**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**







**FORM
      10-Q**




x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934




For
      the
      quarterly period ended: **July
      31, 2007**




OR




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




For
      the
      transition period from __________    to
      ________________




Commission
      file number: **001-32491**




**Coffee
      Holding Co., Inc.**


*(Exact
      name of registrant as specified in its charter)*




**Nevada**
            **11-2238111**(*State
                or other jurisdiction of incorporation or
                organization)*
            *(I.R.S.
                Employer Identification No.)*





**4401
                First Avenue, Brooklyn, New York**
            **11232-0005***(Address
                of principal executive offices)*
            *(Zip
                Code)*




**(718)
      832-0800**


*(Registrant’s
      telephone number including area code)*




**N/A**


*(Former
      name, former address and former fiscal year,*


*if
      changed from last report)*




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 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
o .




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act). Check
      one:




Large
      accelerated filer o Accelerated
      filer  o  Non-accelerated filer x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No x .




Indicate
      the number of shares outstanding of each of the issuer’s classes of common stock
      as of the latest practicable date.




**5,517,830
      shares of common stock, par value $0.001 per share, outstanding at August 31,
      2007**








**PAGE****PART
                I — FINANCIAL INFORMATION****Item
                1.**
            
            **Financial
                Statements**
            
            1Condensed
                Consolidated Balance SheetsJuly
                31, 2007 (unaudited) and October 31, 2006
            
            1Condensed
                Consolidated Statements of OperationsThree
                and Nine Months Ended July 31, 2007 and 2006 (unaudited)
            
            2Condensed
                Consolidated Statements of Cash FlowsNine
                Months Ended July 31, 2007 and 2006 (unaudited)
            
            3Notes
                To Condensed Consolidated Financial Statements (unaudited)
            
            4**Item
                2.**
            
            **Management’s
                Discussion and Analysis of Financial Condition****and
                Results of Operations**
            
            10**Item
                3.**
            
            **Quantitative
                and Qualitative Disclosures About Market Risk**
            
            17**Item
                4.**
            
            **Controls
                and Procedures**
            
            18**PART
                II — OTHER INFORMATION****Item
                1.**
            
            **Legal
                Proceedings**
            
            19**Item
                1A.**
            
            **Risk
                Factors**
            
            20**Item
                2.**
            
            **Unregistered
                Sales of Equity Securities and Use of Proceeds**
            
            20**Item
                3.**
            
            **Defaults
                Upon Senior Securities**
            
            20**Item
                4.**
            
            **Submission
                of Matters to a Vote of Security Holders**
            
            20**Item
                5.**
            
            **Other
                Information**
            
            20**Item
                6.**
            
            **Exhibits**
            
            21**Signatures**
            
            
            
            22




i


**PART
      I** *—* **FINANCIAL INFORMATION**


**Item
      1.**  **Financial Statements**


**COFFEE
      HOLDING CO., INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**JULY
      31, 2007 AND OCTOBER 31, 2006**




**July
                31, 2007**
            
            October
                31, 2006**(unaudited)****-
                ASSETS -****CURRENT
                ASSETS:**Cash
            
            **$**
            **2,098,689**
            
            $
            1,112,165Commodities
                held at broker
            
            
            **3,783,683**
            
            
            4,330,489Accounts
                receivable, net of allowance for doubtful accounts of $420,349 for
                2007
                and 2006
            
            
            **5,277,593**
            
            
            6,534,848Inventories
            
            
            **3,882,301**
            
            
            2,899,543Prepaid
                expenses and other current assets
            
            
            **352,870**
            
            
            328,544Prepaid
                and refundable taxes
            
            
            **32,411**
            
            
            302,003Deferred
                income tax assets
            
            
            **459,000**
            
            
            221,000**TOTAL
                CURRENT ASSETS**
            
            
            **15,886,547**
            
            
            15,728,592Property
                and equipment, at cost, net of accumulated depreciation of $4,424,306
                and
                $4,159,274 for 2007 and 2006, respectively
            
            
            **2,397,680**
            
            
            2,138,951Investment
                in joint venture
            
            
            **284,458**
            
            
            408,798Due
                from joint venture, less reserve of $242,000 for 2007
            
            
            **220,030**
            
            
            73,658Deposits
                and other assets
            
            
            **499,860**
            
            
            631,859**TOTAL
                ASSETS**
            
            **$**
            **19,288,575**
            
            $
            18,981,858**-
                LIABILITIES AND STOCKHOLDERS' EQUITY -****CURRENT
                LIABILITIES:**Line
                of credit borrowings
            
            **$**
            **2,674,490**
            
            $
            2,542,881Accounts
                payable and accrued expenses
            
            
            **3,923,093**
            
            
            4,828,689Income
                taxes payable
            
            
            **27,756**
            
            
            -**TOTAL
                CURRENT LIABILITIES**
            
            
            **6,625,339**
            
            
            7,371,570Deferred
                income tax liabilities
            
            
            **13,700**
            
            
            12,300Deferred
                compensation payable
            
            
            **351,332**
            
            
            256,284**TOTAL
                LIABILITIES**
            
            
            **6,990,371**
            
            
            7,640,154**MINORITY
                INTEREST**
            
            
            **-**
            
            
            -**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, 5,529,830
                shares issued for 2007 and 5,529,830 shares issued and outstanding
                for
                2006
            
            
            **5,530**
            
            
            5,530Additional
                paid-in capital
            
            
            **7,327,023**
            
            
            7,327,023Retained
                earnings
            
            
            **5,028,399**
            
            
            4,009,151Less
                treasury stock, 12,000 shares, at cost in 2007
            
            
            **(62,748**
            **)**
            
            -**TOTAL
                STOCKHOLDERS' EQUITY**
            
            
            **12,298,204**
            
            
            11,341,704**TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY**
            
            **$**
            **19,288,575**
            
            $
            18,981,858





See
      notes to condensed consolidated financial
      statements.


1


**COFFEE
      HOLDING CO., INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**NINE
      AND THREE MONTHS ENDED JULY 31, 2007 AND 2006**


**(Unaudited)**




**Nine
                Months Ended**
              **July
                31,**
            
            **Three
                Months Ended**
              **July
                31,****2007**
            
            2006
            
            **2007**
            
            2006**NET
                SALES**
            
            **$**
            **40,794,292**
            
            $
            37,714,354
            
            **$**
            **13,964,807**
            
            $
            11,858,581**COST
                OF SALES**
            
            
            **34,581,004**
            
            
            32,584,566
            
            
            **12,027,277**
            
            
            9,916,930**GROSS
                PROFIT**
            
            
            **6,213,288**
            
            
            5,129,788
            
            
            **1,937,530**
            
            
            1,941,651**OPERATING
                EXPENSES:**Selling
                and administrative
            
