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

                                   Form 10-KSB

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

For the fiscal year ended October 31, 2002

                                       OR

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

         For the transition period from ____________ to _______________.

                        Commission file No. 333-00588-NY

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

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

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

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

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

                                      None
                                (Title of Class)
           Securities registered pursuant to Section 12(g) of the Act:

                                      None
                                (Title of Class)

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 |X| No|_|.

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-KSB or any  amendment to
this Form 10-KSB. |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 October 31, 2002, the Registrant had 3,999,650 shares of common stock, par
value $.001 per share, outstanding.
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

PART I

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

       ITEM 2.  PROPERTIES....................................................10

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

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

PART II

       ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS...........................................11

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

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

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

PART III

       ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF COFFEE HOLDING CO., INC...17

       ITEM 10. EXECUTIVE COMPENSATION........................................20

       ITEM 11. SECURITY STOCK OWNERSHIP OF CERTAIN BENEFICIAL
                OWNERS AND MANAGEMENT.........................................21

       ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................21

PART IV

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

SIGNATURES....................................................................24

CERTIFICATIONS................................................................25
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

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

      Our products can be divided into three categories:

      o     Branded Coffee;

      o     Private Label Coffee; and

      o     Wholesale Green Coffee.

      We conduct wholesale coffee operations in accordance with strict freshness
and quality standards. Our primary business is roasting, blending, packaging and
distributing coffee for sale under private labels for companies throughout the
United States and Canada. We also sell unprocessed green coffee to specialty
gourmet roasters throughout the United States. We sell over 50 types of coffee
from all over the world at various price points to wholesale customers primarily
located throughout the United States and Canada, including supermarket,
wholesaler and individually owned and multi-unit retail store customers.

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

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

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

Industry Overview

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

      o     commercial ground roast, mass-merchandised coffee; and


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<PAGE>

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

      Specialty coffee, or what is sometimes called gourmet coffee, is coffee
roasted using mainly high quality Arabica beans. The Arabica bean is widely
considered in the industry to be superior to its counterpart, the Robusta bean,
which is used mainly in non-specialty coffee. High quality Arabica beans usually
grow at high elevations, absorb little moisture and mature slowly. These factors
result in beans with a mild aroma and a bright, pleasing flavor that is suitable
for specialty coffee.

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

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

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

      o     increased quality differentiation over commercial grade coffees by
            consumers;

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

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

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

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

Our Competitive Strengths

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

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


                                       2
<PAGE>

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

      Portfolio of Differentiated Branded Coffees. We have amassed a portfolio
of five proprietary name brands sold to supermarkets, wholesalers and
individually-owned stores in the United States, including brands for specialty
espresso, Latin espresso, Italian style espresso, 100% Colombian coffee and
blended coffee. Cafe Caribe, our leading name brand by revenue, is a specialty
espresso coffee targeting the Latin American consumer market, which we believe
is the fastest growing demographic in the coffee market. According to the
Strategy Research Corporation 2000 U.S. Hispanic Market Study, Hispanic coffee
drinkers in the United States consume up to four times more coffee than other
non-Hispanic coffee drinkers and tend to be more brand loyal than other coffee
drinkers. We have signed a letter of intent to license the marketing rights to
four United States retail coffee brands (Martinson, Savarin, Brown Gold, and
Beech-Nut) and all existing slotting allowances, trade names, trademarks,
service marks, recipes and customer lists associated with these brands.
Currently, our highest net profit margin is on our branded coffees. Our existing
portfolio of differentiated brands combined with our management expertise serve
as a platform to add additional name brands through acquisition or licensing
agreements which target product niches and segments that do not compete with our
existing brands.

      Wholesale Green Coffee Market Presence. The growth in specialty coffee
sales has created a marketplace for higher quality and differentiated products
which can be priced at a premium in the marketplace. As the largest
roaster/dealer of green coffee on the East Coast, we are favorably positioned to
increase our specialty coffee sales. We are a charter member of the Specialty
Coffee Association of America and the largest distributor of Swiss water
processed decaffeinated coffees along the Eastern seaboard. We also have a
10-year relationship with our largest wholesale green coffee customer, Green
Mountain Coffee Roasters (Nasdaq: GMCR). We believe that our relationships with
various wholesale green coffee customers, including Green Mountain, and our
focus on selling green coffee on a wholesale basis has enabled us to participate
in the growth of the specialty coffee market while mitigating the risks
associated with the competitive specialty retail coffee environment. We
currently have relationships with approximately 225 wholesale green coffee
customers, including coffee houses, single store operators, mall coffee stores
and mail order sellers.

      Capacity For Growth. We have made capital investments to improve our
roasting, packaging and fulfillment infrastructure to support the production and
distribution of large quantities of fresh coffee products. At present, we are
operating at approximately 70% of our annual roasting capacity. In addition, we
believe we have ample resources to increase green coffee sales without any
significant additional infrastructure investment. We also have the ability to
use independent coffee brokers to enhance our sales of branded and green coffee.
We believe that additional facilities, increased investment in equipment and
increased worker shifts could further increase production capacity.

      Strong Company Culture. We have been a family owned and operated business
for three generations. Throughout this time, we have remained profitable through
all cycles in the coffee industry and the economy. Our management team and many
of our key employees have been working with us for over ten years. Our employees
and management are dedicated to our vision and mission, which is to produce high
quality products, as well as to provide quality and responsive service to our
customers.

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


                                       3
<PAGE>

sales. Using the same commitment to quality and customer service, we plan to
expand our sales of branded coffee products throughout the United States.

Our Growth Strategy

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

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

      Developing our food service business. To date, we have had limited
presence in the food service market. We plan to expand into the food service
business to develop a new distribution channel for our products. Since 2001, we
have hired two new full-time salespersons to market our upscale restaurant and
Colombian coffee brands to hotels, restaurants, office coffee services companies
and other food service retailers.

      Adding niche products. We intend to capture additional market share in our
existing distribution channels by selectively adding or introducing new brand
names and products across multiple price points, including niche specialty
blends, private label "value" blends and mini-brick, filter packs, instant
cappuccinos and tea line products. We also intend to add specialty instant
coffees to our extensive line of instant coffee products.

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

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

Products

      Our products can be divided into three categories:

      o     Branded Coffee;


                                       4
<PAGE>

      o     Private Label Coffee; and

      o     Wholesale Green Coffee.

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

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

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

      Cafe Supremo is a specialty espresso that targets espresso drinkers of all
backgrounds and tastes. It is designed to introduce coffee drinkers to the
tastes of dark roasted coffee.

      Don Manuel is a 100% Colombian coffee product made from the finest beans
Colombia produces. 100% Colombian coffee is an upscale quality product which
commands a substantial premium at retail compared to the more traditional brown
coffee blends.

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

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

      In fiscal 2002, sales of our branded coffees comprised approximately 9% of
our sales revenues, compared to 8% in fiscal 2001.

      Private label coffee. From our facility in Brooklyn, New York, we roast,
blend, package and distribute coffee under private labels for companies
throughout the United States and Canada. Our private label coffee is distributed
in cans and brick packs in a variety of sizes. As of October 31, 2002, we
supplied coffee to approximately 35 different wholesale and retail companies,
including two of the largest wholesalers in North America based on total sales
according to Private Label magazine. We produce private label coffee for
customers who desire to sell coffee under their own name but do not want to
engage in the manufacturing process. Sellers of private label coffee seek to
achieve a similar quality at a lower cost to the national brands representing a
better value for the consumer.

      In the year ended October 31, 2002, approximately 42% of our sales revenue
came from private label coffee sales, compared to 48% of revenues in fiscal
2001.

      Wholesale Green Coffee. Although the overall coffee market is mature, the
specialty green coffee market represents the fastest growing area of the
industry, as the number of gourmet coffee houses have been increasing in all
areas of the United States. The growth in specialty coffee sales has created a
marketplace for higher quality and differentiated products which can be priced
at a premium in the


                                       5
<PAGE>

marketplace. As the largest roaster/dealer of green coffee on the East Coast, we
are favorably positioned to increase our specialty coffee sales. We are a
charter member of the Specialty Coffee Association of America and the largest
distributor of Swiss water processed decaffeinated coffees along the Eastern
seaboard. We have a 10-year relationship with our largest wholesale green coffee
customer, Green Mountain Coffee Roasters (Nasdaq: GMCR). We believe that these
relationships and our focus on selling green coffee on a wholesale basis has
enabled us to participate in the growth of the specialty coffee market while
mitigating the risks associated with the competitive specialty retail coffee
environment.

      We currently have relationships with approximately 225 wholesale green
coffee customers, including coffee houses, single store operators, mall coffee
stores and mail order sellers. We sell green coffee beans to small roasters and
coffee shop operators located throughout the United States. We carry over 50
different varieties of green coffee beans. Green gourmet coffee beans are sold
unroasted, direct from warehouses to the small roasters and gourmet coffee shop
operators which then roast the beans themselves. We sell from as little as one
bag (132 pounds) to a full truckload (44,000 pounds) depending on the size and
needs of the customer. We believe that we can increase sales in the wholesale
green coffee segment of the coffee market without venturing into the already
competitive retail specialty coffee environment. We believe that we can be as
profitable or more profitable than other major specialty roasters by selling
coffee "one bag at a time" rather than "one cup at a time."

      In fiscal 2002, wholesales of green coffee beans accounted for
approximately 49% of our sales revenues compared to approximately 50% of
revenues came from such sales in fiscal 2001.

      We intend to capture additional market share in our existing distribution
channels by selectively adding or introducing new brand names and products
across multiple price points, including niche specialty blends, private label
"value" blends and mini-brick, filter packs and tea line products. We also
intend to add specialty instant coffees to our extensive line of instant coffee
products.

