in sales in fiscal 1997 was
due primarily to increased sales to existing customers.

      Cost of  sales in  fiscal  1997 was  $22,961,911,  or 88% of net  sales as
compared to $18,775,383, or 89% of net sales in fiscal 1996. Management was able
to keep  costs of sales as a  percentage  of net  sales  stable  as a result  of
efficient inventory purchases.

      The Company's gross profit in fiscal 1997 was  $3,158,608,  an increase of
$771,891 or 32% from $2,386,717 in fiscal 1996.  Gross profit as a percentage of
net sales  increased  by 1% to 12% in fiscal 1997 from 11% in fiscal  1996.  The
increase in gross  profits  both in actual  dollars and as a  percentage  of net
sales was a result of increased sales and well managed inventory purchases.

      Selling and  administrative  expenses  were  $2,097,731 in fiscal 1997, an
increase of $874,376 or 71% from  $1,223,355  in fiscal 1996. As a percentage of
net sales, this change represented a 2% increase from 6% in fiscal 1996 to 8% in
fiscal  1997.  Higher  selling  and  administrative  costs  were  due to  higher
commissions, professional fees and bad debts.

      The Company's  interest expense  increased  $13,754 or 4% from $310,591 in
fiscal  1996 to $324,345  in fiscal  1997.  Interest  expense  increased  due to
increased borrowings to support higher sales.

      Primarily as a result of the increase in sales, gross profit and operating
expenses,  the Company had income of $501,612 before income taxes in fiscal 1997
compared to $439,031 in fiscal 1996.

      As a  result  of  the  "S"  Corporation  elections,  the  Company  had  an
historical  provision for state and local income taxes of $64,173 in fiscal 1997
compared to $8,528 in fiscal 1996.  The Company  would have had a provision  for
income taxes of  approximately  $226,000 in fiscal 1997  compared to $198,000 in
fiscal 1996 assuming the "S"  Corporation  elections had not been made in fiscal
1997 as a result of the  increase in pre-tax  income.  The  unaudited  pro forma
provisions   and  credits  for  income  taxes  reflect  an  effective   rate  of
approximately  45% for each period as explained above. On an unaudited pro forma
basis, the Company would have had net income of $275,612,  or $.07 per share, in
fiscal 1997  compared to net income of  $241,031,  or $.06 per share,  in fiscal
1996.

Liquidity and Capital Resources

      The Company had a loss of approximately  $1,102,000 during fiscal 1998. As
of  October  31,  1998,  the  Company  had  a  working  capital   deficiency  of
approximately  $227,000,  which  decreased by $310,000 from its working  capital
deficiency of $537,000 as of October 31, 1997, and a stockholders' deficiency of
approximately  $928,000,  which increased by $1,523,000  from its  stockholders'
equity of $595,000 as of October 31, 1997. The


                                      -9-
<PAGE>

Company had  unrestricted  cash  balances  of  $199,000 as of October 31,  1997,
whereas it had no  unrestricted  cash  balances  as of  October  31,  1998.  The
Company's  current  liabilities  as of October 31, 1998 included a mortgage note
payable to the New York City  Industrial  Development  Agency  with a balance of
$600,000 that was secured by a first mortgage on the Company's land and building
and was  collateralized  by  restricted  cash  investments  with an  approximate
balance of $433,000.  The  mortgage  note,  which  originally  required  monthly
payments  through  November 1, 2009 of $4,167 plus interest  based on a variable
rate set  weekly,  was due on demand  as of  October  31,  1998 as a result of a
violation of certain  covenants.  In the absence of certain  mitigating  factors
discussed below,  these matters would have raised  substantial  doubts about the
Company's ability to continue as a going concern.

      The Company's  working  capital  deficiency  decreased  during fiscal 1998
primarily  as a  result  of the  replacement  of  borrowings  obtained  under  a
factoring  agreement  that were  payable on a  short-term  basis with  long-term
borrowings obtained under a credit facility from Nationscredit  Commercial Corp.
that  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 for equipment
purchases of up to $500,000. The line of credit provides for borrowings of up to
85% of the Company's eligible trade accounts  receivable and 60% of its eligible
inventories.  The outstanding balance of approximately  $2,321,000 as of October
31, 1998  approximated the maximum amount that the Company could borrow based on
its eligible trade accounts receivable and inventories as of that date. Interest
is payable monthly at the prime rate plus 1% (an effective rate of 9% at October
31, 1998). Assuming the Company has sufficient collateral,  substantially all of
the balances  outstanding  under the credit  facility will not have to be repaid
until November 20, 2000.

      During  fiscal 1998,  net cash  provided by operating  activities  totaled
approximately   $1,333,000  primarily  as  a  result  of  decreases  in  amounts
receivable  from the Company's  broker and customers and an increase in accounts
payable  and  accrued  expenses  that  were  partially  offset  by the net loss,
adjusted to eliminate the effects of charges for  depreciation  and amortization
and bad debts.

      During fiscal 1998,  the Company used  approximately  $347,000 of its cash
resources  to  purchase  property  and  equipment.  In  addition  to these  cash
expenditures, the Company also added property and equipment totaling $288,500 in
fiscal 1998 by entering into capital leases. The capital  expenditures were used
to  refurbish  equipment,  upgrade  capacity  and to  purchase  and  install new
manufacturing and other equipment  associated with production.  The Company used
$667,000 of its cash resources to reduce its mortgage note,  term loan,  capital
lease and  related  party  obligations  and  placed  approximately  $367,000  in
restricted  cash and cash  equivalent  investments  to secure the mortgage  note
payable. In January 1998, prior to the date of the merger with Transpacific, the
Company, while it was still a privately held "S" corporation,  paid dividends of
$422,000 to its  stockholders to pay personal income taxes. The Company borrowed
approximately  $271,000  under the line of credit during fiscal 1998 for working
capital purposes.

      The  Company's net loss in fiscal 1998  included  nonrecurring  charges of
approximately  $440,000 attributable to expenses incurred in connection with the
Reverse Acquisition and the termination of the factoring  agreement.  Management
believes, but cannot assure, that the Company will be able to increase sales and
reduce certain operating costs in fiscal 1999. Management also believes that the
Company's  expenditures  for  purchases of equipment  and  repayments of related
party loans during  fiscal 1999 will be  substantially  below those  incurred in
fiscal 1998 and that the Company will be able to finance  substantial  increases
in eligible accounts receivable and inventories arising from sales increases, if
any,  through  additional  borrowings  under its line of credit and purchases of
approximately  $133,000 of eligible  equipment under its term loan. In addition,
on March 3, 1999,  the Company  repaid the  mortgage  note in full.  The Company
generated a portion of the funds required for the repayment by liquidating  cash
and cash equivalent  investments  that were restricted  under the mortgage note.
Accordingly, management believes that the Company will have sufficient resources
to fund its operations through at least October 31, 1999.

Year 2000

      The Year 2000  problem  concerns the  possible  inability  of  information
systems and systems with  embedded  chip  technology  to properly  recognize and
process  data-sensitive  information  beyond  December 31, 1999.  In the fall of
1997,  the Company,  and its  information  technology  consultant,  assessed the
Company's personal computer hardware and its accounting software (which included
accounts  receivable  and  payroll  and  inventory  management)  for  Year  2000
readiness.  The Company concluded that its then accounting software and computer
hardware and system were not Year 2000 compliant.


                                      -10-
<PAGE>

      The  Company  installed   software   modifications  and  upgrades  to  its
accounting software in November 1997 at an approximate cost of $4,300.

      In April and August 1999, the Company  replaced its computer  hardware and
operating systems including its server and three workstations.  The Company also
added an additional workstation.  The total cost of the equipment,  installation
and  follow-up  support was  approximately  $18,800.  The Company  also paid its
consultant $1,400 to oversee installation of the operating system.