            
            **4,239,451**
            
            
            3,916,707
            
            
            **1,360,846**
            
            
            1,414,412Writedown
                of amount due from joint venture
            
            
            **242,000**
            
            
            -
            
            
            **-**
            
            
            -Bad
                debt expense
            
            
            **31,195**
            
            
            5,421
            
            
            **-**
            
            
            5,421Officers’
                salaries
            
            
            **384,302**
            
            
            408,155
            
            
            **149,853**
            
            
            135,975**TOTALS**
            
            
            **4,896,948**
            
            
            4,330,283
            
            
            **1,510,699**
            
            
            1,555,808**INCOME
                FROM OPERATIONS**
            
            
            **1,380,124**
            
            
            799,505
            
            
            **426,831**
            
            
            385,843**OTHER
                INCOME (EXPENSE)**Interest
                income
            
            
            **102,226**
            
            
            90,907
            
            
            **35,650**
            
            
            33,618Equity
                in (loss) income of joint venture
            
            
            **(91,340**
            **)**
            
            (74,611
            )
            
            **2,600**
            
            
            (69,289
            )Writedown
                of investment in joint venture
            
            
            **(33,000**
            **)**
            
            -
            
            
            **-**
            
            
            -Management
                fee income
            
            
            **12,026**
            
            
            -
            
            
            **-**
            
            
            -Interest
                expense
            
            
            **(87,530**
            **)**
            
            (80,951
            )
            
            **(31,124**
            **)**
            
            (42,726
            )**(97,618**
            **)**
            
            (64,655
            )
            
            **7,126**
            
            
            (78,397
            )**INCOME
                BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST IN
                SUBSIDIARY**
            
            
            **1,218,722**
            
            
            734,850
            
            
            **433,957**
            
            
            307,446Provision
                for income taxes
            
            
            **(198,493**
            **)**
            
            (319,996
            )
            
            **(58,443**
            **)**
            
            (127,996
            )**INCOME
                BEFORE MINORITY INTEREST**
            
            
            **1,020,229**
            
            
            414,854
            
            
            **375,514**
            
            
            179,450Minority
                interest in subsidiary
            
            
            **(981**
            **)**
            
            -
            
            
            **(4,858**
            **)**
            
            -**NET
                INCOME**
            
            **$**
            **1,019,248**
            
            $
            414,854
            
            **$**
            **370,656**
            
            $
            179,450Basic
                and diluted earnings per share
            
            **$**
            **.18**
            
            $
            .08
            
            **$**
            **.07**
            
            $
            .03


See
      notes to condensed consolidated financial
      statements.


2


**COFFEE
      HOLDING CO., INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**NINE
      MONTHS ENDED JULY 31, 2007 AND 2006**


**(Unaudited)**




**2007**
            
            2006**OPERATING
                ACTIVITIES:**Net
                income
            
            **$**
            **1,019,248**
            
            $
            414,854Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
                and amortization
            
            
            **272,058**
            
            
            328,962Bad
                debts
            
            
            **31,195**
            
            
            5,421Writedown
                of amount due from joint venture
            
            
            **242,000**
            
            
            -Loss
                from joint venture
            
            
            **91,340**
            
            
            74,611Writedown
                of investment in joint venture
            
            
            **33,000**
            
            
            -Deferred
                income taxes
            
            
            **(236,600**
            **)**
            
            46,100Impairment
                loss
            
            
            **31,892**
            
            
            -Changes
                in operating assets and liabilities:Commodities
                held at broker
            
            
            **546,805**
            
            
            (176,480
            )Accounts
                receivable
            
            
            **984,060**
            
            
            86,222Inventories
            
            
            **1,226,060**
            
            
            281,694Prepaid
                expenses and other current assets
            
            
            **(24,326**
            **)**
            
            (284,662
            )Prepaid
                and refundable income taxes
            
            
            **269,592**
            
            
            -Accounts
                payable and accrued expenses
            
            
            **(905,595**
            **)**
            
            194,252Due
                from joint venture
            
            
            **(388,372**
            **)**
            
            -Deposits
                and other assets
            
            
            **(196,389**
            **)**
            
            (99,479
            )Income
                taxes payable
            
            
            **27,756**
            
            
            (218,864
            )Deferred
                compensation payable
            
            
            **95,048**
            
            
            -**Net
                cash provided by operating activities**
            
            
            **1,151,954**
            
            
            652,631**INVESTING
                ACTIVITIES:**Purchases
                of property and equipment
            
            
            **(234,291**
            **)**
            
            (157,641
            )Investment
                in joint venture
            
            
            **-**
            
            
            (689,005
            )**Net
                cash used in investing activities**
            
            
            **(234,291**
            **)**
            
            (846,646
            )**FINANCING
                ACTIVITIES:**Advances
                under bank line of credit
            
            
            **36,771,879**
            
            
            31,322,458Principal
                payments under bank line of credit
            
            
            **(36,640,270**
            **)**
            
            (28,823,076
            )Purchase
                of treasury stock
            
            
            **(62,748**
            **)**
            
            **-**Principal
                payments of obligations under capital leases
            
            
            **-**
            
            
            (1,329
            )**Net
                cash provided by financing activities**
            
            
            **68,861**
            
            
            2,498,053**NET
                INCREASE IN CASH**
            
            
            **986,524**
            
            
            2,304,038Cash,
                beginning of year
            
            
            **1,112,165**
            
            
            735,468**CASH,
                END OF PERIOD**
            
            **$**
            **2,098,689**
            
            $
            3,039,506**SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW DATA:**Interest
                paid
            
            **$**
            **35,530**
            
            $
            36,034Income
                taxes paid
            
            **$**
            **132,506**
            
            $
            269,784**SUPPLEMENTAL
                DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:**The
                Company utilized its deposit for the purchase of machinery and
                equipment
            
            **$**
            **328,388**
            
            $
            -


See
      notes to condensed consolidated financial
      statements.


3


**COFFEE
      HOLDING CO., INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JULY
      31, 2007 AND 2006**


**(Unaudited)**




**NOTE
      1 -**  **BUSINESS
      ACTIVITIES:**





Coffee
      Holding Co., Inc. (the “Company”) conducts wholesale coffee operations,
      including manufacturing, roasting, packaging, marketing and distributing roasted
      and blended coffees for private labeled accounts and its own brands, and also
      sells green coffee. The Company’s sales are primarily to customers that are
      located throughout the United States and Canada, consisting of supermarkets,
      wholesalers, gourmet roasters and individually owned and multi - unit
      retailers.





The
      Company owns a 60% interest in Generations Coffee Company, LLC (“GCC”) effective
      April 7, 2006. GCC is in the same business as the Company and had limited
      operations since it commenced its operations during the quarter ended October
      31, 2006. The Company also exercises control of GCC. As a result of its 60%
      interest and control, the financial statements of GCC are consolidated with
      the
      Company.





The
      Company also owns a 50% interest in Cafe La Rica, LLC (“CLR”) effective March
      10, 2006. CLR is in the same business as the Company and is being recorded
      as an
      investment in joint venture. CLR commenced its operations during the quarter
      ended April 30, 2006. The Company does not exercise control of CLR. As a result,
      the financial statements of CLR are not consolidated and are accounted for
      by
      the equity method of accounting .
      On
      February 5, 2007, the Company dissolved CLR (See
      Note
      7).