Raw Materials

      Coffee is a commodity traded on the Commodities and Futures Exchange.
Coffee prices are subject to fluctuation. Over the past five years, the average
price per pound of coffee beans ranged from approximately $.42 to $3.18. The
price for coffee beans on the commodities market as of October 31, 2002 was $.66
per pound.

      We purchase our green coffee from dealers located primarily within the
United States. The dealers supply us with coffee beans from many countries,
including Colombia, Mexico, Kenya, Indonesia, Brazil and Uganda, among others.
In fiscal 2002, substantially all of our purchases were from approximately ten
dealers. The ten vendors accounted for 89% of total product purchases. One of
these vendors, Rothfos Corporation, accounted for 33% of total purchases. This
vendor accounted for approximately $128,700 of our accounts payable at October
31, 2002. An employee of this vendor is one of our directors. Purchases from
that vendor totaled approximately $3,415,200 and $2,243,000 in 2002 and 2001,
respectively. We do not believe that the loss of any one vendor would have a
material adverse effect on our operations due to the availability of alternate
suppliers.

      The supply and price of coffee beans are subject to volatility and are
influenced by numerous factors which are beyond our control. Supply and price
can be affected by many factors such as weather, politics and economics in the
coffee exporting countries. Increases in the cost of coffee beans can, to a
certain extent, be passed on to our customers in the form of higher prices for
coffee beans and processed coffee. However, there can be no assurance that we
will be successful in passing coffee price increases to customers without losses
in sales volume or margin. Drastic or prolonged increases in coffee prices could
also adversely impact our business as it could lead to a decline in overall
consumption of coffee.


                                       6
<PAGE>

Similarly, rapid decreases in the cost of coffee beans could force us to lower
our sales prices before realizing cost reductions in our purchases. In addition,
a worldwide supply shortage of gourmet coffee beans could have an adverse impact
on us.

      Gourmet green coffee, unlike most coffee, does not trade directly to
commodities markets. Instead, it tends to trade on a negotiated basis at a
substantial premium over commodity coffee pricing, depending on the origin,
supply and demand at the time of purchase.

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

Trademarks and Domain Names

      We hold trademarks, registered with the United States Office of Patent and
Trademark for all five of our proprietary coffee brands. Trademark registrations
are subject to periodic renewal and we anticipate maintaining our registrations.
We believe that our brands are recognizable in the marketplace and that brand
recognition is important to the success of our branded coffee business.

Customers

      We sell our private label and our branded coffee to several prominent
wholesalers, including Supervalu, Nash Finch and Topco/Shurfine. Sales to
Supervalu amounted to 17% and 21% of our net sales for the year ended October
31, 2002 and the year ended October 31, 2001, respectively. Sales to these three
companies in the aggregate accounted for approximately 27% and 31% of our total
net sales for these periods, respectively. Sales of green coffee beans to Green
Mountain Coffee Roasters accounted for approximately 18% and 17% of our total
sales for the year ended October 31, 2002 and the year ended October 31, 2001,
respectively.

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

      Although our agreements with wholesale customers generally contain only
pricing terms, our contract with Supervalu also contains minimum and maximum
purchase obligations at fixed prices. Because our profits on a fixed-price
contract could decline if coffee prices increased, we began to acquire futures
contracts with longer terms (generally three to four months) primarily for the
purpose of guaranteeing an adequate supply of green coffee at favorable prices
beginning in the latter half of fiscal 2000 and continuing through fiscal 2001
and fiscal 2002. The use of these derivative financial instruments has enabled
us to mitigate the effect of changing prices although we generally remain
exposed to loss when prices surge significantly in a short period of time and
remain at higher levels, preventing us from obtaining inventory at favorable
prices. In addition, during fiscal 2001 and fiscal 2002, the historically low
price of coffee allowed us to replace our existing inventory with cheaper new
inventory, locking in additional margins on previously contracted business. We
believe that our more favorable inventory position will allow us to increase its
sales and margins if coffee prices begin to rise.

Marketing

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

      For our private label and brand coffees, we will, from time to time in
conjunction with retailers and with wholesalers, conduct in-store promotions,
such as product demonstrations, coupons, price reductions and two-for-one sales.


                                       7
<PAGE>

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

      We evaluate opportunities for growth consistent with our business
objectives. We recently established relationships with additional independent
sales brokers to market our products in the western United States, an area of
the country where we have historically not marketed and sold our coffee. In
addition, we have targeted the Latin American consumer market which is the
fastest growing demographic in the coffee market. According to the Strategy
Research Corporation 2000 U.S. Hispanic Market Study, Hispanic coffee drinkers
in the United States consume up to four times more coffee than other
non-Hispanic coffee drinkers and tend to be more brand loyal than other coffee
drinkers. We are currently negotiating with third-party brand managers that will
focus exclusively on developing sales of our ethnic espresso brands.

      We plan to expand into the food service business to develop a new
distribution channel for our products. Since 2001, we have hired two new
full-time salespersons to market our upscale restaurant and Colombian coffee
brands to hotels, restaurants, office coffee services companies and other food
service retailers.

      We intend to capture additional market share in our existing distribution
channels by selectively adding or introducing new brand names and products
across multiple price points, including niche specialty blends, private label
"value" blends and mini-brick, filter packs, instant cappuccinos and tea line
products. We also intend to add specialty instant coffees to our extensive line
of instant coffee products.

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

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

Competition

      The coffee market is highly competitive. We compete with other suppliers
and distributors of green coffee beans, whole bean coffees and roasted coffees.
Our whole bean coffees compete directly against specialty coffees sold at retail
through supermarkets and a growing number of specialty coffee stores. Until
1991, we sold our coffee products primarily in the northeastern United States.
Since that time, through our commitment to quality and customer service,
management expertise and the use of a network of independent coffee brokers, we
have successfully expanded our sales westward throughout the United States to
customers based in Illinois, Minnesota and Missouri, amongst others, especially
in private label coffee and wholesale green coffee sales. Using the same
commitment to quality and customer service, we plan to expand our sales of
branded coffee products throughout the United States.


                                       8
<PAGE>

We believe, however, that we compete primarily across product lines and that
competition in regions in which we do not currently have significant market
presence does not differ significantly from competition in those markets in
which we currently do business.

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

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

      Private Label Competition. There are approximately four major producers of
coffee for private label sale in the United States. Many other companies produce
coffee for sale on a regional basis. Our main competitors are Kroger and the
coffee division of Sara Lee. Both Kroger and Sara Lee are larger and have more
financing and resources than we do and therefore are able to devote more
resources to product development and marketing. However, because Kroger owns the
stores in which it sells coffee and therefore competes directly with potential
purchasers of its private label coffee, many customers will not purchase private
label coffee from Kroger.

      We believe that we remain competitive by providing a high level of quality
and customer service. This service includes ensuring that the coffee produced
for each label maintains a consistent taste and delivering the coffee on time in
the proper quantities. We also provide our private label customers with
information on the coffee market on a regular basis. Private label coffee also
competes with all of the branded coffee on the market. Sara Lee also produces
branded coffees which compete directly with their private label products.

      Wholesale Green Coffee Competition. There are many green coffee dealers
throughout the United States. Many of these dealers have greater financial
resources than us. However, we believe that we have both the knowledge and the
capability to assist small specialty gourmet coffee roasters with developing and
growing their business. Because we are also a roaster as well as a seller of
green coffee, we can provide our roasting experience as a value added service to
our gourmet roaster customers. While other coffee merchants may be able to offer
a lower price for coffee beans, we market ourselves as a value-added supplier to
small roasters, with the ability to help them market their specialty coffee
products


                                       9
<PAGE>

and develop a customer base. The assistance we provide our customers includes
training, coffee blending and market identification. Because the gourmet green
coffee beans are sold unroasted to small coffee shops and roasters that market
their products to local gourmet customers, we do not believe that our gourmet
green coffee customers compete with our private label or branded coffee lines of
business.

Government Regulation

      Our coffee roasting operations are subject to various governmental laws,
regulations, and licenses relating to customs, health and safety, building and
land use, and environmental protection. Our roasting facility is subject to
state and local air-quality and emissions regulation. If we encounter
difficulties in obtaining any necessary licenses or complying with these laws
and regulations, then our product offerings could be limited.

      We believe that we are in compliance in all material respects with all
such laws and regulations and that we have obtained all material licenses and
permits that are required for the operation of our business. We are not aware of
any environmental regulations that have or that we believe will have a material
adverse effect on our operations.

Employees

      We have 33 full-time employees, 25 of whom are employed in the areas of
coffee roasting, blending and packaging and seven of whom are in administration
and sales. None of our employees are represented by unions or collective
bargaining agreements. Our management believes that we maintain a good working
relationship with our employees. To supplement our internal sales staff, we
sometimes use independent national and regional sales brokers who work on a
commission basis.

ITEM 2. PROPERTIES

      We are headquartered at 4401 First Avenue, Brooklyn, New York where we own
the land and an approximately 15,000 square foot building. The building houses
our executive offices, as well as our plant where we roast, blend and package
our coffee. We believe our headquarters are in good condition and have adequate
insurance coverage.

      We also lease a 7,500 square foot warehouse located at 4425A First Avenue
in Brooklyn from T & O Management. T & O Management is not affiliated with us or
any of our officers, directors or shareholders. We will pay annual rent of
$50,076 until August 31, 2003 and will pay annual rent of $53,582 from September
1, 2003 until the expiration of the lease on August 31, 2004.

      We also use a variety of independent, bonded commercial warehouses to
store our green coffee beans.

      Our management believes that our facilities are adequate for our current
operations and for our contemplated operations in the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

      In the ordinary course of its business, we are a party to litigation
involving our operations. We do not believe that the outcome of any current
litigation will have a material adverse effect upon our business, financial
condition or results of operations.


