**UNITED
        STATES**
 **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: **January
        31, 2008**
  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, a non-accelerated filer, or a smaller reporting company.
        See
        the definitions of “large accelerated filer,” “accelerated filer” and “smaller
        reporting company” in Rule 12b-2 of the Exchange Act.
  Large
        accelerated filer o   Accelerated
        filer o
  Non-accelerated
        filer o   Smaller
        reporting company 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.
  **5,497,130
        shares of common stock, par value $0.001 per share, outstanding at February
        29,
        2008**
  
   **PAGE****PART
                  I — FINANCIAL INFORMATION****Item
                  1.**
              **Financial
                  Statements**
              1Condensed
                  Consolidated Balance SheetsJanuary
                  31, 2008 (unaudited) and October 31, 2007
              1Condensed
                  Consolidated Statements of Income and Retained EarningsThree
                  Months Ended January 31, 2008 and 2007 (unaudited)
              2Condensed
                  Consolidated Statements of Cash FlowsThree
                  Months Ended January 31, 2008 and 2007 (unaudited)
              3Notes
                  to Condensed Consolidated Financial Statements (unaudited)
              4**Item
                  2.**
              **Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations**
              11**Item
                  3.**
              **Quantitative
                  and Qualitative Disclosures About Market Risk**
              18**Item
                  4.**
              **Controls
                  and Procedures**
              18**PART
                  II — OTHER INFORMATION****Item
                  1.**
              **Legal
                  Proceedings**
              19**Item 1A.**
              **Risk
                  Factors**
              19**Item
                  2.**
              **Unregistered
                  Sales of Equity Securities and Use of Proceeds**
              19**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**
              20**Signatures**
              21
  i
  **PART
        I** *—* **FINANCIAL INFORMATION**
 **Item
        1.**  **Financial Statements**
 **COFFEE
        HOLDING CO., INC.**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 **JANUARY
        31, 2008 AND OCTOBER 31, 2007**
  **January
                  31, 2008**
              
              October
                  31, 2007**(unaudited)****-
                  ASSETS -****CURRENT
                  ASSETS:**Cash
              
              **$**
              **1,089,041**
              
              $
              890,649Commodities
                  held at broker
              
              
              **3,082,871**
              
              
              3,468,530Accounts
                  receivable, net of allowances of $127,464 and $136,781 for 2008
                  and 2007,
                  respectively
              
              
              **5,543,343**
              
              
              7,130,467Inventories
              
              
              **4,709,513**
              
              
              4,472,097Prepaid
                  expenses and other current assets
              
              
              **483,649**
              
              
              502,240Prepaid
                  and refundable income taxes
              
              
              **108,712**
              
              
              236,406Deferred
                  income tax assets
              
              
              **270,000**
              
              
              279,000**TOTAL
                  CURRENT ASSETS**
              
              
              **15,287,129**
              
              
              16,979,389Property
                  and equipment, at cost, net of accumulated depreciation of $4,601,266
                  and
                  $4,542,490 for 2008 and 2007, respectively
              
              
              **2,640,353**
              
              
              2,651,960Deposits
                  and other assets
              
              
              **742,016**
              
              
              765,368**TOTAL
                  ASSETS**
              
              **$**
              **18,669,498**
              
              $
              20,396,717**-
                  LIABILITIES AND STOCKHOLDERS’ EQUITY -****CURRENT
                  LIABILITIES:**Accounts
                  payable and accrued expenses
              
              **$**
              **4,968,590**
              
              $
              6,791,690Line
                  of credit borrowings
              
              
              **889,253**
              
              
              897,191Dividend
                  payable
              
              
              **1,544,568**
              
              
              -Income
                  taxes payable
              
              
              **7,005**
              
              
              9,161**TOTAL
                  CURRENT LIABILITIES**
              
              
              **7,409,416**
              
              
              7,698,042Deferred
                  income tax liabilities
              
              
              **127,500**
              
              
              145,000Deferred
                  compensation payable
              
              
              **380,559**
              
              
              351,332**TOTAL
                  LIABILITIES**
              
              
              **7,917,475**
              
              
              8,194,374**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; 5,497,130 shares outstanding for 2008 and 5,514,930
                  shares
                  outstanding in 2007
              