**NOTE
      2 -**  **BASIS
      OF PRESENTATION:**





The
      interim condensed consolidated financial information as of July 31, 2007 and
      for
      the nine and three-month periods ended July 31, 2007 and 2006 has been prepared
      without audit, pursuant to the rules and regulations of the Securities and
      Exchange Commission (the “SEC”). Certain information and footnote disclosures
      normally included in financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been
      condensed or omitted pursuant to such rules and regulations, although we believe
      that the disclosures made are adequate to provide for fair presentation. These
      Financial Statements should be read in conjunction with the Financial Statements
      and the notes thereto, included in the Company’s Annual Report on Form 10-K for
      the fiscal year ended October 31, 2006, previously filed with the SEC.





In
      the
      opinion of management, all adjustments (which include normal recurring
      adjustments) necessary to present a fair statement of financial position as
      of
      July 31, 2007, and results of operations for the nine and three months ended
      and
      cash flows for the nine months ended July 31, 2007 and 2006, as applicable,
      have
      been made. The results of operations for the nine and three months ended July
      31, 2007 and 2006 are not necessarily indicative of the operating results for
      the full fiscal year or any future periods.





The
      condensed consolidated financial statements include the accounts of the Company
      and GCC. The equity method of accounting was used to record the Company’s share
      of the (loss) income in CLR. All significant inter-company transactions and
      balances have been eliminated in consolidation.


4


**COFFEE
        HOLDING CO., INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JULY
        31, 2007 AND 2006**
 **(Unaudited)**


**NOTE
      3** -  **INSURANCE
      CLAIM RECEIVABLE:**




The
      Company sustained weather related damages to its warehouse facility in Colorado.
      The Company has paid for the repairs as the work progressed. The Company has
      also paid for labor costs related to the repairs and clean-up of the facility.
      The insurance carrier reimburses the Company for the costs of the repairs and
      the costs of the labor related to repairs and clean-up. The Company has already
      been reimbursed $1,630,000 by the insurance carrier as of July 31, 2007. As
      of
      July 31, 2007 the Company had a receivable from its insurance carrier of
      $133,009, which is included with prepaid expenses and other current assets
      on
      the balance sheet.




**NOTE
      4 -**  **INVENTORIES:**




Inventories
      at July 31, 2007 and October 31, 2006 consisted of the following:




**July
                31, 2007 (unaudited)**
            
            October
                31, 2006Packed
                coffee
            
            **$**
            **1,150,543**
            
            $
            700,284Green
                coffee
            
            
            **1,950,349**
            
            
            1,466,161Packaging
                supplies
            
            
            **781,409**
            
            
            733,098Totals
            
            **$**
            **3,882,301**
            
            $
            2,899,543







**NOTE
      5 -**  **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's accounting for options and futures contracts may
      increase earnings volatility in any particular period. The Company has open
      position contracts held by the broker which includes commodities for cash,
      futures and options in the amount of $3,783,683 and $4,330,489 at July 31,
      2007
      and October 31, 2006, respectively. The Company classifies its options and
      future contracts as trading securities and accordingly, unrealized holding
      gains
      and losses are included in earnings and not reflected as a net amount in a
      separate component of shareholders’ equity.




At
      July
      31, 2007, the Company held 100 options (generally
      with terms of two months or less )
      covering an aggregate of 3,750,000 pounds of green coffee beans at a price
      of
      $1.20 per pound. The fair market value of these options, which was obtained
      from
      major financial institutions, was $189,375 at July 31, 2007.




At
      July
      31, 2006, the Company held 243 options (generally with terms of two months
      or
      less) covering an aggregate of 9,112,500 pounds of green coffee beans at a
      prices of $.975 and $1.10 per pound. The fair market value of these options,
      which was obtained from a major financial institution, was $487,961 at July
      31,
      2006.




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 July 31, 2007, the Company held 199 futures contracts for the
      purchase of 7,462,500 pounds of coffee at an average price of $1.1489 per pound.
      The market price of coffee applicable to such contracts was $1.143 per pound
      at
      that date.




5


**COFFEE
        HOLDING CO., INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JULY
        31, 2007 AND 2006**
 **(Unaudited)**


At
      July
      31, 2006, the Company held 58 futures contracts for the purchase of 2,175,000
      pounds of coffee at prices ranging from $.9755 up to $.9930 per pound for
      September 2006 contracts. The market price of coffee applicable to such
      contracts was $.995 per pound at that date.




Included
      in cost of sales and commodities held at broker for the nine and three months
      ended July 31, 2007 and 2006, the Company recorded realized and unrealized
      gains
      and losses respectively, on these contracts as follows:




**Three
              Months Ended July 31,****2007
                (unaudited)**
            
            2006Gross
                realized gains
            
            **$**
            **1,561,329**
            
            $
            758,664Gross
                realized losses
            
            **$**
            **(493,452**
            **)**
            $
            (684,232
            )Unrealized
                gains and (losses)
            
            **$**
            **(69,252**
            **)**
            $
            89,206





**Nine
                Months Ended July 31,****2007
                (unaudited)**
            
            2006Gross
                realized gains
            
            **$**
            **2,726,166**
            
            $
            1,569,909Gross
                realized losses
            
            **$**
            **(793,064**
            **)**
            $
            (1,344,993
            )Unrealized
                gains and (losses)
            
            **$**
            **98,302**
            
            $
            307,397




**NOTE
      6 -**  **LINE
      OF CREDIT:**




The
      Company has a financing agreement with Merrill Lynch Business Financial
      Services, Inc. for a line of credit of up to $4,000,000 expiring on October
      31,
      2007. This line of credit is secured by a blanket lien on all the assets of
      the
      Company and the personal guarantees of two of the Company’s
      officer/shareholders, requires monthly interest payments at the one month LIBOR
      rate plus 2.4% (7.47% as of July 31, 2007 and October 31, 2006) and requires
      the
      Company to comply with various financial covenants. As of July 31, 2007 and
      October 31, 2006, the Company was in compliance with all financial covenants.
      As
      of July 31, 2007 and October 31, 2006, the borrowings under the line of credit
      were $2,674,490 and $2,542,881, respectively. ****





**NOTE
      7 -**  **LEGAL
      PROCEEDINGS:**




On
      February 5, 2007, the Company dissolved CLR due to CLR’s material breach of the
      Expense Sharing Agreement dated March 2006 between the Company and CLR,
      primarily resulting from non-payment for coffee supplied to CLR by the Company.
      In the notice of dissolution, the Company requested an orderly winding up of
      CLR’s business and the liquidation of its assets.





CLR’s
      other member, Coffee Bean Trading-Roasting, LLC (“CBT”), denied that any breach
      occurred and filed a lawsuit in the U.S. District Court for the Southern
      District of Florida against the Company alleging breaches of certain agreements
      and responsibilities. The Company countersued CBT alleging conversion of CLR
      funds and breaches of certain agreements and responsibilities. The court granted
      the Company’s motion to transfer the venue of this lawsuit to
      Delaware.




6


**COFFEE
        HOLDING CO., INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JULY
        31, 2007 AND 2006**
 **(Unaudited)**


The
      Company has filed a lawsuit in the Delaware Chancery Court against CLR, CBT
      and
      Ernesto Aguila, a partner in CBT, individually, alleging breaches of certain
      agreements and responsibilities and conversion of CLR funds. CBT has countersued
      the Company in the Delaware action alleging breaches of certain agreements
      and
      responsibilities and requesting a liquidating trustee to wind up the affairs
      of
      CLR and liquidate and distribute its assets.