                                       10
<PAGE>

      On July 1, 2002, Juemin Chu, Rose-Marie Fox, and Joel Schonfeld, Esq.,
three of our shareholders, filed a complaint against Andrew Gordon, President,
Chief Executive Officer, Treasurer and a director, David Gordon, Executive Vice
President, Secretary and a director and Gerard DeCapua, a director, in the
Supreme Court of the State of New York, Kings County, styled JUEMIN CHU,
ROSE-MARIE FOX AND JOEL SCHONFELD, ESQ. v. ANDREW GORDON, DAVID GORDON AND
GERARD DECAPUA. The plaintiffs, who invested an aggregate of $1,500 in our
predecessor company, Transpacific International Group Corp., alleged
unreasonable restrictions on the transfer of shares, breach of contract and
fraud relating to the defendants' refusal to register our common stock under the
Securities Exchange Act of 1934, as amended, to establish a public market for
our common stock. The lawsuit sought to compel the defendants to register our
common stock under the Securities Exchange Act of 1934, as amended, and
establish a public market for our common stock and to pay money damages in the
amount of $750,000, together with unspecified interest, costs and disbursements.
The defendants filed a motion to dismiss the lawsuit on July 29, 2002. On
December 10, 2002, the motion to dismiss was granted and the complaint was
dismissed without prejudice. We and the defendants believe that the lawsuit was
meritless.

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

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

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      Our common stock is not quoted or listed on any quotation system or
market. No firm makes a market for the common stock. We have applied to list our
common stock on the American Stock Exchange under the symbol "JVA." The number
of registered holders of our common stock at October 31, 2002 was 472.

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

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

Cautionary Note on Forward Looking Statements

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

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


                                       11
<PAGE>

      o     fluctuations in the supply of coffee beans;

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

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

      o     our ability to attract and retain customers;

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

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

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

      o     our ability to obtain additional financing; and

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

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

Critical Accounting Policies and Estimates

      The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Estimates are used
for, but not limited to, the accounting for the allowance for doubtful accounts,
inventories, income taxes and loss contingencies. Management bases its estimates
on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances. Actual results could differ from these
estimates under different assumptions or conditions.

      We believe the following critical accounting policies, among others, may
be impacted significantly by judgment, assumptions and estimates used in the
preparation of the financial statements:

      o     We recognize revenue in accordance with Securities and Exchange
            Commission Staff Accounting Bulletin No. 101, "Revenue Recognition
            in Financial Statements" ("SAB 101"). Under SAB 101, revenue is
            recognized at the point of passage to the customer of title and risk
            of loss, there is persuasive evidence of an arrangement, the sales
            price is determinable, and collection of the resulting receivable is
            reasonably assured. We generally recognize revenue at the time of
            shipment. Sales are reflected net of discounts and returns.

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


                                       12
<PAGE>

            customers' credit worthiness and/or there is an increase in the
            length of time that the receivables are past due greater than the
            historical assumptions used, additional allowances may be required.

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

      o     We account for income taxes in accordance with Statement of
            Financial Accounting Standards No. 109, "Accounting for Income
            Taxes." Under SFAS No. 109, deferred tax assets and liabilities are
            determined based on the liabilities, using enacted tax rates in
            effect for the year in which the differences are expected to
            reverse. Deferred tax assets are reflected on the balance sheet when
            it is determined that it is more likely than not that the asset will
            be realized.

Year Ended October 31, 2002 (Fiscal 2002) Compared to the Year Ended October 31,
2001 (Fiscal 2001)

      Net sales totaled $17,432,742 for the year ended October 31, 2002, a
decrease of $2,893,978 or 14.2% from $20,326,720 for the year ended October 31,
2001. The decrease in net sales reflects the low level of the price of coffee
and a reduction in coffee pounds sold from 18.5 million pounds in 2001 to 16.1
million pounds in 2002. The decrease in pounds of coffee sold is the result of
aggressive pricing practices of national brands that increased market share
compared to private label competitors for the 2002 fiscal year. The decline in
pounds of coffee sold was offset by a 53% increase in sales to food service
business resulting from our hiring of two full-time salespersons to market our
upscale brands to hotels, restaurants, office coffee service companies and other
food service retailers.

      The number of our customers in the gourmet green coffee area grew
approximately 12.5% to 225 during the year ended October 31, 2002. These
customers are predominately independent gourmet/specialty roasters, some of whom
own their own retail outlets. Sales to new customers in this area historically
start slowly because many of these companies are start-up ventures. Since
management believes that the gourmet green coffee area is the fastest growing
segment of the coffee market, we believe that our customer base and sales will
expand in this area. We also believe that historically low coffee prices will
continue to encourage consumers to purchase higher quality gourmet coffee
relative to supermarket brands.

      Our sales prices decreased steadily throughout fiscal 2002 due to the
decline in the price of green coffee. Commencing in late 1998, the purchase
price of green coffee began a decline that, with the exception of brief price
surges, continued through to the end of 2002. Declines in green coffee purchase
prices eventually led to declines in selling prices. Sales prices of products
which use commodity coffee react fairly quickly to changes in green coffee
purchase prices. Gourmet green coffee sales prices tend to react more slowly to
changes in purchase prices because demand for gourmet coffee is less price
sensitive. We also experienced some pricing pressure in the private label area
as national brands cut their prices in order to increase market share. The
decrease in national brand prices made private label coffee less attractive to
consumers compared to these national brands. However, the price of green coffee
has begun to increase and national brands have recently increased their prices
in response. Based on this trend, we believe that pricing pressure will decrease
in fiscal 2003.


                                       13
<PAGE>

      Cost of sales for the year ended October 31, 2002 was $12,452,713, or
71.4% of net sales, as compared to $16,065,035, or 79% of net sales for the year
ended October 31, 2001. Cost of sales consists primarily of the cost of green
coffee and packaging materials and realized and unrealized gains or losses on
hedging activity. The decrease in cost of sales primarily was attributable to
the decline in green coffee purchase prices. As the price of coffee is cyclical
and volatile and subject to many factors, including weather, politics and
economics, we are unable to predict the purchase price of green coffee for
fiscal 2003. As discussed above, although our agreements with wholesale
customers generally contain only pricing terms, our contract with a major
customer also contains minimum and maximum purchase obligations at fixed prices.
Because our profits on a fixed-price contract could decline if coffee prices
increased, we began to acquire futures contracts with longer terms (generally
three to four months) primarily for the purpose of guaranteeing an adequate
supply of green coffee at favorable prices beginning in the latter half of
fiscal 2000 and continuing through fiscal 2001 and fiscal 2002. The use of these
derivative financial instruments has enabled us to mitigate the effect of
changing prices although we generally remain exposed to loss when prices surge
significantly in a short period of time and remain at higher levels, preventing
us from obtaining inventory at favorable prices. In addition, during fiscal 2001
and fiscal 2002, the historically low price of coffee allowed us to replace our
existing inventory with cheaper new inventory, locking in additional margins on
previously contracted business. We believe that our more favorable inventory
position will allow us to increase our sales and margins if coffee prices begin
to rise.

      Our gross profit in fiscal 2002 was $4,980,029, an increase of $718,344,
or 16.9%, from $4,261,685 for the year ended October 31, 2001. Gross profit as a
percentage of net sales increased by 7.6% to 28.6% in fiscal 2002 from 21% in
fiscal 2001. Margins improved primarily due to lower inventory costs as a result
of the overall decline in green coffee purchase prices. Margins were
particularly favorable in gourmet green coffee sales, as pricing in this area
decreased more slowly relative to the decrease in green coffee purchase prices.
As discussed above, we believe that our increased inventory position will allow
us to increase our sales and margins if coffee prices begin to rise.

      Total operating expenses increased $342,848, or 10.8%, to $3,504,764 in
fiscal 2002 from $3,161,916 in fiscal 2001 due to increases in selling, general
and administrative expenses, including professional fees, and officers'
salaries. Officers' salaries were $443,222 in fiscal 2002, an increase of
$73,222 from $370,000 for the year ended October 31, 2001. Selling and
administrative expense increased $269,626 during the period. We expect
advertising and promotional expenses to increase in the future as we participate
in national and regional shows to promote our brands and our private label
products. As a percentage of net sales, total operating expenses increased 4.5%
from 15.6% for the year ended October 31, 2001 to 20.1% for the year ended
October 31, 2002. This change reflects the fact that many components of selling
and administrative expenses, including shipping costs, remained flat as the
dollar value of sales decreased.

      Interest expense decreased $166,630, or 48.0%, from $347,308 for the year
ended October 31, 2001 to $180,678 for the year ended October 31, 2002. The
decrease was attributable to a decline in the average borrowings outstanding on
our line of credit with Wells Fargo Business Credit and on the term loan. The
decrease is also attributable to lower interest rates on outstanding borrowings.
Rates of interest on our outstanding borrowings are tied to the prime rate. As
the prime rate declined from the prior period, the rate of interest payable on
our outstanding borrowings also declined. See "--Liquidity and Capital
Resources."

      We had income before taxes of $1,313,095 in fiscal 2002 compared to income
before taxes of $830,703. The increase was attributable primarily to the
increase in gross profit.

      Our provision for income taxes for the year ended October 31, 2002 totaled
$557,720 compared to $312,825 for the year ended October 31, 2001. The increase
was attributable to the increase in income before taxes for the 2002 fiscal
year. As a result, we had net income of $755,375, or $.19 per share, in fiscal
2002 compared to net income of $517,878, or $.13 per share, in fiscal 2001.