              
              **5,530**
              
              
              5,530Additional
                  paid-in capital
              
              
              **7,327,023**
              
              
              7,327,023Retained
                  earnings
              
              
              **3,584,164**
              
              
              4,946,467Less:
                  Treasury stock, 32,700 and 14,900 common shares, at cost for 2008
                  and
                  2007, respectively
              
              
              **(164,694**
              **)**
              
              (76,677
              )**TOTAL
                  STOCKHOLDERS’ EQUITY**
              
              
              **10,752,023**
              
              
              12,202,343**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY**
              
              **$**
              **18,669,498**
              
              $
              20,396,717
 See
          notes
          to Condensed Consolidated Financial Statements.
  1
  **COFFEE
        HOLDING CO., INC.**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS**
 **THREE
        MONTHS ENDED JANUARY 31, 2008 AND 2007**
 **(Unaudited)**
  **2008**
              
              2007**NET
                  SALES**
              
              **$**
              **14,962,541**
              
              $
              12,635,112**COST
                  OF SALES**
              
              
              **13,082,423**
              
              
              10,466,517**GROSS
                  PROFIT**
              
              
              **1,880,118**
              
              
              2,168,595**OPERATING
                  EXPENSES:**Selling
                  and administrative
              
              
              **1,378,924**
              
              
              1,390,690Writedown
                  of amount due from dissolved joint venture
              
              
              **-**
              
              
              242,000Officers’
                  salaries
              
              
              **161,377**
              
              
              117,012**TOTALS**
              
              
              **1,540,301**
              
              
              1,749,702**INCOME
                  FROM OPERATIONS**
              
              
              **339,817**
              
              
              418,893**OTHER
                  INCOME (EXPENSE):**Interest
                  income
              
              
              **24,271**
              
              
              34,116Equity
                  in loss from dissolved joint venture
              
              
              **-**
              
              
              (63,939
              )Writedown
                  of investment in dissolved joint venture
              
              
              **-**
              
              
              (33,000
              )Management
                  fee income
              
              
              **-**
              
              
              12,026Interest
                  expense
              
              
              **(29,006**
              **)**
              
              (24,232
              )**TOTALS**
              
              
              **(4,735**
              **)**
              
              (75,029
              )**INCOME
                  BEFORE INCOME TAXES AND MINORITY INTEREST IN
                  SUBSIDIARY**
              
              
              **335,082**
              
              
              343,864Provision
                  for income taxes
              
              
              **142,051**
              
              
              37,850**INCOME
                  BEFORE MINORITY INTEREST**
              
              
              **193,031**
              
              
              306,014Minority
                  interest in earnings (loss) of subsidiary
              
              
              **(10,766**
              **)**
              
              3,670**NET
                  INCOME**
              
              
              **182,265**
              
              
              309,684Retained
                  earnings – beginning
              
              
              **4,946,467**
              
              
              4,009,151Dividend
                  declared
              
              
              **(1,544,568**
              **)**
              
              **-****RETAINED
                  EARNINGS - ENDING**
              
              **$**
              **3,584,164**
              
              $
              4,318,835Basic
                  and diluted earnings per share
              
              **$**
              **.03**
              
              $
              .06Weighted
                  average common shares outstanding:Basic
              
              
              **5,506,326**
              
              
              5,529,830Diluted
              
              
              **5,576,326**
              
              
              5,599,830
 
 See
          notes
          to Condensed Consolidated Financial Statements.
  2
  **COFFEE
        HOLDING CO., INC.**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **THREE
        MONTHS ENDED JANUARY 31, 2008 AND 2007**
 **(Unaudited)**
  **2008**
              