The
      litigation continues and the parties are in the process of discovery. Settlement
      discussions between the various parties are ongoing. The Company considers
      the
      allegations against it be baseless and intends to vigorously defend itself
      and
      prosecute its claims against CBT, CLR and Ernesto Aguila in the Delaware
      Chancery Court.





The
      Company has written down the amount due from the joint venture by $242,000
      during the nine months ended July 31, 2007 representing the least likely amount
      that will not be recovered from CLR. The Company’s investment in the joint
      venture has been written down by $33,000 during the nine months ended July
      31,
      2007 to $284,458 as of July 31, 2007 representing the approximate net book
      value
      of the equipment that was originally contributed by the Company to the joint
      venture.





The
      Company has estimated its share of the losses in CLR to be $91,340 for the
      nine
      months ended July 31, 2007 and income of $2,600 for the three months ended
      July
      31, 2007 based upon the most recent available information.





The
      Company is a party to various other 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 results of operations or financial position
      in
      future period.





**NOTE
      8 -**  **EARNINGS
      PER SHARE:**




The
      Company presents “basic” and “diluted” earnings per common share pursuant to the
      provisions of Statement of Financial Accounting Standards No. 128, “Earnings per
      Share.” Basic earnings per share is based on the weighted-average number of
      common shares outstanding and diluted earnings per share as based on the
      weighted-average number of common shares outstanding plus all potential dilutive
      common shares outstanding. Diluted earnings per share for the three and nine
      month periods ended July 31, 2007 and 2006 is the same as basic earnings per
      share, since the effects of the calculation were anti-dilutive.




The
      following weighted average number of shares was used for the computation of
      basic and diluted earnings per share:





**Nine
                Months Ended**
              **July
                31**,
            
            **Three
                Months Ended**
              **July
                31,****2007**
            
            2006
            
            **2007**
            
            2006**Basic:**
            
            
            **5,528,708**
            
            
            5,529,830
            
            
            **5,528,708**
            
            
            5,529,830**Diluted:**
            
            
            **5,528,708**
            
            
            5,529,830
            
            
            **5,528,708**
            
            
            5,529,830




7




**COFFEE
      HOLDING CO., INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JULY
      31, 2007 AND 2006**


**(Unaudited)**


**NOTE
      9 -**  **ECONOMIC
      DEPENDENCY:**




For
      the
      nine months ended July 31, 2007, sales to two customers were in excess of 10%
      of
      the Company’s total sales. Sales to these customers were approximately
      $10,775,000 and $5,220,000 or 26% and 13%, respectively, and the corresponding
      accounts receivable at July 31, 2007 from these customers was approximately
      $770,000 and $480,000, respectively.





For
      the
      nine months ended July 31, 2006, sales to one customer were in excess of 10%
      of
      the Company’s total sales. Sales to this customer were approximately $13,370,000
      or 35% and the corresponding accounts receivable at July 31, 2006 from this
      customer was approximately $1,009,000.





For
      the
      nine months ended July 31, 2007, purchases from two suppliers, were in excess
      of
      10% of the Company’s total purchases. Purchases from these suppliers were
      approximately $11,000,000 and $5,000,000 or 32% and 14%, respectively, and
      the
      corresponding accounts payable to these suppliers at July 31, 2007 were
      approximately $1,055,000 and $419,000, respectively.





For
      the
      nine months ended July 31, 2006, purchases from two suppliers, were in excess
      of
      10% of the Company’s total purchases. Purchases from these suppliers were
      approximately $11,718,000 and $3,827,000, respectively, and the corresponding
      accounts payable to these suppliers at July 31, 2006 were approximately $934,000
      and $94,000, respectively.





**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 non-incentive
      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). On June
      21, 2004, the Plan was amended to reduce the number of shares of common stock
      reserved for issuance under the plan from 2,000,000 to 800,000, subject to
      adjustment for stock splits, stock dividends, reorganizations, mergers,
      recapitalizations or other capital adjustments.




As
      of
      July 31, 2007, no options had been granted under the Plan, since its
      inception.





**NOTE
      11 -**  **RECENT
      ACCOUNTING PRONOUNCEMENTS:**




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159
      permits entities to choose to measure, on an item-by-item basis, specified
      financial instruments and certain other items at fair value. Unrealized gains
      and losses on items for which the fair value option has been elected are
      required to be reported in earnings at each reporting date. SFAS No. 159 is
      effective for fiscal years beginning after November 15, 2007, the provisions
      of
      which are required to be applied prospectively. The Company expects to adopt
      SFAS No. 159 for the first quarter ending January 31, 2009, and is still
      evaluating the effect, if any, on its financial position or results of
      operations.




8


**COFFEE
        HOLDING CO., INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JULY
        31, 2007 AND 2006**
 **(Unaudited)**


**NOTE
      12 -**  **TREASURY
      STOCK:**




On
      April
      13, 2007, the Board of Directors authorized a stock repurchase plan pursuant
      to
      which the Company could repurchase up to 276,491 shares (5% of its common stock
      outstanding as of April 12, 2007) in either open market or private transactions.
      The stock repurchase plan is not subject to an expiration date.




The
      Company utilizes the cost method of accounting for treasury stock. During the
      nine months ended July 31, 2007, the Company purchased 12,000 shares for
      $62,748.




9


**Item
      2.**  **Management’s
      Discussion and Analysis** **of
      Financial Condition and Results of Operations.**




**Cautionary
      Note on Forward Looking Statements**




This
      report contains 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:




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




·
            fluctuations
                in the supply of coffee beans;




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




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




·
            our
                ability to attract and retain
                customers;




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




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




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




·
            our
                ability to obtain additional financing;
                and




·
            other
                risks which we identify in future filings with the Securities and
                Exchange
                Commission.




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
      report.


10


**Overview**




We
      are an
      integrated wholesale coffee roaster and dealer in the United States and one
      of
      the few coffee companies that offers a broad array of coffee products across
      the
      entire spectrum of consumer tastes, preferences and price points. As a result,
      we believe that we are well positioned to increase our profitability and endure
      potential coffee price volatility throughout varying cycles of the coffee market
      and economic conditions.




Our
      operations have primarily focused on the following areas of the coffee
      industry:




·
            the
                sale of wholesale specialty green
                coffee;




·
            the
                roasting, blending, packaging and sale of private label coffee;
                and




·
            the
                roasting, blending, packaging and sale of our seven brands of coffee.




Our
      operating results are affected by a number of factors including:




·
            the
                level of marketing and pricing competition from existing or new
                competitors in the coffee industry;




·
            our
                ability to retain existing customers and attract new
                customers;




·
            fluctuations
                in purchase prices and supply of green coffee and in the selling
                prices of
                our products; and




·
            our
                ability to manage inventory and fulfillment operations and maintain
                gross
                margins.