Liquidity and Capital Resources

      As of October 31, 2002, we had working capital of approximately
$1,729,000, which represented a $51,000 increase from our working capital of
approximately $1,678,000 as of October 31, 2001, and total stockholders' equity
of $1,498,397, which increased by $755,375 from our total stockholders' equity


                                       14
<PAGE>

of $743,022 as of October 31, 2001. Our working capital increased primarily as a
result of an increase in the amount due from broker at October 31, 2002 compared
to October 31, 2001.

      We have a credit facility with Wells Fargo Business Credit. The credit
facility provides for a revolving line of credit of up to $5,000,000 based on
eligible trade accounts receivable and inventories and a term loan of up to
$600,000 ($750,000 as of October 1, 2002) based on eligible equipment. The line
of credit provides for borrowings of up to 85% of our eligible trade accounts
receivable and 60% of its eligible inventories. Interest on the line of credit
was payable monthly at the prime rate plus .5% (an effective rate of 5.25% at
October 31, 2002). Interest on the term loan was payable monthly at the prime
rate plus .75% (an effective rate of 5.50% at October 31, 2002). On October 1,
2002, we extended our credit facility for an additional two years to November
20, 2004 at lower interest rates. Effective November 21, 2002, interest on the
line of credit will be payable monthly at the prime rate plus .25% (an effective
rate of 4.50 at December 31, 2002) and interest on the term loan will be payable
monthly at the prime rate plus .50% (an effective rate of 4.75% at December 31,
2002). Principal payments on the term loan are payable monthly at $7,000 as of
November 1, 2002. Andrew Gordon and David Gordon, two of our directors and
officers, each have guaranteed borrowings under the credit facility up to
$500,000.

      As of October 31, 2002, the line of credit had an outstanding balance of
$1,321,373 as compared to an outstanding balance of $2,339,216 at October 31,
2001. The outstanding balance under the term loan was $420,000 as of October 31,
2002, and was $500,000 at October 31, 2001. The outstanding balance under the
line of credit and a portion of the outstanding balance under the term loan were
classified as short-term liabilities in our October 31, 2002 balance sheet based
on the amended terms of the credit facility whereby we may either defer payments
until, or make installment payments, through November 20, 2002. This amount is
reflected as short-term since the agreement was to expire in November 2002, but
will be classified as long-term debt in future statements since the line of
credit has been extended. We were in compliance with all required financial
covenants at October 31, 2002.

      We had loans payable to our stockholders, all of whom are members of the
Gordon family, of $92,570 at October 31, 2002. The loans are due on demand and
currently bear interest at a rate of 10% per year. Effective November 1, 2002,
the loans bear interest at 6.0% per year. We borrow from our stockholders from
time-to-time to supplement short-term working capital needs. The stockholders
are under no obligation to make such loans.

      In fiscal 2002, our operating activities provided net cash of
approximately $823,000 as compared to fiscal 2001 when net cash provided by
operating activities was approximately $250,000. The improved cash flow from
operations in fiscal 2002 was primarily due to the increase in net income and to
a $1,118,364 decrease in the outlay of cash to pay down accounts payable and
accrued expenses in 2002 as compared to 2001.

      During the year ended October 31, 2002, we used $435,538 of our cash
resources to purchase property and equipment. We purchased a state-of-the-art
double line brick pack machine at a cost of approximately $400,000 in fiscal
2002. The machine will allow us to increase our production capacity and
diversify our product mix. In addition, we lease machinery and equipment under a
capital lease which expires in July 2005. The interest rate on the capital lease
is 8-1/3% per annum. Under the terms of the capital lease, our minimum annual
future lease payments are $141,249, $141,249 and $94,165 for the years ended
October 31, 2003, 2004 and 2005, respectively. Management does not expect to
incur other significant capital expenditures in fiscal 2003.

      We also used $543,768 of net cash in financing activities in the year
ended October 31, 2002, including a net of $1,017,843 to reduce our bank line of
credit, $80,000 in net payments on the term loan and $68,410 in the repayment of
principal and interest on loans to related parties. We also received


                                       15
<PAGE>

$383,764 in net cash under the capital lease and benefited from a decrease in
cash and cash equivalents restricted under our line of credit and mortgage note
in the amount of $279,518.

      We expect to fund our operations, including paying our liabilities,
funding capital expenditures and making required payments on our debts, in
fiscal 2003 through cash provided by operating activities and by drawing on our
credit facilities. We expect that we will generate sufficient cash to continue
our business for the next twelve months. In addition, an increase in eligible
accounts receivable and inventory would permit us to make additional borrowings
under our line of credit. We also believe we could, if necessary, obtain
additional loans by mortgaging our headquarters.

Market Risks

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

Interest Rate Risks

      We are subject to market risk from exposure to fluctuations in interest
rates. At October 31, 2002, our debt consisted of approximately $92,570 of fixed
rate debt and approximately $1,741,373 of variable rate debt under our revolving
line of credit and term loan. Interest on the variable rate debt was payable
primarily at 5.25% (or .5% above the prime rate) above the prime rate, with a
portion of the variable rate debt payable at 5.50% (or .75% above the prime
rate) above the prime rate at October 31, 2002. We do not expect changes in
interest rates to have a material effect on results of operations or cash flows
in fiscal 2003, although there can be no assurance that interest rates will not
significantly change.

Commodity Price Risks

      The supply and price of coffee beans are subject to volatility and are
influenced by numerous factors which are beyond our control. Historically, we
have used short-term coffee futures and options contracts primarily for the
purpose of partially hedging and minimizing the effects of changing green coffee
prices, as further explained in Note 2 of the notes to financial statements in
this annual report. In addition, during the latter half of fiscal 2000, we began
to acquire futures contracts with longer terms (generally three to four months)
primarily for the purpose of guaranteeing an adequate supply of green coffee.
The use of these derivative financial instruments has enabled us to mitigate the
effect of changing prices although it generally remains exposed to loss when
prices decline significantly in a short period of time and remain at higher
levels, preventing us from obtaining inventory at favorable prices. We generally
have been able to pass green coffee price increases through to customers,
thereby maintaining our gross profits. However, we cannot predict whether we
will be able to pass inventory price increases through to our customers in the
future.

      At October 31, 2002, we held 75 options (generally with terms of two
months or less) covering an aggregate of 2,812,500 pounds of green coffee beans
at a price of $.60 to $.65 per pound. The fair market value of these options,
which was obtained from a major financial institution, was approximately
$145,000 at October 31, 2002.

      We also hold futures contracts with longer terms (generally three to four
months) primarily for the purpose of guaranteeing an adequate supply of green
coffee. At October 31, 2002, we held 70 futures contracts for the purchase of
2,625,000 pounds of coffee at an average price of $.62 per pound for various
December 2002 contracts. The market price of coffee applicable to such contracts
was $.66 per pound at that date.


                                       16
<PAGE>

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      See Item 13 herein.

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

      None.

                                    PART III

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

      Set forth below is information concerning our directors and executive
officers. Our board of directors currently consists of six directors. Directors
are elected by a plurality of the votes cast at our annual meeting of
stockholders. Once elected, each director serves until the next annual meeting
of stockholders and until his or her successor is duly elected and qualified, or
until his or her earlier death, resignation or removal. Officers are appointed
by the directors, and, once appointed, each officer serves until his or her
successor is duly appointed, or until his or her earlier death, resignation or
removal.

                                          Director
            Name                 Age(1)    Since             Position
----------------------------     ------   --------    ------------------------
Andrew Gordon...............      41      1981        Chief Executive Officer,
                                                      President, Treasurer and
                                                      Director
David Gordon................      38      1983        Executive Vice President,
                                                      Secretary and Director
Jorge Arbelaez..............      58      2001        Director
Gerard DeCapua..............      41      1997        Director
Daniel Dwyer................      46      1998        Director
Sterling Gordon.............      70      1971        Director

----------
(1)   At December 31, 2002.

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

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

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

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

      Daniel Dwyer has been a senior coffee trader at Rothfos Corporation, a
green coffee bean supplier, since 1995. Mr. Dwyer is responsible for our
account. We paid Rothfos approximately


                                       17
<PAGE>

$3,415,200 for green coffee purchases in fiscal 2002 and expect to pay it a
similar amount in fiscal 2003. All purchases are made on arms' length terms.

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

      We did not have any standing committees in 2002. However, we plan to
establish the following committees in 2003:

NOMINATING/CORPORATE               The Nominating/Corporate Governance Committee
GOVERNANCE COMMITTEE               formulates our corporate governance
                                   guidelines and determines the qualification
                                   and independence of directors and committee
                                   members. The committee also recommends
                                   nominees for election as directors and review
                                   if any stockholder(s) nominations comply with
                                   the notice procedures set forth in our
                                   Bylaws.

COMPENSATION COMMITTEE             The Compensation Committee provides advice
                                   and recommendations to the Board in areas of
                                   employee salaries and benefits and directors'
                                   compensation.


AUDIT COMMITTEE                    The Audit Committee will oversee and monitor
                                   our financial reporting process and internal
                                   control system, review and evaluate the audit
                                   performed by our outside auditors and report
                                   any substantive issues found during the audit
                                   to the Board. The Audit Committee shall be
                                   directly responsible for the appointment,
                                   compensation and oversight of the work of our
                                   independent auditors. The committee will also
                                   review and approve all transactions with
                                   affiliated parties.


                                       18
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

      The following table sets forth certain compensation information for our
chief executive officer and each other executive officer whose salary and bonus
compensation exceeded $100,000 for the fiscal year ended October 31, 2002.