      As of June 30,  2000,  with  regard  to Year  2000,  the  Company  had not
experienced any disruptions in its internal  information systems or its business
activities with its suppliers and customers.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

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

Interest Rate Risks

      The Company is subject to market risk from  exposure  to  fluctuations  in
interest  rates. At October 31, 1998, the Company's  long-term debt,  other than
capitalized leases,  consisted of approximately  $131,000 of fixed rate debt and
approximately  $3,300,000  of  variable  rate debt under its  revolving  line of
credit, term loan and mortgage note payable.  Interest on the variable rate debt
was payable  primarily at 1% above a specified  prime rate. The Company does not
expect  changes in  interest  rates to have a material  effect on income or cash
flows in fiscal 1999,  although  there can be no assurance  that interest  rates
will not significantly change.

Commodity Price Risks

      See Note 2 to the financial statements,  Summary of Significant Accounting
Policies - "Hedging", for additional information regarding the Company's hedging
program.

      The Company uses coffee futures and options contracts for hedging purposes
to  minimize  the effect of changing  green  coffee  prices  and, if needed,  to
supplement its supply. At October 31, 1998, the Company held options covering an
aggregate of 2,550,000  pounds of green coffee beans,  which are  exercisable in
fiscal 1999 at prices  ranging from $1.10 to $1.35 per pound.  The closing price
per pound of green coffee on October 31, 1998 was $1.10.  The Company  generally
has been able to pass green coffee  price  increases  through to its  customers,
thereby  maintaining  its gross  profits.  However,  the Company  cannot predict
whether  it  will  be able to pass  inventory  price  increases  through  to its
customers  in the  future.  See also "Raw  Materials"  in Item 1 for  additional
information in connection with commodity price risks.

Item 8. Financial Statements And Supplementary Data

      See Item 14 herein.


                                      -11-
<PAGE>

Item 9. Changes In and Disagreements With Accountants on Accounting And
        Financial Disclosure

      On May 15, 1998,  Transpacific  dismissed German W. Chacon  ("Chacon") who
has been previously engaged as the principal accountant for Transpacific and had
previously audited its financial statements as of September 30, 1997 and for the
period from October 9, 1995 (date of inception) to September 30, 1997.

      Chacon's  reports on  Transpacific's  financial  statements for the period
from October 9, 1995 to September  30, 1997 did not contain any adverse  opinion
or disclaimer of opinion,  qualifications  or  modifications  as to uncertainty,
audit scope or accounting principles.

      There were no disagreements  between Transpacific and Chacon on any matter
of accounting principles or practice, financial statement disclosure or auditing
scope or procedure  within the period from October 9, 1995 to September 30, 1997
and the subsequent interim period preceding its dismissal which disagreement, if
not resolved to Chacon's satisfaction, would have caused it to make reference to
such disagreement.

      During  the period  from  October 9, 1995 to  September  30,  1997 and the
subsequent   interim  period  preceding  Chacon's   dismissal,   there  were  no
"reportable events" as set forth in Item 304(a)(1)(v) of Regulation S-K.

      On May 15, 1998,  Coffee Holding  dismissed the accounting  firm of Ira D.
Ganzfried  & Company  ("Ganzfried")  which had been  previously  engaged  as the
principal  accountants  for  Coffee  Holding  and  had  previously  audited  its
financial  statements  as of  October  31,  1996 and 1995 and for the years then
ended.

      Ganzfried's reports on Coffee Holding's financial statements for the years
ended  October  31,  1996  and 1995  did not  contain  any  adverse  opinion  or
disclaimer of opinion,  qualifications or modifications as to uncertainty, audit
scope or accounting principles.

      There were no  disagreements  between  Coffee Holding and Ganzfried on any
matter of accounting  principles or practice,  financial statement disclosure or
auditing  scope or procedure  for the years ended  October 31, 1996 and 1995 and
the subsequent interim period preceding its dismissal which disagreement, if not
resolved to Ganzfried's satisfaction,  would have caused it to make reference to
such disagreement.

      For the years ended October 31, 1996 and 1995 and the  subsequent  interim
period preceding Ganzfried's dismissal, there were no "reportable events" as set
forth in Item 304(a)(1)(v) of Regulation S-K.

      The decision to change  accountants was approved by the Board of Directors
of the Company following the merger between Transpacific and Coffee Holding. The
Company does not have an audit committee.

      On May 15, 1998,  Coffee Holding  engaged the accounting firm of J.H. Cohn
LLP as the principal  accountant to audit its financial statements in subsequent
years.  Neither  Coffee  Holding nor anyone acting on its behalf  consulted with
J.H. Cohn LLP prior to engaging them  regarding  the  application  of accounting
principles to a specified transaction or the type of audit opinion that might be
rendered on the Coffee Holding or  Transpacific  financial  statements for which
disclosure would be required by Item 304(a)(2) of Regulation S-K.

                                    PART III

Item 10. Directors and Executive Officers of Coffee Holding Co., Inc.

      Set forth below is  information  concerning  the  Company's  directors and
executive officers.  The Company's board of directors currently consists of five
directors.  Directors  are  elected  by a  plurality  of the  votes  cast at the
Company's  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.

                  Name           Age                  Position
-----------------------------    ----   ----------------------------------------
Andrew Gordon                    [39]   Chief Executive Officer, President,
                                          Treasurer and Director
David Gordon                     [35]   Executive Vice President, Secretary and
                                          Director
Gerard DeCapua                   [39]   Director
Daniel Dwyer                     [43]   Director
Matthew Phillips                 [46]   Director


                                      -12-
<PAGE>

      Andrew  Gordon is Chief  Executive  Officer,  President,  Treasurer  and a
Director of Coffee  Holding.  He was  previously a Vice  President  from 1981 to
1997. He has been a Director of Coffee Holding since 1981.  Mr. Gordon  received
his B.B.A. degree from Emory University. He is the brother of David Gordon.

      David  Gordon is Executive  Vice  President--Operations,  Secretary  and a
Director of Coffee  Holding.  He was  previously a Vice  President and Operating
Manager from 1983 to 1997. He has been a Director of Coffee  Holding since 1983.
Mr. Gordon attended Baruch College in New York City. He is the brother of Andrew
Gordon.

      Gerard  DeCapua has been a Director of Coffee  Holding  since 1997. He has
his own law  practice in  Rockville  Centre,  New York since 1985.  Mr.  DeCapua
received his law degree from Pace University.

      Daniel Dwyer has been a Director of Coffee  Holding since 1998.  Mr. Dwyer
has been a senior coffee trader at Rothfos Corporation since 1995.

      Matthew  Phillips has been a Director of Coffee Holding since 1998.  Since
1991,  Mr.  Phillips has been a Vice  President  of Branco Peres  International,
responsible for coffee trading operations.

      The Company currently does not have any standing committees.

Item 11. Executive Compensation

      The following  table sets forth certain  compensation  information for the
Company's chief executive  officer and each other executive officer whose salary
and bonus  compensation  exceeded $100,000 for the fiscal year ended October 31,
1998.

<TABLE>
<CAPTION>
                           Summary Compensation Table
                                                                      Annual Compensation
                                                    ----------------------------------------------------------
                     Name and                           Fiscal       Salary       Bonus         All Other
                Principal Position                       Year          ($)         ($)     Compensation ($)(1)
--------------------------------------------------  --------------  --------    ---------  -------------------
<S>                                                      <C>         <C>         <C>              <C>
Andrew Gordon ....................................       1998        160,000        --            24,399
  Chief Executive Officer and President ..........       1997        100,000     50,000           15,684
                                                         1996         85,000         --            7,200
David Gordon .....................................       1998        130,000                       6,970
  Executive Vice President-- Operations ..........       1997        100,000     50,000            8,268
                                                         1996         85,000         --            3,400
</TABLE>

----------
(1)   The amounts set forth  consist of amounts  paid by the Company for the use
      of an automobile and automobile insurance.