Our
      net
      sales are driven primarily by the success of our sales and marketing efforts
      and
      our ability to retain existing customers and attract new customers. For this
      reason, we have made the strategic decision to invest in measures that will
      increase net sales. In February 2004, we acquired certain assets of Premier
      Roasters, including equipment and a roasting facility located in La Junta,
      Colorado. We have also hired a West Coast Brand Manager to market our S&W
      brand and to increase sales of S&W coffee to new customers and a West Coast
      Sales Department to increase our sales of green coffee to west coast
      customers.




As
      a
      result of these efforts, net sales increased in our specialty green coffee,
      private label and branded coffee business lines in both dollars and pounds
      sold.
      In addition, we increased the number of our customers in all three
      areas.




In
      March
      2006, we entered into a joint venture with Coffee Bean Trading-Roasting, LLC
      and
      formed Café La Rica, LLC, a Delaware limited liability company, for the purpose
      of engaging in the roasting, packaging and sale of the Café La Rica brand coffee
      and other branded and food service coffee products in Miami, Florida. We had
      originally invested $585,709 in cash and equipment in Café La Rica. We incurred
      a net loss on our investment in Café La Rica of $91,340 for the nine months
      ended July 31, 2007 and $268,251 since Café La Rica was formed and wrote the
      investment down by $33,000 during the nine months ended July 31, 2007 to equal
      the approximate net book value of the equipment that was originally contributed
      by us to Café La Rica upon formation. In addition, prior to July 31, 2007, we
      were owed $462,030 for coffee supplied by us to Café La Rica and for
      miscellaneous advances. Despite an Expense Sharing Agreement between the parties
      which required Café La Rica to pay us for the coffee supplied to it by us within
      15 days of the end of each calendar month, all of this amount was over 90 days
      past due as of July 31, 2007. As a result, on July 31, 2007 we wrote down the
      amounts owed to us by $242,000 during the nine months ended July 31, 2007.
      On
      February 5, 2007, we dissolved Café La Rica due to Café La Rica’s material
      breach of the Expense Sharing Agreement. In the notice of dissolution, we
      requested an orderly winding up of Café La Rica’s business and the liquidation
      of its assets. Cafe La Café and Coffee Bean Trading-Roasting, LLC, have denied
      that any breach has occurred. The dispute is now in litigation. See
“ *Legal
      Proceedings* .”




11




In
      April
      2006, we entered into a joint venture with Caruso's Coffee of Brecksville,
      Ohio
      and formed Generations Coffee Company, LLC, a Delaware limited liability
      company, which will engage in the roasting, packaging and sale of private label
      specialty coffee products. We own 60% of the joint venture and are the exclusive
      supplier of its coffee inventory. We believe that the Generations Coffee joint
      venture will allow us to bid on the private label gourmet whole bean
      business we have not been equipped to pursue from an operational standpoint
      in
      the past. With this specialty roasting facility in place, in many cases right
      in
      the backyard of our most important wholesale and retail customers,
      we believe that we are in an ideal position to combine our current canned
      private label business with high-end private label specialty whole bean
      business. High-end specialty whole bean coffee sells for as much as three times
      more per pound than the canned coffees in which we currently
      specialize **.** Generations
      had approximately $100,000 in net sales for the quarter ended July 31, 2007
      and
      had nine accounts, two of which made Generations the exclusive supplier for
      their fast growing and highly visible organic coffee programs.




In
      July
      2007, we entered into a three-year licensing agreement with Entenmann’s
      Products, Inc., a subsidiary of Entenmann’s, Inc., which is one of the nation’s
      oldest baking companies. The agreement gives us the exclusive rights to
      manufacture, market and distribute a full line of Entenmann’s brand coffee
      products throughout the United States. **** We
      anticipate rolling out these items to our customers in late 2007/early 2008.
      We
      expect to develop not only mainstream Entenmann’s coffee items, but upscale
      flavored Entenmann’s products in twelve ounce valve bags as well. These products
      will give the line a visible upscale image to our retailers and their customers,
      which we believe will be integral to the long term success of this
      arrangement.




Our
      net
      sales are affected by the price of green coffee. We import green coffee from
      Colombia, Mexico, Kenya, Brazil and Uganda. The supply and price of coffee
      beans
      are subject to volatility and are influenced by numerous factors which are
      beyond our control. For example, coffee crops in Brazil, which produces
      one-third of the world’s green coffee, are susceptible to frost in June and July
      and drought in September, October and November. However, because we purchase
      coffee from a number of countries and are able to freely substitute one
      country’s coffee for another in our products, price fluctuations in one country
      generally have not had a material impact on the price we pay for coffee.
      Accordingly, price fluctuations generally have not had a material effect on
      our
      results of operations, liquidity and capital resources. Historically, because
      we
      generally have been able to pass green coffee price increases through to
      customers, increased prices of green coffee generally result in increased net
      sales. However, the average indicator price for Robusta coffee, the main
      component for our leading espresso brands (Café Caribe and Café Supremo) is
      still at its highest level seen in the last eight years. In October 2006,
      national brands reacted to these price increases, raising list prices by $0.12
      per unit, and we were able to increase our prices as well. In addition, we
      initiated another price increase in January 2007 for $0.10 per pound on most
      roasted products.




Historically,
      we have used short-term coffee futures and options contracts primarily for
      the
      purpose of partially hedging and minimizing the effects of changing green coffee
      prices and to reduce our cost of sales. In addition, we acquire futures
      contracts with longer terms, generally three to four months, primarily for
      the
      purpose of guaranteeing an adequate supply of green coffee at favorable prices.
      Although the use of these derivative financial instruments has enabled us to
      mitigate the effect of changing prices, no strategy can entirely eliminate
      pricing risks and we generally remain exposed to loss when prices decline or
      increase significantly in a very short period of time. If the hedges that we
      enter do not adequately offset the risks of coffee bean price volatility or
      our
      hedges result in losses, our cost of sales may increase, resulting in a decrease
      in profitability. In addition, we generally remain exposed to supply risk in
      the
      event of non-performance by the counter-parties to any futures
      contract.




12




**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:




·
            We
                recognize revenue in accordance with Securities and Exchange Commission
                Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”).
                Under SAB 104, revenue is recognized at the point of passage to the
                customer of title and risk of loss, when there is persuasive evidence
                of
                an arrangement, the sales price is determinable, and collection of
                the
                resulting receivable is reasonably assured. We recognize revenue
                at the
                time of shipment. Sales are reflected net of discounts and
                returns.




·
            Our
                allowance for doubtful accounts is maintained to provide for losses
                arising from customers’ inability to make required payments. If there is
                deterioration of our customers’ credit worthiness and/or there is an
                increase in the length of time that the receivables are past due
                greater
                than the historical assumptions used, additional allowances may be
                required. For example, every additional one percent of our accounts
                receivable that becomes uncollectible, would reduce our operating
                income
                by approximately $53,000.




·
            Inventories
                are stated at cost (determined on a first-in, first-out basis). Based
                on
                our assumptions about future demand and market conditions, inventories
                are
                subject to be written-down to market value. If our assumptions about
                future demand change and/or actual market conditions are less favorable
                than those projected, additional writedowns of inventories may be
                required. Each additional one percent of potential inventory write-down
                would have reduced operating income by approximately $39,000****for
                the three months ended July 31,
                2007.