                           Summary Compensation Table

                                                     Annual Compensation
                                             -----------------------------------
                                                                     All Other
Name and                         Fiscal      Salary       Bonus     Compensation
Principal Position                Year         ($)       ($) (1)      ($) (2)
------------------------         ------      -------     -------    ------------
Andrew Gordon                     2002       190,254      49,500           --
Chief Executive Officer
  and President                   2001       175,000      30,000       19,838
                                  2000       155,000          --       13,671

David Gordon                      2002       153,467      49,500           --
Executive Vice
  President - Operations          2001       140,000      25,000        7,311
                                  2000       125,000      40,000        6,919

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

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

      Our Board of Directors did not have a compensation committee in fiscal
2002. During that year, salaries and bonuses were determined by the Board of
Directors. Andrew Gordon's base salary for fiscal 2003 is $235,000. David
Gordon's base salary for fiscal 2003 is $199,000. Once established, the
compensation committee will determine the salaries and bonuses of Andrew Gordon
and David Gordon.

Stock Option Plan

      We have a stock option plan, The Coffee Holding Co., Inc. 1998 Stock
Option Plan, under which non-qualified and incentive stock options to purchase
shares of common stock may be granted to our directors, officers and other key
employees and consultants. The plan was adopted by our Board of Directors and
approved by our stockholders on February 10, 1998. We have reserved 2,000,000
shares of our common stock for issuance under the plan, subject to adjustment
for stock splits, stock dividends, reorganizations, mergers, recapitalizations
or other capital adjustments. The plan is administered by our Board of Directors
which may delegate our powers to a committee of the board. No options may be
granted after February 10, 2008. The compensation committee will determine, at
the time of grant, the purchase price of shares issuable pursuant to exercise of
stock options; provided that the purchase price of a share of common stock under
incentive stock options shall not be less than the fair market value of a share
on the date the option is granted. Unless earlier terminated due to termination
of employment or death or disability of the optionee, each stock option shall
terminate no later than ten years from the date on which it is granted. Options
are transferable only by will or the laws of descent and distribution. No
options have been granted under the plan.

Compensation of Directors

      Directors do not receive any compensation for their services. They are,
however, reimbursed for travel expenses and other out-of-pocket costs incurred
in connection with attendance at board of directors and committee meetings.


                                       19
<PAGE>

ITEM 11. SECURITY STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth information regarding ownership of shares
of our common stock, as of October 31, 2002, by each person known to be the
owner of 5% or more of our common stock, by each person who is a director or
executive officer and by all directors and executive officers as a group. Except
as otherwise indicated, each person and each group shown in the table has sole
voting and investment power with respect to the shares of common stock
indicated. For purposes of the table below, in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, a person is deemed to be the
beneficial owner, for purposes of any shares of common stock: (1) over which he
or she has or shares, directly or indirectly, voting or investment power; or (2)
of which he or she has the right to acquire beneficial ownership at any time
within 60 days after October 31, 2002. As used in this annual report, "voting
power" is the power to vote or direct the voting of shares and "investment
power" includes the power to dispose or direct the disposition of shares. Common
stock beneficially owned and percentage ownership were based on 3,999,650 shares
outstanding. The address of each beneficial owner is c/o The Coffee Holding Co.,
Inc., 4401 First Avenue, Brooklyn, New York 11232-0005.

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

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

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

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

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

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

      At October 31, 2002, we had loans payable to certain of our stockholders
and directors and officers in the aggregate principal amount of $92,570.

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


                                       20
<PAGE>

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

      Daniel Dwyer, a director, is a senior coffee trader for Rothfos
Corporation, a coffee trading company. Mr. Dwyer is responsible for our account.
We paid Rothfos approximately $3,415,200 for green coffee purchases in fiscal
2002 and expect to pay it a similar amount in fiscal 2003. All purchases are
made on arms' length terms.

                                    PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

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

      1.    Financial Statements:

            -     Index to Financial Statements

            -     Report of Independent Public Accountants.

            -     Balance sheet as of October 31, 2002.

            -     Statements of Operations for the Years Ended October 31, 2002
                  and 2001.

            -     Statements of Changes in Stockholders' Equity for the Years
                  Ended October 31, 2002 and 2001.

            -     Statements of Cash Flows for the Years Ended October 31, 2002
                  and 2001.

            -     Notes to Financial Statements.

      (b)   Form 8-K.

            None.


                                       21
<PAGE>

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

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

    2.1     Agreement and Plan of Merger by and Among Transpacific International
            Group Corp. and Coffee Holding Co., Inc. (incorporated herein by
            reference to Exhibit 2 to Post-Effective Amendment No. 1 to the
            Registration Statement on Form SB-2 (file No. 333-00588-NY) as filed
            with the Commission on November 10, 1997).

    3.1     Articles of Incorporation of Coffee Holding, as amended.

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

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

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

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

   10.2     1998 Stock Option Plan (incorporated herein by reference to Exhibit
            10.3 to Coffee Holding's Annual Report on Form 10-K for the fiscal
            year ended October 31, 2000).

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

   10.4     First Amendment to Loan and Security Agreement dated as of May 22,
            1998 between Coffee Holding and NationsCredit Commercial Corporation
            (incorporated herein by reference to Exhibit 10.3 to Coffee
            Holding's Annual Report on Form 10-K for the fiscal year ended
            October 31, 2000).

   10.5     Second Amendment dated as of November 29, 2000 to Loan and Security
            Agreement between Coffee Holding and Wells Fargo Business Credit,
            Inc., as assignee (incorporated herein by reference to Exhibit 10.3
            to Coffee Holding's Annual Report on Form 10-K for the fiscal year
            ended October 31, 2000).

   10.6     Term Note dated as of November 29, 2000 made by Coffee Holding in
            favor of Wells Fargo Business Credit, Inc., in the principal amount
            of $600,000 (incorporated herein by reference to Exhibit 10.3 to
            Coffee Holding's Annual Report on Form 10-K for the fiscal year
            ended October 31, 2000).

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

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

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

  10.10     Sales contract with Supervalu and Cub Foods.

  10.11     Sales contract with Shurfine Central.


                                       22
<PAGE>

   99.1     Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
            2002.

ITEM 14. Controls and Procedures

      During the 90-day period prior to the filing date of this report,
management, including the Company's principal executive officer and principal
accounting officer, evaluated the effectiveness of the design and operation of
the Company's disclosure controls and procedures. Based upon, and as of the date
of that evaluation, the President, Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures were effective, in
all material respects, to ensure that information required to be disclosed in
the reports the Company files and submits under the Exchange Act is recorded,
processed, summarized and reported as and when required.

      There have been no significant changes in the Company's internal controls
or in other factors which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation. There were no
significant deficiencies or material weaknesses identified in the evaluation and
therefore, no corrective actions were taken.


                                       23
<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

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on February 12, 2003 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 executive officer and
     Andrew Gordon                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/ Jorge Arbelaez           Director
-------------------------------
     Jorge Arbelaez

     /s/ Sterling Gordon          Director
-------------------------------
     Sterling Gordon



                                       24
<PAGE>

                                 CERTIFICATIONS

      I, Andrew Gordon, certify that:

1.    I have reviewed this annual report on Form 10-KSB of Coffee Holding Co.,
      Inc.;

2.    Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this annual report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this annual
      report.

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      (a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this annual report is
      being prepared;

      (b) evaluated the effectiveness of the registrant's disclosure controls
      and procedures as of a date within 90 days prior to the filing date of
      this annual report (the "Evaluation Date"); and

      (c) presented in this annual report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of the registrant's board of directors (or persons performing
      the equivalent function):

      (a) all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

      (b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and

6.    The registrant's other certifying officers and I have indicated in this
      annual report whether or not there significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: February 12, 2003             /s/ Andrew Gordon
                                    -----------------------------------
                                    Andrew Gordon
                                    President and Chief Executive Officer
                                    (Principal Executive Officer and Principal
                                    Accounting Officer)


                                       25
<PAGE>

                            COFFEE HOLDING CO., INC.

                          INDEX TO FINANCIAL STATEMENTS

                                                                            PAGE
                                                                            ----

FINANCIAL STATEMENTS:

       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                    F-2

       BALANCE SHEET AS OF OCTOBER 31, 2002                                  F-3

       STATEMENTS OF OPERATIONS YEARS ENDED
         OCTOBER 31, 2002 AND 2001                                           F-4

       STATEMENTS OF CHANGES IN STOCKHOLDERS'
         EQUITY YEARS ENDED OCTOBER 31, 2002 AND 2001                        F-5

       STATEMENTS OF CASH FLOWS YEARS ENDED
         OCTOBER 31, 2002 AND 2001                                           F-6

       NOTES TO FINANCIAL STATEMENTS                                      F-7/16

                                      * * *


                                      F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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

We have audited the accompanying balance sheet of Coffee Holding Co., Inc. as of
October  31,  2002  and  the  related  statements  of  operations,   changes  in
stockholders'  equity  and cash  flows  for the two  years in the  period  ended
October 31, 2002.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the 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 financial  statements  referred to above present fairly, in
all material respects,  the financial position of Coffee Holding Co., Inc. as of
October 31, 2002 and its results of operations  and cash flows for the two years
in the period  ended  October 31,  2002,  in  conformity  accounting  principles
generally accepted in the United States of America.

                                       -------------------------------
                                       LAZAR LEVINE & FELIX, LLP

New York, New York
December 20, 2002


                                      F-2
<PAGE>

                            COFFEE HOLDING CO., INC.