      The Company has a stock option plan under which stock  options to purchase
shares of  Company  Common  Stock may be  granted  to the  Company's  directors,
officers  and other key  employees  and  consultants.  The Company has  reserved
2,000,000  shares of its Common Stock for issuance  under the stock option plan.
As of September 30, 2000, no options had been granted under the plan.

      The Company does not have employment agreements with any of its officers.

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 12. Security Stock Ownership of Certain Beneficial Owners and Management

      The following table sets forth information  regarding  ownership of shares
of the Company's common stock, as of October 4, 2000, by each person known to be
the owner of 5% or more of the Company's  common stock,  by each person who is a
director or executive  officer and by all directors and executive  officers as a
group.

      When reviewing the following table, you should be aware that:

      (i)   The amounts and  percentages  of common  stock and  preferred  stock
            beneficially  owned are reported on the basis of  regulations of the
            SEC  governing  the   determination   of  beneficial   ownership  of
            securities.  Under the rules of the SEC,  a person is deemed to be a
            "beneficial owner" of a security if that person has


                                      -13-
<PAGE>

            or shares  "voting  power,"  which  includes the power to vote or to
            direct the voting of such  security,  or  "investment  power," which
            includes  the power to dispose of or to direct  the  disposition  of
            such security.  A person is also deemed to be a beneficial  owner of
            any  securities  of  which  that  person  has  a  right  to  acquire
            beneficial  ownership within 60 days.  Under these rules,  more than
            one person may be deemed a beneficial  owner of the same  securities
            and a person may be deemed to be a beneficial owner of securities as
            to which that person has no economic interest.

      (ii)  Unless otherwise  indicated by footnote,  each person  identified in
            the table below has sole voting power and investment power as to the
            shares beneficially owned.

                                                             Common Stock
                                                     ---------------------------
                                                       Number of      Percentage
                                                        Shares          of Class
                                                     ---------------------------
      Andrew Gordon(1) ...........................     1,970,378        49.3%
      David Gordon(1) ............................     1,970,378        49.3%
      Gerard DeCapua .............................           100           *
      Daniel Dwyer ...............................           100           *
      Matt Phillips ..............................           100           *
      Rachelle Gordon(2) .........................     1,740,000        43.5%
      Rachelle Gordon Grantor
        Retained Annuity Trust ...................     1,350,878        30.8%
      Sterling Gordon ............................       199,600         5.0%
      Judy Melnick ...............................       199,600         5.0%
      All directors and executive officers
        as a group (5 persons)(1) ................     2,590,178        64.8%

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

(1)   Includes  1,350,878  shares held by the Rachelle  Gordon Grantor  Retained
      Annuity Trust, of which Andrew and David Gordon are the  co-trustees  with
      the power to vote and dispose of the shares.

(2)   Includes  1,350,878  shares held by the Rachelle  Gordon Grantor  Retained
      Annuity Trust, of which Ms. Gordon is the grantor and beneficiary.

Item 13. Certain Relationships and Related Transactions

      From time to time, certain of the Company's stockholders and directors and
officers make loans to the Company for working capital  purposes.  During fiscal
1998, the Company repaid to those persons an aggregate  amount of  approximately
$344,000.

      At October  31,  1998,  the  Company  had loans  payable to certain of its
stockholders and directors and officers in the principal amounts as follows:

      Rachelle Gordon                                -- $48,000
      Sterling Gordon                                -- $43,000
      David Gordon                                   -- $38,000
      Andrew Gordon                                  -- $ 1,600

      The loans are due on demand and bear interest at 10% per annum.

      Andrew  Gordon and David  Gordon have each  guaranteed  the payment of the
Company's   borrowings  under  its  outstanding  term  loan  from  Nationscredit
Commercial Corp. up to $100,000 in principal,  plus interest and other costs and
expenses.

      Daniel  Dwyer,  a director of the Company,  is a senior  coffee trader for
Rothfos  Corporation.  Mr. Dwyer is responsible for the Company's  account.  The
Company paid Rothfos  $4,112,675 for the purchase of green coffee in fiscal 1998
and expects to pay it a similar amount in fiscal 1999.


                                      -14-
<PAGE>

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

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

      1. Financial Statements:

            -     Independent Auditors' Report

            -     Balance sheets as of October 31, 1998 and 1997

            -     Statements of Operations for the Years Ended October 31, 1998,
                  1997 and 1996

            -     Statements of Changes in Stockholders' Equity (Deficiency) for
                  the Years Ended October 31, 1998, 1997 and 1996

            -     Statements of Cash Flows for the Years Ended October 31, 1998,
                  1997 and 1996

            -     Notes to Financial Statements

      2. Financial Statement Schedules:

            II.   Valuation and  Qualifying  Accounts and Reserves for the Years
                  Ended October 31, 1998, 1997 and 1996

            Other Schedules have been omitted  because the information  required
            to be  set  forth  therein  is not  applicable  or is  shown  in the
            financial statements or notes thereto.

      (b) No  reports on Form 8-K were  filed by the  Company  during the fourth
quarter ended October 31, 1998.

      (c) Exhibits

           Exhibit
           Number                        Exhibit Name
           -------                      ---------------

            3.1      Articles  of  Incorporation  of the  Company  (incorporated
                     herein  by  reference  to  Exhibit  3.1  to  the  Company's
                     Quarterly  Report on Form 10-Q for the quarter  ended April
                     30, 1998).

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

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

            10.1     Lease with T&O  Management  Corp.  dated  August  15,  1997
                     (incorporated   herein  by  reference   to  the   Company'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 No. 10.2 to the Company's  Quarterly Report on Form
                     10-Q for the quarter ended April 30, 1998).

            16.1     Letter from German W. Chacon  (incorporated by reference to
                     Exhibit 16(a) to the Form 8-K of Transpacific International
                     Group Corp. filed with the SEC on May 18, 1998).

            16.2     Letter  from Ira D.  Ganzfried & Company  (incorporated  by
                     referenced to Exhibit 16(b) to the Form 8-K of Transpacific
                     International  Group  Corp.  filed  with the SEC on May 18,
                     1998).

            27*      Financial Data Schedule.

----------
*     Filed herewith


                                      -15-
<PAGE>

                            COFFEE HOLDING CO., INC.

                        INDEX TO FINANCIAL STATEMENTS AND
                          FINANCIAL STATEMENT SCHEDULE

                                                                           PAGE
                                                                           ----

(A) FINANCIAL STATEMENTS:

      REPORTS OF INDEPENDENT ACCOUNTANTS ...............................  F-2/3

      BALANCE SHEETS
        OCTOBER 31, 1998 AND 1997 ......................................  F-4

      STATEMENTS OF OPERATIONS
        YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996 ....................  F-5

      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
        YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996 ....................  F-6

      STATEMENTS OF CASH FLOWS
        YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996 ....................  F-7

      NOTES TO FINANCIAL STATEMENTS ....................................  F-8/16

(B) FINANCIAL STATEMENT SCHEDULE:

      II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
        YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996 ....................  S-1

      Other  schedules are omitted  because of the absence of  conditions  under
      which they are  required or because the required  information  is given in
      the financial statements or notes thereto.