·
            We
                account for income taxes in accordance with Statement of Financial
                Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS No.
                109”). Under SFAS No. 109, deferred tax assets and liabilities are
                determined based on the liabilities, using enacted tax rates in effect
                for
                the year in which the differences are expected to reverse. Deferred
                tax
                assets are reflected on the balance sheet when it is determined that
                it is
                more likely than not that the asset will be realized. Accordingly,
                our net
                deferred income tax assets of $445,300 could need to be written off
                if we
                do not remain profitable.




13


**Comparison
      of Results of Operations for the Three Months Ended July 31, 2006 and
      2007**




***Net
      Income.*** We had
      net income of $370,656, or $0.07 per share (basic and diluted), for the three
      months ended July
      31,
      2007 compared
      to net income of $179,450, or $0.03 per share (basic and diluted), for the
      three
      months ended July 31, 2006. The increase primarily reflects decreased operating
      expenses and increased other income, while gross profit remained relatively
      constant.




***Net
      Sales.*** Net
      sales totaled $13,964,807 for the three months ended July 31, 2007, an increase
      of $2,106,226 or 17.8% from $11,858,581 for the three months ended July 31,
      2006. The increase net sales reflect higher sales of green coffee and private
      label coffee compared to the third quarter of fiscal year 2006. The number
      of
      our customers in the specialty green coffee area was relatively flat, numbering
      292 customers at July 31, 2007. These customers are predominately independent
      gourmet/specialty roasters, some of whom own their own retail outlets. Because
      the specialty green coffee area is the fastest growing segment of the coffee
      market, we believe that our customer base and sales will grow in this area.
      Although we are constantly gaining new customers in this area, we are also
      focusing our efforts on retaining and expanding our relationship with our most
      profitable customers.




***Cost
      of Sales.*** Cost of
      sales for the three months ended July 31, 2007 was $12,027,277 or 86.1% of
      net
      sales, as compared to $9,916,930 or 83.6% of net sales for the three months
      ended July 31, 2006. The increase in cost of sales primarily reflects increased
      purchases of green coffee and packaging, partially offset by an increase in
      net
      gains on futures contracts. Green coffee purchases increased $1,221,184 from
      $9,196,832 to $10,418,016 due to higher green coffee prices and private label
      sales volumes. Packaging purchases increased $485,143 from $640,938 to
      $1,126,081 due to a higher level of private label coffee sales. Net gains on
      futures contracts increased by $834,987 compared to the second quarter of fiscal
      year 2006. The increase in cost of sales as a percentage of net sales reflects
      higher green coffee prices.




***Gross
      Profit.*** Gross
      profit remained relatively constant at $1,937,530 for the three months ended
      July 31, 2007 compared to $1,941,651 for the three months ended July 31, 2006.
      Gross profit as a percentage of net sales decreased to 13.9% for the three
      months ended July 31, 2007 from 16.4% for the three months ended July 31, 2006.
      The decrease in our margins is attributable to higher green coffee prices and
      increased sales to our two largest customers, each of whom receives volume
      discounts and with whom our margins are therefore somewhat lower. The decrease
      in our margins was partially offset by an increase in net gains on future
      contracts during the three months ended July 31, 2007 compared to same period
      the previous year.




***Operating
      Expenses.*** Total
      operating expenses decreased by $45,109, or 2.9%, to $1,510,699 for the three
      months ended July
      31,
      2007 from
      $1,555,808 for the three months ended July 31, 2006. The decrease in operating
      expenses primarily reflects a $53,566 decrease in selling and administrative
      expense. The decrease in selling and administrative expense was primarily
      attributable to decreases of approximately $75,000 in insurance, $28,000 in
      packaging development expense and $25,000 in office supplies, partially offset
      by increases of approximately $39,000 in office salaries and $18,000 in
      commissions. The decrease in insurance was due to a reduction in our director
      and officer insurance premiums and the fact that we no longer warehouse coffee
      in New Orleans. Packaging development expense was higher in 2006 due to a new
      packaging initiative during this period. **** The
      decrease in office supplies reflects increased investment in information
      technology during the 2006 period. The increases in office salaries and
      commissions resulted from increased private label and branded coffee sales
      during the 2007 period.




14




***Other
      Income.*** Other
      income increased by $85,523 to $7,126 for the three months ended July 31, 2007
      compared to other expense of $78,397 for the three months ended July 31, 2006.
      The major components of other expense, interest income and interest expense,
      increased by $2,032 and decreased by $11,602, respectively, during the third
      quarter of 2007 compared to 2006. We also incurred expense of $69,289 during
      the
      three months ended July 31, 2006, which constituted our share of the loss
      incurred by our Café La Rica joint venture. For the three months ended July 31,
      2007, this item equaled income of $2,600.




***Income
      Before Income Taxes and Minority Interest in
      Subsidiary.*** We had
      income of $433,957 before income taxes and minority interest in subsidiary
      for
      the three months ended July 31, 2007 compared to $307,446 during the comparable
      period in 2006. The increase was attributable to increased income from
      operations and increased other income.




***Income
      Taxes*** **.** Our
      provision for income taxes for the three months ended July 31, 2007 totaled
      $58,443 compared to a provision of $127,996 for the three months ended July
      31,
      2006. An increase in deferred tax assets and decrease in estimate for taxes
      payable resulted in a reduction in tax expense for the quarter.




**Comparison
      of Results of Operations for the Nine Months Ended July 31, 2006 and
      2007**




***Net
      Income.*** We had
      net income of $1,019,248, or $.18 per share (basic and diluted), for the nine
      months ended July 31, 2007 compared to net income of $414,854, or $0.08 per
      share (basic and diluted), for the nine months ended July 31, 2006. The increase
      primarily reflects increased gross profit and was partially offset by increased
      operating expenses and other expense.




***Net
      Sales.*** Net
      sales totaled $40,794,292 for the nine months ended July 31, 2007, an increase
      of $3,079,938 or 8.2% from $37,714,354 for the nine months ended July 31, 2006.
      The increase in net sales reflects higher sales of green coffee and private
      label coffee versus the first three quarters of 2006. The number of our
      customers in the specialty green coffee area was relatively flat, numbering
      292
      customers at July 31, 2007. These customers are predominately independent
      gourmet/specialty roasters, some of whom own their own retail outlets. Because
      the specialty green coffee area is the fastest growing segment of the coffee
      market, we believe that our customer base and sales will grow in this area.
      Although we are constantly gaining new customers in this area, we are also
      focusing our efforts on retaining and expanding our relationship with our most
      profitable customers.




***Cost
      of Sales.*** Cost of
      sales for the nine months ended July 31, 2007 was $34,581,004, or 84.8% of
      net
      sales, as compared to $32,584,566 or 86.4% of net sales for the nine months
      ended July 31, 2006. The increase in cost of sales primarily reflects increased
      purchases of green coffee and packaging, partially offset by an increase in
      net
      gains on futures contracts. Green coffee purchases increased by $1,816,881
      from
      $27,877,070 to $29,693,951 due to higher green coffee and private label sales
      volumes. Packaging purchases increased by $1,665,818 from $$2,259,009 to
      $3,294,827 due to higher private lable coffee sales. Net gains on futures
      contracts increased by $1,302,487, or 244.7%, from $532,313 for the nine months
      ended July 31, 2006 to $1,834,800 for the nine months ended July 31, 2007.
      The
      decrease in cost of sales as a percentage of net sales reflects increased
      margins on our private label and branded coffee products due to the two price
      increases implemented in October of 2006 and January of 2007 and increased
      gains
      on futures contracts.