                                  BALANCE SHEET
                                OCTOBER 31, 2002

                                   - ASSETS -

Current assets:
  Cash                                                                $   43,568
  Due from broker                                                        768,602
  Accounts receivable, net of allowance for
    doubtful accounts of $200,511                                      1,783,422
  Inventories                                                          1,418,144
  Prepaid expenses and other current assets                               83,267
  Deferred tax asset                                                     115,300
                                                                      ----------
    Total current assets                                               4,212,303
Property and equipment, at cost, net of
  accumulated depreciation of $2,694,400                               1,813,342
Deposits and other assets                                                 16,796
                                                                      ----------
                                                                      $6,042,441
                                                                      ==========
                    - LIABILITIES AND STOCKHOLDERS' EQUITY -

Current liabilities:
  Current portion of term loan                                        $   84,000
  Current portion of obligations under
    capital lease                                                        121,259
  Accounts payable and accrued expenses                                2,048,494
  Income taxes payable-current                                           229,540
                                                                      ----------
    Total current liabilities                                          2,483,293
Term loan, net of current portion                                        336,000
Obligations under capital lease, net of
  current portion                                                        221,708
Line of credit borrowings                                              1,321,373
Loans from related parties                                                92,570
Income taxes payable-deferred                                             89,100
                                                                      ----------
    Total liabilities                                                  4,544,044

Commitments and contingencies

Stockholders' equity:

  Preferred stock, par value $.001 per
    share; 10,000,000 shares authorized;
    none issued                                              --
  Common stock, par value $.001 per
    share; 30,000,000 shares authorized,
    3,999,650 shares issued
    and outstanding                                  $    4,000
  Additional paid-in capital                            867,887
  Retained earnings                                     626,510
                                                     ----------
    Total stockholders' equity                                         1,498,397
                                                                      ----------
                                                                      $6,042,441
                                                                      ==========

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


                                      F-3
<PAGE>

                            COFFEE HOLDING CO., INC.

                            STATEMENTS OF OPERATIONS
                      YEARS ENDED OCTOBER 31, 2002 AND 2001

                                                     2002            2001
                                                     ----            ----
Net sales                                         $17,432,742     $20,326,720

Cost of sales                                      12,452,713      16,065,035
                                                  -----------     -----------

Gross profit                                        4,980,029       4,261,685
                                                  -----------     -----------

Operating expenses:
  Selling, general and administrative               3,061,542       2,791,916
  Officers' salaries                                  443,222         370,000
                                                  -----------     -----------
    Totals                                          3,504,764       3,161,916
                                                  -----------     -----------

Income from operations                              1,475,265       1,099,769
                                                  -----------     -----------

Other income (expense):
  Interest income                                      18,508          31,242
  Other income                                             --          47,000
  Interest expense                                   (180,678)       (347,308)
                                                  -----------     -----------
    Totals                                           (162,170)       (269,066)
                                                  -----------     -----------

Income before income taxes                          1,313,095         830,703

Provision for income taxes                            557,720         312,825
                                                  -----------     -----------

Net income                                        $   755,375     $   517,878
                                                  ===========     ===========

Basic earnings per share                          $       .19     $       .13
                                                  ===========     ===========

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

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


                                      F-4
<PAGE>

                            COFFEE HOLDING CO., INC.

           STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                      YEARS ENDED OCTOBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                       Retained
                                                                         Additional    Earnings
                                                                          Paid - in   (Accumulated
                                                       Common Stock        Capital      Deficit)        Total
                                                    -------------------  -----------  ------------      -----
                                                      $.001 Par Value
                                                    -------------------
                                                     Number
                                                    of Shares    Amount
                                                    ---------    ------
<S>                                                 <C>          <C>       <C>         <C>           <C>
Balance, October 31, 2000 - As previously stated    3,999,650    $4,000    $743,985    $(522,841)    $  225,144

Prior Period Adjustment (Note 1)                           --        --     123,902     (123,902)            --
                                                    ---------    ------    --------    ---------     ----------

Balance, October 31, 2000 - As adjusted             3,999,650     4,000     867,887     (646,743)       225,144

Net income                                                 --        --          --      517,878        517,878
                                                    ---------    ------    --------    ---------     ----------

Balance, October 31, 2001                           3,999,650     4,000     867,887     (128,865)       743,022

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

Balance, October 31, 2002                           3,999,650    $4,000    $867,887    $ 626,510     $1,498,397
                                                    =========    ======    ========    =========     ==========
</TABLE>

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


                                      F-5
<PAGE>

                            COFFEE HOLDING CO., INC.

                            STATEMENTS OF CASH FLOWS
                      YEARS ENDED OCTOBER 31, 2002 AND 2001

                                                      2002              2001
                                                      ----              ----
Operating activities:
  Net income                                      $    755,375     $    517,878
  Adjustments to reconcile net income
    to net cash provided by operating
    activities:
    Depreciation and amortization                      270,994          262,004
    Bad debts                                               --           34,822
    Deferred taxes                                     (26,200)              --
    Changes in operating assets
      and liabilities:
      (Increase) in due from broker                   (494,037)        (136,010)
      Decrease in accounts receivable                  118,327          130,393
      (Increase) decrease in inventories               (66,994)         114,900
      (Increase) decrease in prepaid
        expenses and other current assets              (42,378)          27,693
      Increase (decrease) in accounts
        payable and accrued expenses                   301,128         (817,236)
      Increase in income taxes payable                   7,225          115,823
                                                  ------------     ------------
          Net cash provided by operating
            activities                                 823,440          250,267
                                                  ------------     ------------
Investing activities:
  Purchases of property and equipment                 (435,538)         (85,154)
                                                  ------------     ------------
Financing activities:
  Advances on term loan                                 40,000          407,885
  Principal payments on term loan                     (120,000)        (100,000)
  Decrease (increase) in cash and cash
    equivalents restricted under credit
    facility and mortgage note                         279,518          (18,480)
  Advances under bank line of credit                18,037,747       21,687,582
  Principal payments under bank line of credit     (19,055,590)     (21,966,068)
  Advances of obligations under capital leases         383,764               --
  Principal payments of obligations under
    capital leases                                     (40,797)         (46,161)
  Repayments of advances from related parties          (68,410)         (84,281)
                                                  ------------     ------------
          Net cash (used) in financing
            activities                                (543,768)        (119,523)
                                                  ------------     ------------
Net increase (decrease) in cash                       (155,866)          45,590
Cash, beginning of year                                199,434          153,844
                                                  ------------     ------------
Cash, end of year                                 $     43,568     $    199,434
                                                  ============     ============
Supplemental disclosure of cash flow data:
    Interest paid                                 $    145,969     $    309,463
                                                  ============     ============
    Income taxes paid                             $    494,669     $    194,931
                                                  ============     ============

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


                                      F-6
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2002 AND 2001

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."
      Accordingly,   the  historical   financial  statements  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 number of
      common shares of Transpacific  effectively  exchanged for common shares of
      Coffee.

      Prior period adjustment:

      Due  to the  above  merger,  the  Company's  status  as a  "Subchapter  S"
      Corporation  was  terminated  on  February  10,  1998.  The   accompanying
      financial  statements  reflect an adjustment that should have been made at
      that date aggregating  $123,902 which converts  undistributed  earnings to
      additional paid-in-capital.

Note 2 - Summary of significant accounting policies:

      Use of estimates:

      The  preparation  of financial  statements in conformity  with  accounting
      principles  generally  accepted in the United  States of America  requires
      management to make estimates and assumptions  that affect certain reported
      amounts and  disclosures.  Accordingly,  actual  results could differ from
      those estimates.


                                      F-7
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2002 AND 2001

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

      Cash equivalents:

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

      Inventories:

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

      Property and equipment:

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

      Hedging:

      The Company  uses options and futures  contracts  to  partially  hedge the
      effects of  fluctuations  in the price of green coffee beans.  Options and
      futures  contracts are marked to market with current  recognition of gains
      and losses on such  positions.  The Company  does not defer such gains and
      losses  since  its  positions  are not  considered  hedges  for  financial
      reporting  purposes.  The  Company's  accounting  for  options and futures
      contracts  may have the effect of  increasing  earnings  volatility in any
      particular period.

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

      At October 31, 2001, the Company held 165 options covering an aggregate of
      6,187,500  pounds of green  coffee  beans at prices  ranging from $.425 to
      $.45 per pound. The fair market value of these options, which was obtained
      from a major financial  institution,  was approximately $46,000 at October
      31, 2001.

      The Company acquires futures  contracts with longer terms (generally three
      to four  months)  primarily  for the purpose of  guaranteeing  an adequate
      supply of green coffee.  At October 31, 2002 and 2001, the Company held 70
      and 52  longer-term  futures  contracts  for the purchase of 2,625,000 and
      1,950,000  pounds  of  coffee  at an  average  price of $.62 and $.525 per
      pound,  respectively.  The  market  price  of  coffee  applicable  to such
      contracts  was $.66 and  $.439  per pound at  October  31,  2002 and 2001,
      respectively.

      The Company  historically  has had short term  contracts  with some of its
      customers  (generally  one to two  years in  duration).  The  Company  has
      agreements  with  three  of its  wholesale  customers  in  which it is the
      supplier at fixed  prices for lines of private  label ground  coffee.  The
      Company  is  the  exclusive  supplier  for  these  three  customers.   The
      agreements generally contain only pricing terms.


                                      F-8
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2002 AND 2001

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

      Hedging (Continued):

      Included in cost of sales and due from broker for the years ended  October
      31, 2002 and 2001, the Company  recorded  realized and unrealized gain and
      losses respectively, on these contracts as follows:

                                                   Years Ended October, 31
                                                   -----------------------
                                                    2002             2001
                                                   ------           ------
          Realized Gain and (losses)              $776,580       $(965,890)
          Unrealized Gain and (losses)               1,830        (183,731)

      Advertising:

      The Company  expenses the cost of advertising  and promotions as incurred.
      Advertising  costs charged to operations  totaled $109,751 and $193,791 in
      2002 and 2001 respectively.