                                      * * *


                                      F-1
<PAGE>

                    REPORT OF INDEPENDENT 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, 1998,  and the related  statements of  operations,  changes in
stockholders'  equity (deficiency) and cash flows for the year then ended. 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 audit.

      We conducted  our audit in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

      In our opinion,  the 1998 financial  statements  referred to above present
fairly, in all material respects,  the financial position of Coffee Holding Co.,
Inc. as of October 31, 1998,  and its results of  operations  and cash flows for
the  year  then  ended,  in  conformity  with  generally   accepted   accounting
principles.

      Our 1998 audit referred to above  included the  information in Schedule II
which presents fairly, in all material  respects,  when read in conjunction with
the 1998 basic financial  statements taken as a whole, the information  required
to be set forth therein for the year ended October 31, 1998.

                                                              J. H. COHN LLP

Roseland, New Jersey
March 16, 1999



                                      F-2
<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,  1997,  and the  related  statements  of  income,  changes in
stockholders'  equity and cash flows for the years ended  December  31, 1997 and
1996.  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  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

      In our opinion,  the 1997 and 1996 financial  statements referred to above
present  fairly,  in all material  respects,  the  financial  position of Coffee
Holding Co., Inc. as of October 31, 1997, and its results of operations and cash
flows  for the years  ended  December  31,  1997 and 1996,  in  conformity  with
generally accepted accounting principles.

      As  discussed  in Note  14,  the  accompanying  1997  and  1996  financial
statements   reflect   prior   period   adjustments   for  the  effects  of  the
understatement  of certain  income and expenses in previously  issued  financial
statements.

      Our 1997 and 1996 audits  referred to above  included the  information  in
Schedule  II which  presents  fairly,  in all  material  respects,  when read in
conjunction with the 1997 and 1996 basic financial  statements taken as a whole,
the information required to be set forth therein for the years ended October 31,
1997 and 1996.

                                                     IRA D. GANZFRIED & COMPANY

New York, New York
December 23, 1997


                                      F-3
<PAGE>

                            COFFEE HOLDING CO., INC.

                                 BALANCE SHEETS
                            OCTOBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                Assets                                  1998           1997
                                ------                              -----------    -----------
                                                                                    (Note 14)
<S>                                                                 <C>            <C>
Current assets:
    Cash ........................................................                  $   198,679
    Due from broker .............................................   $   150,592        423,899
    Accounts receivable, net of allowance for doubtful
      accounts of $215,000 and $254,317 .........................     2,243,798      2,858,201
    Inventories .................................................     1,359,954      1,379,383
    Cash and cash equivalents restricted under mortgage note ....       432,965         66,070
    Prepaid expenses and other current assets ...................        57,198         27,066
                                                                    -----------    -----------
         Total current assets ...................................     4,244,507      4,953,298
Property and equipment, at cost, net of accumulated
    depreciation of $1,657,206 and $1,422,651 ...................     2,123,429      1,722,194
Deferred mortgage costs, net of accumulated amortization
    of $48,611 and $43,449 ......................................        56,784         61,946
Deposits and other assets .......................................        99,323         57,191
                                                                    -----------    -----------
         Totals .................................................   $ 6,524,043    $ 6,794,629
                                                                    ===========    ===========

                Liabilities and Stockholders' Equity (deficiency)
                -------------------------------------------------

Current liabilities:
    Mortgage note payable .......................................   $   600,000    $   650,000
    Current portion of term loan ................................        87,312
    Current portion of obligations under capital leases .........       215,026        127,524
    Accounts payable and accrued expenses .......................     3,569,321      2,209,420
    Due factor ..................................................                    2,503,228
                                                                    -----------    -----------
         Total current liabilities ..............................     4,471,659      5,490,172
Term loan, net of current portion ...............................       279,431
Line of credit borrowings .......................................     2,320,513
Obligations under capital leases, net of current portion ........       249,325        233,810
Loans from related parties ......................................       131,197        475,215
                                                                    -----------    -----------
         Total liabilities ......................................     7,452,125      6,199,197
                                                                    -----------    -----------
Commitments and contingencies
Stockholders' equity (deficiency):
    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 .......         4,000
    Common stock, no par value; 200 shares authorized;
      100 shares issued and outstanding .........................                      460,000
    Additional paid-in capital ..................................       480,997
    Retained earnings (accumulated deficit) .....................    (1,413,079)       135,432
                                                                    -----------    -----------
         Total stockholders' equity (deficiency) ................      (928,082)       595,432
                                                                    -----------    -----------
         Totals .................................................   $ 6,524,043    $ 6,794,629
                                                                    ===========    ===========
</TABLE>

See Notes to Financial Statements.


                                      F-4
<PAGE>

                           COFFEE HOLDINGS CO., INC.

                            STATEMENTS OF OPERATIONS
                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                1998            1997            1996
                                                            ------------    -------------   ------------
                                                                              (Note 14)
<S>                                                         <C>             <C>             <C>
Net sales ...............................................   $ 25,853,791    $ 26,120,519    $ 21,162,100
Cost of sales ...........................................     24,090,666      22,961,911      18,775,383
                                                            ------------    ------------    ------------
Gross profit ............................................      1,763,125       3,158,608       2,386,717
                                                            ------------    ------------    ------------
Operating expenses:
    Selling and administrative ..........................      1,921,864       2,097,731       1,223,355
    Officers' salaries ..................................        293,270         257,817         413,740
                                                            ------------    ------------    ------------
         Totals .........................................      2,215,134       2,355,548       1,637,095
                                                            ------------    ------------    ------------
Income (loss) from operations ...........................       (452,009)        803,060         749,622
                                                            ------------    ------------    ------------
Other income (expense):
    Interest income .....................................         40,512          22,897
         Interest expense ...............................       (363,445)       (324,345)       (310,591)
    Expenses in connection with reverse acquisition .....       (327,087)
                                                            ------------    ------------    ------------
         Totals .........................................       (650,020)       (301,448)       (310,591)
                                                            ------------    ------------    ------------
Income (loss) before income taxes .......................     (1,102,029)        501,612         439,031
Provision for state and local income taxes ..............                         64,173           8,528
                                                            ------------    ------------    ------------
Net income (loss) .......................................   $ (1,102,029)   $    437,439    $    430,503
                                                            ============    ============    ============
Unaudited:
    Historical income (loss) before income taxes ........   $ (1,102,029)   $    501,612    $    439,031
    Pro forma:
         Provision (credit) for income taxes ............       (424,000)        226,000         198,000
                                                            ------------    ------------    ------------
         Net income (loss) ..............................   $   (678,029)   $    275,612    $    241,031
                                                            ============    ============    ============
         Basic earnings (loss) per share ................   $       (.17)   $        .07    $        .06
                                                            ============    ============    ============
         Basic weighted average common shares outstanding      3,999,650       3,999,650       3,999,650
                                                            ============    ============    ============
</TABLE>

See Notes to Financial Statements


                                      F-5
<PAGE>

                            COFFEE HOLDING CO., INC.

           STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
                                              Common Stock
                               -------------------------------------------                Retained
                                  No Par Value         $.001 Par Value                    Earnings
                               ------------------- ----------------------    Additional    (Accum-
                               Number of              Number of               Paid-in      ulated
                                Shares      Amount     Shares      Amount     Capital      Deficit)         Total
                               ---------  ---------   ---------   --------   ----------  -----------    -----------
                                                                                                          (Note 14)
<S>                               <C>     <C>         <C>          <C>       <C>         <C>            <C>
Balance, November 1, 1995,
   as adjusted ..............     100     $ 460,000                                      $  (732,510)   $  (272,510)
Net income ..................                                                                430,503        430,503
                                 ----     ---------                                      -----------    -----------
Balance, October 31, 1996,
   as adjusted ..............     100       460,000                                         (302,007)       157,993
Net income, as adjusted .....                                                                437,439        437,439
                                 ----     ---------                                      -----------    -----------
Balance, October 31, 1997,
   as adjusted ..............     100       460,000                                          135,432        595,432
Effect of reverse acquisition    (100)     (460,000)  3,999,650    $4,000    $480,997        (24,224)           773
Net loss ....................                                                             (1,102,029)    (1,102,029)
Dividends paid ..............                                                               (422,258)      (422,258)
                                 ----     ---------   ---------    ------    --------    -----------    -----------
Balance, October 31, 1998 ...      --     $      --   3,999,650    $4,000    $480,997    $(1,413,079)   $  (928,082)
                                 ====     =========   =========    ======    ========    ===========    ===========
</TABLE>

See Notes to Financial Statements.


                                      F-6
<PAGE>

                            COFFEE HOLDING CO., INC.

                            STATEMENTS OF CASH FLOWS
                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                                      1998              1997               1996
                                                                                  -----------        ----------         -----------
                                                                                                      (Note 14)
<S>                                                                               <C>                <C>                <C>
Operating activities:
    Net income (loss) .....................................................       $(1,102,029)       $   437,439        $   430,503
    Adjustments to reconcile net income (loss) to net
      cash provided by (used in) operating activities:
         Depreciation and amortization ....................................           239,687            170,579            209,243
         Bad debts ........................................................            53,391            522,499            130,230
         Changes in operating assets and liabilities:
         Due from broker ..................................................           273,307           (299,922)           (72,270)
         Accounts receivable ..............................................           561,012           (730,028)           257,025
         Inventories ......................................................            19,429           (504,122)           (58,186)
         Prepaid expenses and other current assets ........................           (30,132)             2,736                (10)
         Deposits and other assets ........................................           (42,132)           (47,469)             3,109
         Accounts payable and accrued expenses ............................         1,360,674            809,499           (953,608)
                                                                                  -----------        -----------        -----------
           Net cash provided by (used in) operating activities ............         1,333,207            361,211            (53,964)
                                                                                  -----------        -----------        -----------
Investing activities -- purchases of property and equipment ...............          (347,260)          (262,653)           (58,988)
                                                                                  -----------        -----------        -----------
Financing activities:
    Net advances from factor ..............................................                              505,053            181,630
    Principal payments on mortgage note payable ...........................           (50,000)           (50,000)           (50,000)
    Increase in cash and cash equivalents restricted
      under mortgage note .................................................          (366,895)           (22,897)
    Principal payments on term loan .......................................           (87,312)
    Net advances under bank line of credit ................................           271,340
    Principal payments of obligations under capital leases ................          (185,483)                               (9,203)
    Repayments of loans from related parties ..............................          (344,018)          (343,125)              (447)
    Dividends paid ........................................................          (422,258)
                                                                                  -----------        -----------        -----------
         Net cash provided by (used in) financing activities ..............        (1,184,626)            89,031            121,980
                                                                                  -----------        -----------        -----------
Net increase (decrease) in cash ...........................................          (198,679)           187,589              9,028
Cash, beginning of year ...................................................           198,679             11,090              2,062
                                                                                  -----------        -----------        -----------
Cash, end of year .........................................................       $        --        $   198,679        $    11,090
                                                                                  ===========        ===========        ===========
Supplemental disclosure of cash flow data:
    Interest paid .........................................................       $   334,567        $   324,345        $   310,591
                                                                                  ===========        ===========        ===========
    Income taxes paid .....................................................       $   104,664        $    64,173        $     8,528
                                                                                  ===========        ===========        ===========
</TABLE>

Supplemental schedule of noncash investing and financing activities:
      During  1998  and  1997,  the  Company  purchased  equipment  at a cost of
      $288,500  and   $361,334,   respectively,   by  incurring   capital  lease
      obligations.

      During  1998,  the  Company  increased  its  obligations  under the credit
      facility  that  provides  it with the  line of  credit  and term  loan and
      decreased the balance  payable to its factor through a direct  transfer of
      $2,503,288 from the bank to the factor.

See Notes to Financial Statements.


                                      F-7
<PAGE>

                            COFFEE HOLDING CO., INC.

                          NOTES TO FINANCIAL STATEMENTS

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.

      On February 10, 1998, the holders of all of the shares of Coffee's  common
stock  consummated  an exchange (the  "Exchange")  of their shares for shares of
common  stock  of  Transpacific  International  Group  Corp.   ("Transpacific").
Transpacific  was  incorporated  in Nevada  on  October  9,  1995 and  organized
originally as a "blind pool" or "blank check"  company for the purpose of either
merging with or acquiring an operating company.  It had been a development stage
company with no significant operating activities or assets and liabilities prior
to the Exchange.

      Transpacific, which had, effectively, 999,650 outstanding shares of common
stock  (with a par  value of $.001  per  share)  prior to the  Exchange,  issued
3,000,000  shares of common  stock in  exchange  for all of the 100  issued  and
outstanding  shares of  common  stock (no par  value) of  Coffee.  Concurrently,
Coffee was merged into Transpacific (the "Merger") and Transpacific  changed its
name to Coffee Holding Co., Inc.

      Coffee  Holding  Co.,  Inc.  after the  Exchange,  the Merger and the name
change is referred to below as the  "Company"  or the  "Combined  Company."  The
"Company"  is also  used to refer  to  Coffee  Holding  Co.,  Inc.  prior to the
Exchange, the Merger and the name change.

      The  stockholders  of Coffee also owned 540,040  shares of common stock of
Transpacific  prior to the  Exchange  and,  accordingly,  they  owned a total of
3,540,400 or 88.5% of the outstanding shares of the Combined Company immediately
after the Exchange.  Therefore, the Merger was treated, effective as of February
10, 1998, as a "purchase business  combination" and a "reverse  acquisition" for
accounting  purposes in which  Transpacific  was the "legal acquirer" and Coffee
was the "accounting acquirer." The carrying values of the assets and liabilities
of  Transpacific,  which were  immaterial,  were  recorded  at their  historical
carrying values as of February 10, 1998.  Accordingly,  the historical financial
statements  included herein only reflect the operations of Coffee for the period
prior to February 10, 1998.  All references to numbers of shares of common stock
as of the dates or for  periods  prior to the  Exchange  have been  restated  to
reflect  the ratio of the number of common  shares of  Transpacific  effectively
exchanged for common shares of Coffee.

      Consulting  and  professional  fees and other costs incurred in connection
with the reverse acquisition totaling $327,087 were charged to expense in 1998.

      Information  as to the  unaudited  pro forma  results of operations of the
Company  assuming  the Merger  had been  consummated  as of, and the  results of
operations of Transpacific had been included from, November 1, 1996 has not been
presented  because such pro forma results would not differ  materially  from the
historical results of operations for 1998 and 1997 reflected in the accompanying
historical statements of operations.

Note 2--Summary of significant accounting policies:

Use of estimates:

      The  preparation  of financial  statements  in conformity  with  generally
accepted  accounting  principles  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.


                                      F-8
<PAGE>

                            COFFEE HOLDING CO., INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

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  futures and options  contracts  to hedge the effects of
fluctuations  in the price of green coffee beans.  These  transactions  meet the
requirements for hedge  accounting,  including  designation and correlation.  To
obtain a proper matching of revenues and expenses,  gains or losses arising from
open and closed hedging  transactions are included in inventory as a cost of the
commodity and reflected in the statement of operations when the product is sold.
Risks arise from the possible  inability of  counterparties to meet the terms of
their  contracts  and from  movements in the price of green  coffee.  Management
believes that the overall exposure to credit risk is minimal.