15




***Gross
      Profit.*** Gross
      profit for the nine months ended July 31, 2007 was $6,213,288, an increase
      of
      $1,083,500, or 21.2%, from $5,129,788 for the nine months ended July 31, 2006.
      Gross profit as a percentage of net sales increased to 15.2% for the nine months
      ended July 31, 2007 from 13.6% for the nine months ended July 31, 2006. The
      increase in our margins is attributable to the effects of the price increases
      implemented in October 2006 as well as an increase in net gains on future
      contracts during the nine months ended July 31, 2007 compared to same period
      the
      previous year. The increase was partially mitigated by the increase in sales
      to
      two large customers on whose business we earn somewhat lower margins during
      the
      three months ended July 31, 2007.




***Operating
      Expenses.*** Total
      operating expenses increased by $566,665, or 13.1%, to $4,896,948 for the nine
      months ended July 31, 2007 from $4,330,283 for the nine months ended July 31,
      2006. The increase in operating expenses primarily reflects a $322,744 increase
      in selling and administrative expense and a $242,000 writedown in amounts due
      from Café La Rica. The writedown pertained to the nonpayment of invoices and
      advances associated with Café La Rica. See “ *Legal
      Proceedings* .”
The
      increase in selling and administrative expense was primarily attributable to
      increases of approximately $108,000 in office salaries, $93,000 in professional
      fees, $87,000 in commissions and $50,000 in licenses and fees, and an impairment
      loss of $31,892 on leasehold improvements. These increases were partially offset
      by decreases of approximately $52,000 in both shipping costs and contract labor
      costs. The increase in office salaries and commissions resulted from increased
      private label and green coffee sales. The increase in professional fees was
      due
      to costs related to Sarbanes-Oxley Act compliance and the Café La Rica
      litigation. The increase in licenses and fees was due to a down payment on
      a new
      licensing arrangement during the second quarter. The decrease in shipping costs
      resulted from increased sales to customers proximate to our New York and
      Colorado locations **** and
      the
      decrease in contract labor costs is due to our use of more direct labor during
      the nine month period.




***Other
      Expense.*** Other
      expense increased by $32,963 to $97,618 for the nine months ended July 31,
      2007
      compared to $64,655 for the nine months ended July 31, 2006. The increase in
      other expense was primarily due to a $33,000 writedown in the investment in
      our
      Café La Rica joint venture and increased interest expense. These increases in
      expense were partially offset by increased management fee income and interest
      income.




***Income
      Before Income Taxes and Minority Interest in
      Subsidiary.*** We had
      income of $1,218,722 before income taxes and minority interest in subsidiary
      for
      the nine months ended July 31, 2007 compared to $734,850 for the nine months
      ended July 31, 2006. The increase was attributable to increased income from
      operations.




***Income
      Taxes*** **.**  Our
      provision for income taxes for the nine months ended July 31, 2007 totaled
      $198,493 compared to $319,996 for the nine months ended July 31, 2006. An
      increase in deferred tax assets and decrease in estimate for taxes payable
      resulted in a reduction in tax expense for the nine months ended July 31,
      2007.




**Liquidity
      and Capital Resources**




As
      of
      July 31, 2007, we had working capital of $9,261,208 which represented a $904,186
      increase from our working capital of $8,357,022 as of October 31, 2006, and
      total stockholders’ equity of $12,298,204, which increased by $956,500 from our
      total stockholders’ equity of $11,341,704 as of October 31, 2006. Our working
      capital increased primarily due to an increase in cash of $986,524, an increase
      in inventories on $982,758 and a decrease in accounts payable and accrued
      expenses of $905,596, offset in part by a $1,257,255 decrease accounts
      receivable, net of allowance for doubtful accounts, $546,806 decrease in
      commodities held at broker, a $269,592 decrease in prepaid and refundable taxes
      and an increase in line of credit borrowings. At July 31, 2007, the outstanding
      balance on our line of credit was $2,674,490 compared to $2,542,881 at October
      31, 2006. Total stockholders’ equity primarily increased due to net income for
      the nine month period. This increase was partially offset by the repurchase
      12,000 shares of our outstanding common stock during the quarter at a cost
      of
      $62,748.




16




As
      of
      July 31, 2007, we had a financing agreement with Merrill Lynch Business
      Financial Services Inc. This line of credit is for a maximum $4,000,000, expires
      on October 31, 2007 and requires monthly interest payments at a rate of LIBOR
      plus 2.4%. This loan is secured by a blanket lien on all of our assets. The
      credit facility contains covenants that place restrictions on our operations.
      Among other things, these covenants and the personal guarantees of two of the
      Company’s officers/shareholders: require us to maintain certain financial
      ratios; require us to maintain a minimum net worth; and prohibit us from merging
      with or into other companies, acquiring all or substantially all of the assets
      of other companies, or selling all or substantially all of our assets without
      the consent of the lender. These restrictions could adversely impact our ability
      to implement our business plan, or raise additional capital, if needed. In
      addition, if we default under our existing credit facility or if our lender
      demands payment of a portion or all of our indebtedness, we may not have
      sufficient funds to make such payments. As of July 31, 2007, we were in
      compliance with all covenants contained in the credit facility.




For
      the
      nine months ended July 31, 2007, our operating activities provided net cash
      of
      $1,151,954 as compared to the nine months ended July 31, 2006 when net cash
      provided by operating activities was $652,631. The increased cash flow from
      operations for the nine months ended July 31, 2007 was primarily due to
      increased net income and decreases in accounts receivable and commodities held
      at broker, partially offset by decreases in accounts payable and accrued
      expenses and inventories, as well as the loss due to our interest in, and
      writedown of amounts due from, Café La Rica.




For
      the
      nine months ended July 31, 2007, our investing activities used net cash of
      $234,291 as compared to the nine months ended July 31, 2006 when net cash used
      in investing activities was $846,646. During the nine months ended July 31,
      2007, all of the net cash used in investing activities related to purchases
      of
      property and equipment. During the nine months ended July 31, 2006, net cash
      used in investing activities included approximately $690,000 of investments
      Café
La Rica and Generations Coffee Company.




For
      the
      nine months ended July 31, 2007, our financing activities provided net cash
      of
      $68,861 as compared to the nine months ended July 31, 2006 when net cash
      provided by financing activities was $2,498,053. The decreased cash flow from
      financing activities reflects increased net cash payments under our line of
      credit.




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




**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, results of
      operations, liquidity, capital expenditures or capital resources, that is
      material to investors.


17


**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risk.**





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
      July
      31, 2007, our debt consisted of $2,674,490 of variable rate debt under our
      revolving line of credit. At July 31, 2007, interest on the variable rate debt
      was payable at **[7.47]** %
      (or
      2.4% above the one-month LIBOR rate) for the revolving line of
      credit.