      Income taxes:

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

      Stock options:

      In accordance with the provisions of Accounting  Principles  Board Opinion
      No. 25,  "Accounting  for Stock  Issued to  Employees,"  the Company  will
      recognize  compensation costs as a result of the issuance of stock options
      to  employees  based  on the  excess,  if any,  of the  fair  value of the
      underlying  stock at the date of  grant  or  award  (or at an  appropriate
      subsequent  measurement  date) over the amount the  employees  must pay to
      acquire  the  stock.  Therefore,  the  Company  will  not be  required  to
      recognize  compensation expense as a result of any grants of stock options
      to employees at an exercise  price that is  equivalent  to or greater than
      fair value. The Company will also make pro forma disclosures,  as required
      by Statement of Financial  Accounting  Standards No. 123,  "Accounting for
      Stock-Based Compensation" ("SFAS 123"), of net income or loss as if a fair
      value based method of accounting  for stock  options had been applied,  if
      such amounts differ materially from the historical amounts.


                                      F-9
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2002 AND 2001

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

      Earnings (loss) per share:

      The Company  presents "basic" and, if applicable,  "diluted"  earnings per
      common  share  pursuant  to  the  provisions  of  Statement  of  Financial
      Accounting  Standards  No.  128,  "Earnings  per Share"  ("SFAS  128") and
      certain other financial accounting  pronouncements.  Basic earnings (loss)
      per common  share are  calculated  by  dividing  net income or loss by the
      weighted average number of common shares  outstanding  during each period.
      The calculation of diluted earnings per common share is similar to that of
      basic earnings per common share,  except that the denominator is increased
      to include  the number of  additional  common  shares that would have been
      outstanding  if all  potentially  dilutive  common  shares,  such as those
      issuable  upon the  exercise  of stock  options,  were  issued  during the
      period.   Since  the  Company  had  no  potentially   dilutive  securities
      outstanding  in 2002 and 2001,  only  historical  basic earnings per share
      amounts are  presented in the  accompanying  statement of  operations  for
      those years.

      The weighted average common shares  outstanding used in the computation of
      basic  earnings  per  share in 2002 and 2001 was the  3,999,650  shares of
      common stock actually outstanding during those years.

      Fair value of financial instruments:

      The carrying amounts of cash and cash equivalents, accounts receivable and
      accounts payable  approximate fair value because of the short-term  nature
      of these instruments. Fair value estimates are made at a specific point in
      time, based on relevant market information about the financial  instrument
      when  available.  These  estimates  are  subjective  in nature and involve
      uncertainties and matters of significant judgment and therefore, cannot be
      determined  with  precision.  Changes in assumptions  could  significantly
      affect the estimates.

      Revenue recognition:

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

      Recent accounting pronouncements:

      In July 2001,  the  Financial  Accounting  Standards  Board (FASB)  issued
      Statement   of  Financial   Accounting   Standards   No.  141,   "Business
      Combinations" ("SFAS 141") and Statement of Financial Accounting Standards
      No. 142,  "Goodwill and Other  Intangible  Assets" ("SFAS 142").  SFAS 141
      requires all business  combinations to be accounted for using the purchase
      method  of  accounting  and is  effective  for all  business  combinations
      completed  after June 30, 2001.  This  standard does not have an impact on
      the Company's operating results and financial condition. SFAS 142 requires
      goodwill to be tested for  impairment  under  certain  circumstances,  and
      written-off  when  impaired,  rather  than  being  amortized  as  previous
      standards required.  Furthermore,  SFAS 142 required purchased  intangible
      assets to be  amortized  over their  estimated  useful  lives unless these
      lives are  determined to be  indefinite.  SFAS 142 is effective for fiscal
      years beginning after December 15 2001.


                                      F-10
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2001 AND 2000

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

      Recent accounting pronouncements (Continued):

      On October 3, 2001,  the FASB issued  Statement  of  Financial  Accounting
      Standards  No.  144,   "Accounting  for  the  Impairment  or  Disposal  of
      Long-Lived   Assets"  ("SFAS  144"),   that  is  applicable  to  financial
      statements  issued for fiscal years beginning after December 15, 2001. The
      FASB's new rules on asset impairment  supersede SFAS 121,  "Accounting for
      the  Impairment  of  Long-Lived  Assets  and for  Long-Lived  Assets to Be
      Disposed  Of," and portions of  Accounting  Principles  Board  Opinion 30,
      "Reporting  the Results of  Operations."  This standard  provides a single
      accounting model for long-lived assets to be disposed of and significantly
      changes  the  criteria  that would have to be met to  classify an asset as
      held-for-sale. Classification as held-for sale is an important distinction
      since such assets are not  depreciated and are stated at the lower of fair
      value and carrying  amount.  This Standard also requires  expected  future
      operating  losses from  discontinued  operations  to be  displayed  in the
      period(s)  in  which  the  losses  are  incurred,  rather  than  as of the
      measurement  date as presently  required.  This new standard does not have
      any impact on the Company's operating results and financial position.

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

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

      Reclassifications:

      Certain   accounts  in  the  2001  financial   statements  may  have  been
      reclassified to conform to the 2002 presentation.

Note 3 - Inventories:

      Inventories at October 31, 2002 consisted of the following:

          Packed coffee                        $  380,597
          Green coffee                            659,889
          Packaging supplies                      377,658
                                               ----------
          Totals                               $1,418,144
                                               ==========


                                      F-11
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2002 AND 2001

Note 4 - Property and equipment:

      Property and equipment at October 31, 2002 consisted of the following:

                                                      Estimated
                                                     Useful Life
                                                     -----------
     Building and improvements                        30 years       $1,250,547
     Machinery and equipment                           7 years        2,261,932
     Machinery and equipment under capital
       leases                                          7 years          714,903
     Furniture and fixtures                            7 years          139,360
                                                                     ----------
                                                                      4,366,742

     Less accumulated depreciation (including
       $216,777 arising from capital leases)                          2,694,400
                                                                     ----------
                                                                      1,672,342

     Land                                                               141,000
                                                                     ----------
     Totals                                                          $1,813,342
                                                                     ==========

      Depreciation  expense  totaled  $270,994  and  $262,004  in 2002 and 2001,
respectively.

Note 5 - Credit facility and other borrowings:

      Prior Credit Facility:

      As of October 31, 2001, the Company was obligated for aggregate borrowings
      of $2,839,216  under a credit  facility  provided by Wells Fargo  Business
      Credit the assignee of BACFC, formerly Nationscredit Commercial Corp. that
      became  effective on November 29, 2000 and that was scheduled to expire on
      November 20, 2002.  The credit  facility  consisted of a revolving line of
      credit and a term loan.

      The line of credit  provided 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.  The  outstanding  balance of  $2,339,216  at
      October 31, 2001  approximated  the maximum  amount that the Company could
      borrow based on its eligible  trade accounts  receivable and  inventories.
      Interest was payable monthly at the prime rate plus .5% (an effective rate
      of 6.5 % at October 31, 2001).

      The term loan, which had an outstanding  balance of $500,000  (including a
      current portion of $120,000 at October 31, 2001),  provided for borrowings
      of up to the greater of 80% of the cost of eligible equipment or $600,000.
      Principal  was payable in monthly  installments  of $10,000 plus  interest
      which was also at the prime rate plus .75%.

      Two  of  the  Company's   stockholders  had  each  guaranteed  outstanding
      borrowings  under the credit  facility  of up to  $100,000  at October 31,
      2001,  plus  interest  and other costs and  expenses  as defined,  and the
      Company also had $279,518 in an interest bearing money market account that
      was deposited  with BACFC during the year ended October 31, 2000 to secure
      outstanding borrowings under the credit facility.


                                      F-12
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2002 AND 2001

Note 5 - Credit facility and other borrowings (Continued):

      Current Credit Facility:

      As a result of  amendments  to the  agreements  with Wells Fargo  Business
      Credit,  the assignee of BACFC,  that became effective on October 1, 2002,
      interest on borrowings  under the line of credit and the term loan will be
      payable  monthly  at the prime rate plus .25% and .50%,  respectively  (an
      effective  rate of 5% and 5.25%  respectively,  at October 31, 2002).  The
      credit  facility  will not expire until  November  20,  2004;  the maximum
      amount of  borrowings  under  the term loan  increased  from  $600,000  to
      $750,000; term loan principal payments decrease from $10,000 to $7,000 per
      month commencing November 1, 2002; the amount of borrowings  guaranteed by
      each of the two  stockholders  is $500,000;  a restricted  cash collateral
      deposit  aggregating  approximately  $290,000  was  used  to  reduced  the
      outstanding line of credit balance;  and the Company's ability to continue
      to use the credit  facility  will  become  subject to its  ability to meet
      specified  financial  covenants and ratios.  In addition,  the outstanding
      balance under the line of credit and a portion of the outstanding  balance
      under  the term loan  were  classified  as  long-term  liabilities  in the
      accompanying October 31, 2002 balance sheet based on the Company's ability
      to either defer payments  until,  or make  installment  payments  through,
      November 20, 2004. The term loan,  has an outstanding  balance of $420,000
      (including  a current  portion of $84,000)  and  aggregate  borrowings  of
      $1,321,373 were outstanding  under its credit line facility at October 31,
      2002. The Company was in compliance with the required financial  covenants
      at October 31, 2002.

Note 6 - Loans from related parties:

      The Company had loans payable to certain of its  stockholders  aggregating
      $92,570 at October 31, 2002.  The loans are due on demand but payments are
      not  expected to be required in the next twelve  months.  These loans bear
      interest at 10% per annum.  Interest expense totaled approximately $13,000
      and $22,000 in 2002 and 2001 respectively.