      At October 31, 1998,  the Company  held  options  covering an aggregate of
2,550,000  pounds of green coffee beans which are  exercisable in fiscal 1999 at
prices  ranging from $1.10 to $1.35 per pound.  At October 31, 1997, the Company
held options  covering an  aggregate  of 2,297,000  pounds of green coffee beans
which were  exercisable in 1998 at prices ranging from $1.40 to $1.60 per pound.
The  fair  market  value of  these  options,  which  was  obtained  from a major
financial  institution,  was approximately  $167,000 and $292,000 at October 31,
1998 and 1997,  respectively.  Due from broker  includes the effects of deferred
hedging gains of $123,222 and  unrealized  hedging losses of $299,934 at October
31, 1998 and 1997, respectively.

Deferred mortgage costs:

      Costs incurred in connection with obtaining  mortgage  financing have been
capitalized and are being amortized over the term of the mortgage using a method
that  approximates the interest method.  Amortization of deferred mortgage costs
was not material in 1998, 1997 and 1996.

Advertising:

      The Company  expenses the cost of advertising  and promotions as incurred.
Advertising costs charged to operations  totaled $140,397,  $99,600 and $103,335
in 1998, 1997 and 1996, respectively.

Income taxes:

      Prior to the Merger on February 10, 1998, Coffee,  with the consent of its
stockholders, had elected to be treated as an "S" Corporation under the Internal
Revenue Code.  Accordingly,  the Company's income or loss prior to that date was
allocated  to Coffee's  stockholders  for  inclusion in their  personal  Federal
income tax  returns.  Therefore,  the  Company  was not  required  to record any
historical  provision or credit for Federal income taxes for the period prior to
February 10, 1998.

      The Company had also elected to be treated as an "S"  Corporation  for New
York  state  income  tax  purposes.  However,  New  York  imposes  a tax  on "S"
Corporation  income at a reduced rate and New York City does not  recognize  "S"
Corporations.   Therefore,  the  Company  was  required  to  record  appropriate
historical  provisions  and credits for state and local  income taxes in periods
prior and subsequent to February 10, 1998.

      The Company  accounts for income taxes pursuant to the asset and liability
method which requires  deferred income tax assets and liabilities to be computed
annually 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.


                                      F-9
<PAGE>

                            COFFEE HOLDING CO., INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

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.

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 is 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  elected to be taxed as an "S"  Corporation,  it was
not  required to provide for Federal  income  taxes and it was only  required to
provide  for  state  income  taxes at a  reduced  rate  prior to the date of the
Exchange. SEC rules and regulations prohibit the presentation of earnings (loss)
per common share amounts on a historical  basis for the periods during which the
"S" Corporation elections were in effect; instead, they require the presentation
of basic and, if applicable,  diluted  unaudited pro forma  earnings  (loss) per
common share amounts in the statements of operations  for such periods  assuming
that the Company had been subject to Federal and state income taxes at statutory
rates applicable to those companies that had not made "S" Corporation elections.

      Since the Company had elected to be taxed as an "S"  Corporation  for part
of 1998 and all of 1997 and 1996 and it had no potentially  dilutive  securities
outstanding  in 1998,  1997 and 1996,  unaudited pro forma  earnings  (loss) per
share is presented in the  accompanying  statements of operations for 1998, 1997
and 1996.

      The weighted average common shares  outstanding used in the computation of
unaudited pro forma basic earnings  (loss) per share in 1998,  1997 and 1996 was
3,999,650,  which  reflects the  retroactive  adjustment of the number of common
shares of Transpacific  actually  outstanding to include only the 999,650 shares
effectively  outstanding as of the date of the Exchange and the 3,000,000 shares
of common  stock issued to the  stockholders  of Coffee in  connection  with the
Exchange (see Note 1).

Recent accounting pronouncements:

      In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments  and Hedging  Activities"  ("SFAS 133"),  which is effective for all
fiscal  years  beginning  after  June  15,  1999.  SFAS  133  requires  that all
derivative  financial  instruments be recognized as either assets or liabilities
in the balance sheet and measured at fair value. Management is in the process of
evaluating  the  impact,  if any,  that  SFAS  133  will  have on the  Company's
financial statements.

      The FASB and the Accounting  Standards Executive Committee of the American
Institute of Certified  Public  Accountants had issued certain other  accounting
pronouncements  as of October 31, 1998 that will become  effective in subsequent
periods;  however,  management of the Company does not believe that any of those
pronouncements  would  have  significantly   affected  the  Company's  financial
accounting measurements or disclosures had they been in effect during 1998, 1997
and 1996.


                                      F-10
<PAGE>

                            COFFEE HOLDING CO., INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

Note 3--Inventories:

      Inventories at October 31, 1998 and 1997 consisted of the following:

                                                   1998           1997
                                                   ----           ----
Packed coffee ..............................   $  395,655     $  389,796
Green coffee ...............................      755,305        805,780
Packaging supplies .........................      208,994        183,807
                                               ----------     ----------
  Totals ...................................   $1,359,954     $1,379,383
                                               ==========     ==========

Note 4--Property and equipment:

      Property  and  equipment  at October  31, 1998 and 1997  consisted  of the
following:

<TABLE>
<CAPTION>
                                                    Estimated
                                                   Useful Life          1998               1997
                                                   -----------          ----               ----
<S>                                                 <C>              <C>                <C>
Building and improvements .......................   30 years         $1,220,110         $1,109,696
Machinery and equipment .........................    7 years          1,627,366          1,443,859
Machinery and equipment under capital leases ....    7 years            694,609            361,334
Furniture and fixtures ..........................    7 years             97,550             88,956
                                                                     ----------         ----------
                                                                      3,639,635          3,003,845
Less accumulated depreciation ...................                     1,657,206          1,422,651
                                                                     ----------         ----------
                                                                      1,982,429          1,581,194
Land ............................................                       141,000            141,000
                                                                     ----------         ----------
  Totals ........................................                    $2,123,429         $1,722,194
                                                                     ==========         ==========
</TABLE>

      Depreciation  totaled  $234,525,  $165,417 and $204,081 in 1998,  1997 and
1996, respectively.

Note 5--Cash and cash equivalents restricted under mortgage note:

      Restricted  cash  and  cash  equivalents  at  October  31,  1998  and 1997
consisted of investments in the following interest-bearing accounts:

                                          1998        1997
                                          ----        ----
Cash in escrow .....................   $ 71,039     $ 66,070
Certificate of deposit .............    361,926
                                       --------     --------
  Totals ...........................   $432,965     $ 66,070
                                       ========     ========

      Cash in escrow  represents  amounts  held in  accounts  for the payment of
principal,  interest  and  various  fees in  connection  with the New York  City
Industrial Development Agency ("NYCIDA") mortgage note payable (see Note 6).

      The Company did not comply with certain covenants,  as defined,  under the
NYCIDA agreement at October 31, 1998 and 1997. As a result of its  noncompliance
at October 31, 1997, it was required to obtain an  irrevocable  letter of credit
from ABN  Amro  Bank to  secure  the  mortgage  note  and to  pledge a  $350,000
certificate  of deposit  to secure  the  letter of credit  during the year ended
October 31, 1998.

      The  restricted  investments  were  liquidated in March 1999 in connection
with the  repayment of the mortgage note (see Note 15);  accordingly,  they were
classified as current assets in the accompanying balance sheets.

Note 6--Mortgage note payable:

      On June 1, 1989,  the Company  financed  the purchase of land and building
through  the  issuance of a mortgage  note  payable in the  principal  amount of
$1,050,000 to the NYCIDA. The mortgage note, which had an outstanding balance of
$600,000  and  $650,000  at October 31,  1998 and 1997,  respectively,  requires
monthly  payments of $4,167 plus interest based on a variable rate set weekly by
Bear Stearns & Co. The final payment is due November 1, 2009. The payment of the
note is secured by a first mortgage on the Company's land and building.