              2007**OPERATING
                  ACTIVITIES:**Net
                  income
              
              **$**
              **182,265**
              
              $
              309,684Adjustments
                  to reconcile net income to net cash provided by operating
                  activities:Depreciation
                  and amortization
              
              
              **119,572**
              
              
              60,630Writedown
                  of amount due from dissolved joint venture
              
              
              **-**
              
              
              242,000Loss
                  from dissolved joint venture
              
              
              **-**
              
              
              63,939Writedown
                  of investment in dissolved joint venture
              
              
              **-**
              
              
              33,000Deferred
                  income taxes
              
              
              **(8,500**
              **)**
              
              (229,200
              )Changes
                  in operating assets and liabilities:Commodities
                  held at broker
              
              
              **385,659**
              
              
              1,375,961Accounts
                  receivable
              
              
              **1,587,124**
              
              
              1,916,454Inventories
              
              
              **(237,416**
              **)**
              
              (561,482
              )Prepaid
                  expenses and other assets
              
              
              **18,591**
              
              
              84,362Prepaid
                  and refundable income taxes
              
              
              **127,694**
              
              
              256,672Accounts
                  payable and accrued expenses
              
              
              **(1,823,100**
              **)**
              
              (867,450
              )Due
                  from dissolved joint venture
              
              
              **-**
              
              
              (183,232
              )Deposits
                  and other assets
              
              
              **41,813**
              
              
              (132,557
              )Income
                  taxes payable
              
              
              **(2,156**
              **)**
              
              **-****Net
                  cash provided by operating activities**
              
              
              **391,546**
              
              
              2,368,781**INVESTING
                  ACTIVITIES:**Purchases
                  of property and equipment
              
              
              **(107,965**
              **)**
              
              (92,091
              )**Net
                  cash (used in) investing activities**
              
              
              **(107,965**
              **)**
              
              (92,091
              )**FINANCING
                  ACTIVITIES:**Advances
                  under bank line of credit
              
              
              **14,282,082**
              
              
              11,103,226Principal
                  payments under bank line of credit
              
              
              **(14,290,020**
              **)**
              
              (12,660,888
              )Purchase
                  of treasury stock
              
              
              **(88,017**
              **)**
              
              -**Net
                  cash (used in) financing activities**
              
              
              **(95,955**
              **)**
              
              (1,557,662
              )**MINORITY
                  INTEREST**
              
              
              **10,766**
              
              
              (3,670
              )**NET
                  INCREASE IN CASH**
              
              
              **198,392**
              
              
              715,358Cash,
                  beginning of year
              
              
              **890,649**
              
              
              1,112,165**CASH,
                  END OF PERIOD**
              
              **$**
              **1,089,041**
              
              $
              1,827,523**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW DATA:**Interest
                  paid
              
              **$**
              **19,515**
              
              $
              18,642Income
                  taxes paid
              
              **$**
              **24,962**
              
              $
              3,550**NONCASH
                  INVENTORY AND FINANCING ACTIVITIES:**On
                  January 31, 2008, the Company declared dividends in the amount
                  of
                  $1,544,568.
 
 See
          notes
          to Condensed Consolidated Financial Statements.
  3
 
 **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
        sells
        green coffee. The Company’s sales are primarily to customers that are located
        throughout the United States with limited sales in 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 owned a 50% interest in Cafe La Rica, LLC (“CLR”) effective March
        10, 2006. CLR was in the same business as the Company and was being recorded
        as
        an investment in joint venture since the Company did not exercise control
        of
        CLR. As a result, the financial statements of CLR were not consolidated and
        was
        accounted for by the equity method of accounting. Effective October 17, 2007
        the
        Company dissolved the joint venture.
 