Note 7 - Income taxes:

      The  tax  effects  of the  temporary  differences  that  give  rise to the
      deferred tax assets and liabilities as of October 31, 2002 are as follows:

          Deferred tax assets:
            Accounts receivable                   $ 81,800
            Inventory                               33,500
                                                  --------
                                                   115,300

          Deferred tax liability:
            Fixed assets                          $ 89,100
                                                  ========

      The Company's provision for income taxes in 2002 and 2001 consisted of the
      following:

                                                    2002           2001
                                                    ----           ----
          Federal                                 $387,265       $238,653
          State and local                          170,455         74,172
                                                  --------       --------
          Total                                   $557,720       $312,825
                                                  ========       ========


                                      F-13
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2002 AND 2001

Note 7 - Income taxes (Continued):

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

                                                             2002         2001
                                                             ----         ----
          US Federal income tax statutory rate                 34%         34%
          State income taxes, net of federal tax benefit        8%          4%
                                                           -------      ------
          Effective tax rate                                   42%         38%
                                                           =======      ======

Note 8 - Commitments and contingencies:

      Operating lease:

      The Company occupies  warehouse  facilities under an operating lease which
      expired on August 31, 2002 and was renewed  for an  additional  two years.
      The lease  requires  the Company to pay  utilities  and other  maintenance
      expenses.  Rent charged to  operations  amounted to $47,346 and $46,800 in
      2002 and 2001,  respectively.  Future  minimum  rental  payments under the
      noncancelable  operating lease in years subsequent to October 31, 2002 are
      $50,076 and $41,730 in 2003 and 2004, respectively.

      Obligation under capital leases:

      During the year the Company leased machinery and equipment under a capital
      lease  which  expires  in July  2005.  The asset and  liability  under the
      capital lease is recorded at the lower of the present value of the minimum
      lease  payments  or the  fair  value  of the  asset.  The  asset  is being
      depreciated  over the lease  term.  Depreciation  expense of assets  under
      capital lease are included in depreciation expense and amounted to $30,457
      for the period ended October 31, 2002.

      At October 31, 2002, assets held under capital lease are as follows:

          Machinery and equipment                            $426,404
          Less: accumulated depreciation                      (30,457)
                                                             --------
                                                             $395,947
                                                             ========

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

          Year ended October 31,

                           2003                              $ 141,249
                           2004                                141,249
                           2005                                 94,165
                                                             ---------
          Total minimum lease payments                         376,663
          Less: amount representing interest                   (33,696)
                                                             ---------
          Present value of minimum lease payments              342,967
          Less: current portion                               (121,259)
                                                             ---------
          Long-term portion                                  $ 221,708
                                                             =========

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


                                      F-14
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2002 AND 2001

Note 8 - Commitments and contingencies (Continued):

      Legal proceedings:

      The  Company is a party to various  legal  proceedings.  In the opinion of
      management,  these  actions  are  routine  in  nature  and will not have a
      material  adverse  effect  on  the  Company's   financial   statements  in
      subsequent years.

      During the year 2001, the Company settled a lawsuit in which it originally
      sought  approximately  $100,000  against  a  third  party  for  breach  of
      contract.  The 2001 statement of income  reflects a $47,000  settlement of
      this litigation.

      On July 1, 2002,  Juemin Chu,  Rose-Marie Fox, and Joel  Schonfeld,  Esq.,
      three of the  Company's  shareholders,  filed a complaint  against  Andrew
      Gordon,  President,  Chief  Executive  Officer,  Treasurer and a director,
      David  Gordon,  Executive  Vice  President,  Secretary  and a director and
      Gerard DeCapua, a director, in the Supreme Court of the State of New York,
      Kings County,  styled JUEMIN CHU, ROSE-MARIE FOX AND JOEL SCHONFELD,  ESQ.
      V. ANDREW GORDON,  DAVID GORDON AND GERARD DECAPUA.  The  plaintiffs,  who
      invested an aggregate of $1,500 in our predecessor  company,  Transpacific
      International  Group  Corp.,  alleged  unreasonable  restrictions  on  the
      transfer  of  shares,  breach  of  contract  and  fraud  relating  to  the
      defendant's  refusal to  register  the  Company's  common  stock under the
      Securities  Exchange Act of 1934, as amended, to establish a public market
      for the stock. The lawsuit sought to compel the defendants to register the
      Company's  common  stock under the  Securities  Exchange  Act of 1934,  as
      amended,  and  establish a public  market for its common  stock and to pay
      money  damages  in the  amount  of  $750,000,  together  with  unspecified
      interest,  costs  and  disbursements.  The  defendants  filed a motion  to
      dismiss the lawsuit on July 29, 2002. On December 10, 2002,  the motion to
      dismiss was granted and the complaint was dismissed without prejudice. The
      Company believes that the lawsuit was meritless.

Note 9 - Concentrations of credit risk:

      Financial   instruments   that   potentially   subject   the   Company  to
      concentrations  of  credit  risk  consist  principally  of cash  and  cash
      equivalents,  amounts due from broker and trade accounts  receivable.  The
      Company  maintains  its cash and cash  equivalents  in bank and  brokerage
      accounts the balances of which,  at times,  may exceed  Federal  insurance
      limits.  At October 31, 2002,  the Company did not have cash balances that
      exceeded  Federal  insurance  limits.  The net  balance  of the  Company's
      investments in derivative financial  instruments also represents an amount
      due from a broker.  Exposure  to credit  risk is reduced  by placing  such
      deposits and investments with major financial  institutions and monitoring
      their credit ratings.

      Approximately  18% and 17% of the  Company's  sales were  derived from two
      customers during 2002. Those customers also accounted for  approximately $
      132,000  and $ 141,000 of the  Company's  accounts  receivable  balance at
      October 31, 2002.  Approximately  20% of the Company's  sales were derived
      from one customer in 2001 that customer also  accounted for  approximately
      $250,000 of the  Company's  account  receivable  balance as of October 31,
      2001.   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, 2002.


                                      F-15
<PAGE>

                            COFFEE HOLDING CO., INC.
                          NOTES TO FINANCIAL STATEMENTS
                            OCTOBER 31, 2002 AND 2001

Note 10 - Stock option plan:

      On February 10, 1998, the Company's stockholders consented to the adoption
      of the Company's stock option plan (the "Plan") whereby  incentive  and/or
      nonincentive  stock options for the purchase of up to 2,000,000  shares of
      the  Company's  common  stock may be granted to the  Company's  directors,
      officers,  other key  employees  and  consultants.  Under  the  Plan,  the
      exercise  price of all  options  must be at least 100% of the fair  market
      value of the common stock on the date of grant (the  exercise  price of an
      incentive  stock  option for an  optionee  that holds more than 10% of the
      combined  voting  power of all classes of stock of the Company  must be at
      least 110% of the fair market value on the date of grant).

      As of October 31, 2002, no options had been granted under the Plan.

Note 11 - Major vendors:

      During fiscal 2002, substantially all of the Company's purchases were from
      ten vendors. The ten vendors accounted for 89% of total product purchases.
      One  of  these  vendors   accounted   for  33%  of  total   purchases  and
      approximately  $128,700 of the Company's  accounts  payable at October 31,
      2002.  An employee of this vendor is a director of the Company.  Purchases
      from that vendor totaled  approximately  $3,415,200 and $2,243,000 in 2002
      and 2001,  respectively.  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.

      During fiscal 2001, substantially all of the Company's purchases were from
      eight  vendors.  The  eight  vendors  accounted  for 72% of total  product
      purchases.  Two of  these  vendors  accounted  for 19%  and  13% of  total
      purchases.  These vendors accounted for approximately  $69,000 and $16,000
      of the Company's accounts payable at October 31, 2001.

Note 12 - Additional capital (Finder's fee agreement):

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

Note 13 - Subsequent events:

      On  September  16, 2002 the  Company  signed a letter of intent to license
      from an unrelated  coffee  manufacturer  and  distributor,  the  marketing
      rights  to four  United  States  retail  coffee  brands  and all  slotting
      allowances,  trade names, trademarks,  service marks, recipes and customer
      lists associated with these brands. The letter of intent was terminated by
      mutual agreement of the parties on December 10 2002.

                                      * * *


                                      F-16
<PAGE>

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

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

   2.1      Agreement and Plan of Merger by and Among Transpacific International
            Group Corp.  and Coffee  Holding Co., Inc.  (incorporated  herein by
            reference  to  Exhibit 2 to  Post-Effective  Amendment  No. 1 to the
            Registration Statement on Form SB-2 (file No. 333-00588-NY) as filed
            with the Commission on November 10, 1997).

   3.1      Articles of Incorporation of Coffee Holding, as amended.

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

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

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

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

  10.2      1998 Stock Option Plan (incorporated  herein by reference to Exhibit
            10.3 to Coffee  Holding's  Annual Report on Form 10-K for the fiscal
            year ended October 31, 2000).

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

  10.4      First  Amendment to Loan and Security  Agreement dated as of May 22,
            1998 between Coffee Holding and NationsCredit Commercial Corporation
            (incorporated   herein  by  reference  to  Exhibit  10.3  to  Coffee
            Holding's  Annual  Report on Form  10-K for the  fiscal  year  ended
            October 31, 2000).

  10.5      Second  Amendment dated as of November 29, 2000 to Loan and Security
            Agreement  between Coffee  Holding and Wells Fargo Business  Credit,
            Inc., as assignee  (incorporated herein by reference to Exhibit 10.3
            to Coffee  Holding's  Annual Report on Form 10-K for the fiscal year
            ended October 31, 2000).

  10.6      Term Note dated as of November  29,  2000 made by Coffee  Holding in
            favor of Wells Fargo Business Credit,  Inc., in the principal amount
            of $600,000  (incorporated  herein by  reference  to Exhibit 10.3 to
            Coffee  Holding's  Annual  Report on Form 10-K for the  fiscal  year
            ended October 31, 2000).

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

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

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

 10.10      Contract with Supervalu.

 10.11      Contract with Shurfine Central.


<PAGE>

 10.12      Contract with Cub Foods.

 10.13      Contract with Sav-a-lot.

  99.1      Certification  pursuant to Section 906 of the  Sarbanes-Oxley Act of
            2002.