***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 5 of the notes to condensed consolidated financial
      statements in this report. At July 31, 2007, we held 100 options (generally
      with
      terms of two months or less) covering an aggregate of 3,750,000 pounds of green
      coffee beans at a price of $ $1.20 per pound. The fair market value of these
      options, which was obtained from major financial institutions, was $189,375
      at
      July 31, 2007. In addition, we acquire futures contracts with longer terms
      (generally three to four months) primarily for the purpose of guaranteeing
      an
      adequate supply of green coffee. At
      July
      31, 2007, we held 199 futures contracts for the purchase of 7,462,500 pounds
      of
      coffee at an average price of $1.1489 per pound. The market
      price of coffee applicable to such contracts was $1.143 per pound at that
      date.




The
      use
      of these derivative financial instruments has enabled us to mitigate the effect
      of changing prices although we generally remain exposed to loss when prices
      decline significantly in a short period of time or remain at higher levels,
      preventing us from obtaining inventory at favorable prices. We generally have
      been able to pass green coffee price increases through to customers, thereby
      maintaining our gross profits. However, we cannot predict whether we will be
      able to pass inventory price increases through to our customers in the future.
      Increased green coffee prices cause our margins to shrink to the extent we
      are
      unable to pass the full amount of increase through to our customers. We believe
      our hedging policies remain a vital element to our business model not only
      in
      controlling our cost of sales, but also giving us the flexibility to obtain
      the
      inventory necessary to continue to grow our sales while minimizing margin
      compression during a time of historically high coffee prices.




**Item
      4.**  **Controls
      and Procedures.**





Management,
      including our President, Chief Executive Officer and Chief Financial Officer,
      has evaluated the effectiveness of our disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the
      period covered by this report. Based upon that evaluation, the President and
      Chief Executive Officer, who is also the Chief Financial Officer, concluded
      that
      the disclosure controls and procedures were effective to ensure that information
      required to be disclosed in the reports that we file and submit under the
      Exchange Act is (1) recorded, processed, summarized and reported as and
      when required; and (2) accumulated and communicated to the Company’s management,
      including its President and Chief Executive Officer, who is also the principal
      executive officer and principal financial officer, as appropriate to allow
      timely discussions regarding disclosure.




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


18


**Part
      II — OTHER INFORMATION**




**Item
      1.**  **Legal
      Proceedings** **.**





On
      February 5, 2007, we dissolved Café
La
      Rica due
      to
      Café La Rica’s material breach of the Expense Sharing Agreement dated March 2006
      between us and Café La Rica, primarily resulting from non-payment for coffee
      supplied to Café La Rica by us. In the notice of dissolution, we requested an
      orderly winding up of Café La Rica’s business and the liquidation of its assets.





Café
La
      Rica’s other member, Coffee Bean Trading-Roasting, LLC, denied that any breach
      occurred and filed a lawsuit in the U.S. District Court for the Southern
      District of Florida against us alleging breaches of certain agreements and
      responsibilities. We countersued Coffee Bean Trading-Roasting, LLC alleging
      conversion of Café La Rica funds and breaches of certain agreements and
      responsibilities. The court granted our motion to transfer the venue of this
      lawsuit to Delaware.





We
      have
      filed a lawsuit in the Delaware Chancery Court against Café La Rica, Coffee Bean
      Trading-Roasting, LLC and Ernesto Aguila, a partner in Coffee Bean Trading
      -
      Roasting, LLC, individually, alleging breaches of certain agreements and
      responsibilities and conversion of Café La Rica funds. Coffee Bean
      Trading-Roasting, LLC has countersued us in the Delaware action alleging
      breaches of certain agreements and responsibilities and requesting a liquidating
      trustee to wind up the affairs of Café La Rica and liquidate and distribute its
      assets.





The
      litigation continues and the parties are in the process of discovery. Settlement
      discussions between the various parties are ongoing. We consider the allegations
      against us be baseless and intend to vigorously defend our self and prosecute
      our claims against Coffee Bean Trading-Roasting, LLC, Café La Rica and Ernesto
      Aguila in the Delaware Chancery Court.





We
      have
      written down the amount due from the joint venture by $242,000 during the nine
      months ended July 31, 2007 representing the least likely amount that will not
      be
      recovered from Café La Rica. Our investment in the joint venture has been
      written down by $33,000 during the nine months ended July 31, 2007 to $284,458
      as of July 31, 2007 representing the approximate net book value of the equipment
      that was originally contributed by us to the joint venture. We have estimated
      our share of the loss in Café La Rica to be $91,340 for the nine months ended
      July 31, 2007 based upon the most recent available information.





We
      are a
      party to various other legal proceedings that, in our opinion, are routine
      in
      nature and will not have a material adverse effect on our results of operations
      or financial position in future periods.


19


**Item
      1A.**  **Risk
      Factors.**





There
      have been no material changes to the risk factors previously disclosed in our
      Annual Report on Form 10-K for the fiscal year ended October 31, 2006 that
      could
      affect our business, results of operations or financial condition.





**Item
      2.**  **Unregistered
      Sales of Equity in Securities and Use of Proceeds** **.**




The
      following table provides information regarding repurchases of our common stock
      in each month of the quarter ended July 31, 2007.




**COMPANY
      PURCHASES OF EQUITY SECURITIES**





**Period**
            
            **Total
                Number of Shares Purchased**
            
            **Average
                Price Paid per Share**
            
            **Total
                Number of Shares Purchased as Part of Publicly Announced Plans or
                Programs****(1)**
            
            **Maximum
                Number of Shares that may yet be Purchased under the Plans or
                Programs****(1)**May
                1, 2007 through May 31, 2007
            
            
            3,200
            
            $
            3.99
            
            
            3,200
            
            
            273,291June
                1, 2007 through June 30, 2007
            
            
            **-**
            
            
            -
            
            
            -
            
            
            273,291July
                1, 1007 through July 31, 2007
            
            
            8,800
            
            
            5.59
            
            
            8,800
            
            
            264,491**Total**
            
            
            12,000
            
            $
            5.23
            
            
            12,000
            
            
            264,491







(1)
            On
                April 13, 2007, our Board of Directors authorized a stock repurchase
                plan
                pursuant to which we could repurchase up to 276,491 shares (5% of
                our
                common stock outstanding as of April 12, 2007) in either open market
                or
                private transactions. The stock repurchase plan is not subject to
                an
                expiration date.




**Item
      3.**  **Defaults
      upon Senior Securitie** **s.**





None.





**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders** **.**





During
      the three months ended July 31, 2007, no matters were submitted to a vote of
      security holders.




**Item
      5.**  **Other
      Information** **.**





None.




20




**Item
      6.**  **Exhibits.**





11.1
            
            Earnings
                Per Share Calculation.31.1
            
            Rule
                13a - 14(a)/15d - 14a Certification.32.1
            
            Section
                1350 Certification.


21


**SIGNATURE** **S**


Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.


Coffee
                Holding Co., Inc.
              (Registrant)By:
            /s/ Andrew
              GordonAndrew
                Gordon
              President,
                Chief Executive Officer and Chief Financial Officer(Principal Executive, Financial and Accounting
              Officer)September 13, 2007





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