 **NOTE
                2     -**
              **BASIS
                  OF PRESENTATION:**
 
 The
        interim condensed consolidated financial information as of January 31, 2008
        and
        for the three-month periods ended January 31, 2008 and 2007 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 generally
        accepted accounting principles 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, 2007, 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
        January 31, 2008, and results of operations and cash flows for the three
        months
        ended January 31, 2008 and 2007, as applicable, have been made. The results
        of
        operations for the three months ended January 31, 2008 and 2007 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 in CLR for the quarter ended January 31, 2007 only. All significant
        inter-company transactions and balances have been eliminated in
        consolidation.
  4
 
 **NOTE
                3     -**
              **ADOPTION
                  OF RECENTLY ISSUED ACCOUNTING
                  PRONOUNCEMENT:**
 
 In
        June
        2006, the Financial Accounting Standards Board issued Interpretation No.
        48,
        Accounting for Uncertainty in Income Taxes (“Fin 48”). This Interpretation
        clarifies the accounting for uncertainty in income taxes recognized in an
        entity’s financial statements and prescribes a recognition threshold of
        more-likely-than-not to be sustained upon examination. Measurement of the
        tax
        uncertainty occurs if the recognition threshold has been met. This
        Interpretation also provides guidance on de-recognition, classification,
        interest and penalties, accounting in interim periods, disclosure, and
        transition. The Company conducts business primarily in the US and, as a result,
        files income tax returns for US, New York, New York City and in four other
        states and jurisdictions. In the normal course of business the Company is
        subject to examination by taxing authorities. At present, there are no ongoing
        income tax audits or unresolved disputes with the various tax authorities
        that
        the Company currently files or has filed with. The Company’s New York State tax
        returns have been accepted as filed through October 31, 2004 and the Company’s
        New York City tax returns have been accepted as filed through October 31,
        2003.
        Given the Company’s history with the taxing authorities, conservative tax
        approach and no material uncertain tax positions, the adoption of FIN 48
        on
        November 1, 2007 did not have any effect on our financial position, results
        of
        operations or cash flows as of and for the three months ended January 31,
        2008.
  **NOTE
                4     -**
              **CAFÉ
                  LA RICA, LLC - JOINT
                  VENTURE**
  The
        following represents condensed financial information of CLR as of January
        31,
        2007 and for the three months then ended.
 
 Current
                  assets
              
              $
              423,828Machinery
                  and other assets
              
              
              448,555Total
                  assets
              
              $
              872,383Current
                  liabilities
              
              $
              643,172Other
                  liabilities
              
              
              5,889Capital
                  (deficit)
              
              
              223,322Total
                  liabilities and capital
              
              $
              872,383Sales
              
              $
              314,806Expenses
              
              
              442,684Net
                  loss
              
              $
              (127,878
              )Company’s
                  share of net loss
              
              $
              (63,939
              )
 
 As
        of
        January 31, 2007, the Company wrote-down the amount due from joint venture
        by
        $242,000 and wrote-down its investment in joint venture by $33,000 as a result
        of the Company’s plans to dissolve CLR. CLR was dissolved on October 17, 2007,
        so no condensed financial information is presented as of January 31, 2008
        and
        for the three months then ended.
  5
  **NOTE
                5     -**
              **ACCOUNTS
                  RECEIVABLE:**
  Accounts
        receivable are recorded net of allowances. The allowance for doubtful accounts
        represents the estimated uncollectible portion of accounts receivable. The
        reserve for sales discounts represents the estimated discount that customers
        will take upon payment. The allowances are summarized as follows:
 
 **2008**
                **(unaudited)**
              
              2007
                (audited)Allowance
                  for doubtful accounts
              
              **$**
              **92,464**
              
              $
              92,464Reserve
                  for sales discounts
              
              
              **35,000**
              
              
              44,317Totals
              
              **$**
              **127,464**
              
              $
              136,781
  **NOTE
                6     -**
              **INVENTORIES:**
  Inventories
        at January 31, 2008 and October 31, 2007 consisted of the
        following:
 