                                      F-11
<PAGE>

                            COFFEE HOLDING CO., INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

      The NYCIDA agreement contains certain financial covenants.  At October 31,
1998  and  1997,  the  Company  was  not  in  compliance   with  the  covenants.
Accordingly,  the mortgage  note payable was due on demand and  classified  as a
current  liability,  and the restricted  investments  securing the mortgage note
(see Note 5) were classified as current assets, in the accompanying  October 31,
1998 and 1997 balance sheets.

      The mortgage note was repaid in March 1999 (see Note 15).

Note 7--Credit facility borrowings:

      The Company was obligated for borrowings under a factoring agreement until
November  21,  1997  when it  obtained  a  credit  facility  from  Nationscredit
Commercial Corp. consisting of a revolving line of credit and a term loan.

      The factoring  agreement  provided for  borrowings of up to (i) 80% of the
Company's  eligible  trade  accounts  receivable  and (ii)  50% of its  eligible
inventories up to a maximum of $400,000.  The outstanding  balance of $2,503,228
at October  31, 1997  approximated  the  maximum  amount that the Company  could
borrow based on its eligible  trade accounts  receivable  and  inventories as of
that date. Interest was payable monthly at the prime rate plus 2% and borrowings
up to $200,000,  plus  interest  and other costs and  expenses as defined,  were
guaranteed by a stockholder.

      The Company  incurred costs of  approximately  $113,000 in connection with
the  cancellation  of the  factoring  agreement  that were  charged to  interest
expense in 1998.

      The line of credit  provides for  borrowings 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  through November 20, 2000 when the line of credit expires
and  any  outstanding  balance  must  be  repaid.  The  outstanding  balance  of
$2,320,513 at October 31, 1998  approximated the maximum amount that the Company
could borrow based on its eligible trade accounts  receivable and inventories as
of that  date.  Interest  is  payable  monthly  at the  prime  rate  plus 1% (an
effective rate of 9% at October 31, 1998).

      The term loan, which had an outstanding  balance of $366,743  (including a
current  portion of $87,312) at October 31, 1998,  provides for borrowings of up
to the greater of 80% of the cost of eligible  equipment or $500,000.  Principal
is payable in monthly  installments of $7,276 plus interest which is also at the
prime rate plus 1% until November 20, 2000 at which time the outstanding balance
must also be repaid.

      Two  of  the  Company's  stockholders  have  each  guaranteed  outstanding
borrowings under the credit facility of up to $100,000,  plus interest and other
costs and expenses as defined.

Note 8--Loans from related parties:

      The Company had loans payable to its stockholders of $131,197 and $475,215
at October 31, 1998 and 1997,  respectively.  The loans are due on demand,  bear
interest  at 10% and are  subordinated  to the  balance  outstanding  under  the
mortgage note payable. Interest expense was not material in 1998, 1997 and 1996.

Note 9--Income taxes:

      As shown in the accompanying statements of operations,  the Company had no
historical  provision  or  credit  for  income  taxes in 1998  and a  historical
provision for current state and local income taxes in 1997 and 1996 comprised as
follows:

                                          1997          1996
                                        -------        ------
      State .........................   $ 4,173        $  528
      Local .........................    60,000         8,000
                                        -------        ------
        Total historical ............   $64,173        $8,528
                                        =======        ======


                                      F-12
<PAGE>

                            COFFEE HOLDING CO., INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

      As  explained  in Note 2,  prior to  February  10,  1998,  the date of the
Exchange,  the  Company  had  elected  to be  taxed as an "S"  Corporation  and,
accordingly,  it was not required to provide for income taxes on its  historical
income before income taxes of  approximately  $1,028,000,  $502,000 and $439,000
for the period from  November  1, 1997 to February  10, 1998 and the years ended
October 31, 1997 and 1996, respectively; however, it was required to provide for
state  income taxes at a reduced rate and New York City income taxes at the same
rates as  companies  that had not made such an election  during  those  periods.
Although the Company became subject to Federal,  state and local income taxes at
full statutory rates for periods subsequent to the date of the Exchange,  it had
a historical loss before income taxes of approximately $2,130,000 for the period
from  February 11, 1998 to October 31,  1998,  and it was not required to record
any  historical  provision or credit for Federal income taxes during that period
and as further explained below.

      As a result of the loss for the period from  February  11, 1998 to October
31, 1998 and  certain  other  elections  related to the  termination  of its "S"
Corporation  election,  the Company had net operating loss  carryforwards  as of
October 31, 1998 of approximately  $800,000  available to reduce future Federal,
state and local taxable income which,  if not used,  will expire in 2012.  There
were no other material temporary  differences as of October 31, 1998. Due to the
uncertainties  related to the extent and timing of the Company's  future taxable
income,  the Company  offset the deferred tax assets of  approximately  $363,000
attributable to the potential benefits from the net operating loss carryforwards
as of October 31, 1998 by an equivalent valuation allowance and, accordingly, it
did not recognize a credit for Federal income taxes for the period from February
11, 1998 to October 31, 1998. As a result of recording  the valuation  allowance
for the period after February 10, 1998, and the "S" Corporation election for the
period through February 10, 1998, the Company did not recognize any provision or
credit for Federal income taxes for the year ended October 31, 1998.

      The differences  between the tax provision or credit computed based on the
Company's  historical pre-tax income or loss and the applicable statutory income
tax rate and the Company's historical provisions and credits for Federal,  state
and local income taxes for 1998, 1997 and 1996 are set forth below:

<TABLE>
<CAPTION>
                                                       1998         1997         1996
                                                    ---------    ---------    ---------
<S>                                                 <C>          <C>          <C>
Tax provision (credit) at statutory rate of 34% .   $(374,000)   $ 149,000    $ 146,000
Adjustments for effects of:
  State income taxes net of Federal benefit .....                   64,173        8,528
  "S" Corporation election and termination of "S"
       Corporation election .....................      11,000     (149,000)    (146,000)
  Change in valuation allowance .................     363,000
                                                    ---------    ---------    ---------
      Historical provision ......................   $      --    $  64,173    $   8,528
                                                    =========    =========    =========
</TABLE>

      The  Company's "S"  Corporation  election was in effect for part or all of
1998, 1997 and 1996.  Unaudited pro forma historical  provisions and credits for
income  taxes  assuming  the  Exchange  had occurred on November 1, 1996 and the
Company was subject to Federal,  state and local income taxes at full  statutory
rates for all of 1998 1997 and 1996 are set forth below:

                                   1998         1997        1996
                                ---------    ---------   ---------

Federal .....................   $(262,000)   $ 140,000   $ 122,000
State .......................     (77,000)      41,000      36,000
Local .......................     (85,000)      45,000      40,000
                                ---------    ---------   ---------
  Total pro forma (unaudited)   $(424,000)   $ 226,000   $ 198,000
                                =========    =========   =========

      The unaudited pro forma provisions and credits for income taxes reflect an
effective rate of approximately 45% for each period comprised of an 11% rate for
state and local income taxes, net of the related Federal income tax effect,  and
a statutory Federal income tax rate of 34%.