 **January
                  31,**
                **2008**
                **(unaudited)**
              
              October
                  31,
                2007
                (audited)Packed
                  coffee
              
              **$**
              **1,207,559**
              
              $
              1,233,457Green
                  coffee
              
              
              **2,722,505**
              
              
              2,379,212Packaging
                  supplies
              
              
              **779,449**
              
              
              859,428Totals
              
              **$**
              **4,709,513**
              
              $
              4,472,097
  **NOTE
                7    -**
              **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 primarily cash and
        commodities for futures and options in the amount of $3,082,871 and $3,468,530,
        which includes unrealized gains of $326,887 and $335,750 at January 31, 2008
        and
        October 31, 2007, 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
        January 31, 2008, the Company held 210 options (generally with terms of two
        months or less) covering an aggregate of 7,875,000 pounds of green coffee
        beans
        at a price of $1.30 per pound including the value of the option. The fair
        market
        value of these options, which was obtained from major financial institutions,
        was $654,000 at January 31, 2008.
 
 At
        January 31, 2007, the Company held 40 options (generally with terms of two
        months or less) covering an aggregate of 1,500,000 pounds of green coffee
        beans
        at a price of $1.15 per pound including the value of the option. The fair
        market
        value of these options, which was obtained from a major financial institution,
        was $54,000 at January 31, 2007.
  6
 
 **NOTE
                7     -**
              **HEDGING
                  (Continued):**
  The
        Company acquires futures contracts with longer terms (generally three to
        four
        months) primarily for the purpose of guaranteeing an adequate supply of green
        coffee.
 
 At
        January 31, 2008, the Company held 35 futures contracts for the purchase
        of
        1,312,500 pounds of coffee at an average price of $1.33 per pound. The market
        price of coffee applicable to such contracts was $1.38 per pound at that
        date.
 
 At
        January 31, 2007, the Company held 75 futures contracts for the purchase
        of
        2,812,500 pounds of coffee at an average price of $1.10 per pound. The market
        price of coffee applicable to such contracts was $1.1765 per pound at that
        date.
 
 Included
        in cost of sales and due from commodities held at broker for the three months
        ended January 31, 2008 and 2007, the Company recorded realized and unrealized
        gains and losses respectively, on these contracts as follows:
 **Three Months Ended January 31,****2008**
                  **(unaudited)**
                
                2007
                  (unaudited)Gross
                    realized gains
                
                **$**
                **1,145,109**
                
                $
                688,456Gross
                    realized losses
                
                **$**
                **(542,803**
                **)**
                $
                (94,401
                )Unrealized
                    losses
                
                **$**
                **(8,863**
                **)**
                $
                (3,739
                )
 
 **NOTE
                8     -**
              **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 with a maturity date
        of
        October 31, 2008. The 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 a rate of LIBOR
        plus
        1.95%, or 5.21% as of January 31, 2008 (the rate was LIBOR plus 2.15%, or
        6.66%,
        as of October 31, 2007), and requires the Company to comply with various
        financial covenants. As of January 31, 2008 and 2007, the Company was in
        compliance with all financial covenants. As of January 31, 2008 and October
        31,
        2007, the borrowings under the line of credit were $889,253 and $897,191,
        respectively.
 
 **NOTE
                9     -**
              **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 results of operations or financial position in future
        periods.
  7
  **NOTE
                10     -**
              **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 is based on the
        weighted-average number of common shares outstanding plus all potential dilutive
        common shares outstanding. The only potential dilutive common shares outstanding
        pertain to warrants. The following weighted average number of shares was
        used
        for the computation of basic and diluted earnings per share.
 