                                      F-13
<PAGE>

                            COFFEE HOLDING CO., INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

Note 10--Lease commitments:

Operating lease:

      The Company occupies  warehouse  facilities under an operating lease which
expires on August 31,  2002  unless  renewed at the option of the Company for an
additional two years.  The lease requires the Company to pay utilities and other
maintenance expenses.  Rent charged to operations amounted to $46,800 and $3,900
in  1998  and  1997,   respectively.   The  Company  had  no  obligations  under
noncancelable operating leases in 1996. Future minimum rental payments under the
noncancelable  operating  lease in years  subsequent to October 31, 1998 were as
follows:

   Year Ending
   October 31,                                                           Amount
   -----------                                                          --------

   1999 .....................................................           $ 46,800
   2000 .....................................................             46,800
   2001 .....................................................             46,800
   2002 .....................................................             39,000
                                                                        --------
Total .......................................................           $179,400
                                                                        ========

Capital leases:

      As of October 31, 1998,  the Company was obligated  under various  capital
leases for machinery and equipment that expire at various dates through February
2001.  Assets under capital  leases are amortized  over their  estimated  useful
lives of seven  years.  Amortization  of  $77,246  and  $25,810  was  charged to
operations  in 1998 and 1997,  respectively.  The Company  had no capital  lease
obligations  in 1996. The future minimum lease payments under capital leases and
the net present value of the future  minimum lease  payments at October 31, 1998
were as follows:

Total minimum lease payments ..................................         $519,236
Less amount representing interest .............................           54,885
                                                                        --------
Present value of net minimum lease payments ...................          464,351
Less current portion ..........................................          215,026
                                                                        --------
Long-term portion .............................................         $249,325
                                                                        ========

Note 11--Risks and uncertainties:

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, 1998, the Company
had cash balances that exceeded Federal  insurance  limits by $262,000.  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.

      Approximately  20% of the  Company's  sales were derived from one customer
during 1998.  That customer also  accounted  for  approximately  $412,000 of the
Company's  accounts  receivable  balance at October 31, 1998.  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, 1998.


                                      F-14
<PAGE>

                            COFFEE HOLDING CO., INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

Other uncertainties:

      The  Company had a net loss of  approximately  $1,102,000  in 1998.  As of
October 31, 1998, the Company had a working capital  deficiency of approximately
$227,000,  a total  stockholders'  deficiency  of  approximately  $928,000 and a
mortgage  note  payable  with a balance of $600,000  that was due on demand as a
result of the violation of certain covenants (see Note 6). In the absence of the
mitigating  factors explained below,  these matters would raise doubts about the
Company's ability to continue as a going concern.

      The net  loss in  1998  included  nonrecurring  charges  of  approximately
$440,000  attributable  to  expenses  incurred  in  connection  with the reverse
acquisition  and the  termination of a factoring  agreement (see Notes 1 and 7).
Management  believes,  but  cannot  assure,  that  the  Company  will be able to
increase sales and reduce certain  operating costs during 1999.  Management also
believes that during 1999 the Company's  expenditures for purchases of equipment
and repayments of related party loans will be substantially below those incurred
in 1998. As further  explained in Note 15, the Company  repaid the mortgage note
in March 1999 primarily with funds that became available through the liquidation
of investments  that had  collateralized  the mortgage note. The Company will be
able to finance  substantial  increases  in  eligible  accounts  receivable  and
inventories arising from sales increases,  if any, through additional borrowings
under its line of credit and  purchases  of  approximately  $133,000 of eligible
equipment  under its term loan (see Note 7).  Accordingly,  management  believes
that the Company will have sufficient  resources to fund its operations  through
at least October 31, 1999.

Note 12--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, 1998, no options had been granted under the Plan.

Note 13--Major vendors:

      During 1998,  substantially all of the Company's  purchases were from nine
vendors.  An  employee  of one of those  vendors is a director  of the  Company.
Purchases  from that vendor totaled  approximately  $4,100,000 in 1998. The nine
vendors also accounted for substantially  all of the Company's  accounts payable
at October 31, 1998. Management 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 14--Prior period adjustments:

      The accompanying 1997 and 1996 financial statements reflect adjustments to
previously  reported amounts of net income for 1997 and retained  earnings as of
November  1, 1995,  October 31, 1996 and October 31, 1997 for the net effects of
the   understatement  of  write-offs  of  uncollectible   accounts   receivable,
unrealized  losses  on  coffee  futures  and  interest  income  in 1997  and the
understatement of unrealized losses on coffee futures in years prior to 1996.

      The components of the  adjustments  and their effect on net income in 1997
follow:

Increase (decrease) in net income:

   Write-off of uncollectible accounts receivable ...............    $(268,182)
   Unrecorded unrealized losses on coffee futures ...............     (299,934)
   Unrecorded interest income on restricted cash ................       22,897
                                                                     ---------
     Total adjustments ..........................................     (545,219)
   Net income, as previously reported ...........................      982,658
                                                                     ---------
   Net income, as adjusted ......................................    $ 437,439
                                                                     =========


                                      F-15
<PAGE>

                            COFFEE HOLDING CO., INC.

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

      Adjustments  to  periods  prior to 1996,  which were  attributable  to the
understatement of unrealized losses on coffee futures, totaled $364,135.

      The effects of these adjustments on retained earnings are set forth below:

                                                   As                    As
                                                Reported              Adjusted
                                              -----------           -----------
Balance:

November 1, 1995 ...................          $  (368,375)          $  (732,510)
                                              ===========           ===========
October 31, 1996 ...................          $    62,128           $  (302,007)
                                              ===========           ===========
October 31, 1997 ...................          $ 1,044,786           $   135,432
                                              ===========           ===========

Note 15--Subsequent event:

      On March 3, 1999, the Company repaid the entire outstanding balance of the
mortgage  note  payable to NYCIDA  which had been in default at October 31, 1998
and 1997 (see Note 6). The Company generated a portion of the funds required for
its payment by liquidating  investments that were restricted under the agreement
with NYCIDA (see Note 5).

                                      * * *


                                      F-16
<PAGE>

                            COFFEE HOLDING CO., INC.

          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                   YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                            Balance at      Additions-      Deductions       Balance
                                             Beginning       Charged           From          at End
                                              of Year        to Income       Reserves        of Year
                                            ----------      ----------      ----------      ---------
<S>                                          <C>             <C>             <C>             <C>
1998:
  Allowance for doubtful accounts .......    $254,317        $ 53,391        $ 92,708        $215,000
                                             ========        ========        ========        ========
1997:
  Allowance for doubtful accounts .......    $134,200        $522,499        $402,382        $254,317
                                             ========        ========        ========        ========
1996:
  Allowance for doubtful accounts .......    $  3,970        $130,230                        $134,200
                                             ========        ========                        ========
</TABLE>


                                      F-17
<PAGE>

                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly 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

                                                        Dated: October 25, 2000

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report has been signed on October 25, 2000 by the following  persons on behalf
of the registrant and in the capacities indicated.

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

         /s/ ANDREW GORDON                 Chief Executive Officer, President,
----------------------------------         Treasurer and Director (principal
           Andrew Gordon                   executive officer and principal
                                           financial and accounting officer)

         /s/ DAVID GORDON                  Executive Vice President--Operations,
----------------------------------         Secretary and Director
           David Gordon

        /s/ GERARD DECAPUA                 Director
----------------------------------
          Gerard DeCapua

          /s/ DAN DWYER                    Director
----------------------------------
             Dan Dwyer

         /s/ MATT PHILLIPS                 Director
----------------------------------
           Matt Phillips


<PAGE>

              Supplemental Information to be Furnished With Reports
            Filed Pursuant to Section 15(d) of the Act by Registrants
     Which Have Not Registered Securities Pursuant to Section 12 of the Act

      Coffee  Holding  has not and does not  intend to send an annual  report to
stockholders or proxy materials to its stockholders.


<PAGE>

                                INDEX TO EXHIBITS

      27    Financial Data Schedule