 **Quarters Ended**
                **January
                  31,****2008**
                **(unaudited)**
              
              2007
                (unaudited)Net
                  Income
              
              **$**
              **182,265**
              
              $
              309,684**BASIC
                  EARNINGS:**Weighted
                  average number of common shares outstanding
              
              
              **5,506,326**
              
              
              5,529,830Basic
                  earnings per common share
              
              **$**
              **0.03**
              
              $
              0.06**DILUTED
                  EARNINGS:**Weighted
                  average number of common shares outstanding
              
              
              **5,506,326**
              
              
              5,529,830Warrants
                  - common stock equivalents
              
              
              **70,000**
              
              
              70,000Weighted
                  average number of common shares outstanding - as adjusted
              
              
              **5,576,326**
              
              
              5,599,830Diluted
                  earnings per common share
              
              **$**
              **0.03**
              
              $
              0.06
 
 8




**COFFEE
      HOLDING CO., INC. AND SUBSIDIARY**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JANUARY
      31, 2008 AND 2007**


**(Unaudited)**




**NOTE 11     -**
            **ECONOMIC
                DEPENDENCY:**




For
      the
      three months ended January 31, 2008, approximately 34% and 13% of the Company’s
      sales were derived from two customers. Sales to these customers were
      approximately $5,100,000 and $1,950,000 and the corresponding accounts
      receivable from these customers at January 31, 2008 were approximately $729,000
      and $493,000, respectively.





For
      the
      three months ended January 31, 2007, approximately 27% of the Company’s sales
      were derived from one customer. Sales to this customer were approximately
      $3,500,000 and the corresponding accounts receivable at January 31, 2007 from
      this customer was approximately $441,000.





For
      the
      three months ended January 31, 2008, approximately 51% and 10% of the Company’s
      purchases were from two vendors. Purchases from these vendors were approximately
      $6,600,000 and $1,200,000 and the corresponding accounts payable to these
      vendors at January 31, 2008 were approximately $724,000 and $389,000,
      respectively.





For
      the
      three months ended January 31, 2007, approximately 29% and 14% of the Company’s
      purchases were from two vendors. Purchases from these vendors were approximately
      $3,100,000 and $1,500,000 and the corresponding accounts payable to these
      vendors at January 31, 2007 were approximately $537,000 and $271,000,
      respectively.





In
      addition, an employee of one of these vendors is a director of the Company.
      Purchases from that vendor totaled approximately $6,600,000 and $3,100,000
      for
      the three months ended January 31, 2008 and 2007, respectively. The
      corresponding accounts payable balance to this vendor were approximately
      $724,000 at January 31, 2008 and $943,000 at October 31, 2007. Management does
      not believe that the loss of any one vendor would have a material adverse effect
      of the Company’s operations due to the availability of many alternate
      suppliers.





**NOTE
              12     -**
            **STOCK
                OPTION PLAN:**





As
      of
      January 31, 2008, the Company had a stock option plan whereby options could
      be
      granted to the Company’s directors, officers, other key employees and
      consultants. The Company had reserved 800,000 shares of common stock for
      issuance under this plan. The plan expired on February 10, 2008 in accordance
      with its terms. No options were granted under the plan since its
      inception.


9


**COFFEE
      HOLDING CO., INC. AND SUBSIDIARY**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**JANUARY
      31, 2008 AND 2007**


**(Unaudited)**




**NOTE
              13     -**
            **WARRANTS
                FOR PURCHASE OF COMMON
                STOCK:**




The
      Company entered into an agreement with Maxim Group, LLC (“Maxim”) for Maxim to
      serve as the Company’s financial advisors and lead managing underwriter for a
      public offering which concluded on June 16, 2005 of the Company’s common stock.
      Subsequently, Maxim and Joseph Stevens & Company, Inc. (“Joseph Stevens”)
      entered into an agreement pursuant to which Joseph Stevens agreed to act as
      managing underwriter and Maxim participated in the underwriting syndicate of
      the
      offering. The Company also sold to Joseph Stevens and Maxim for $100, warrants
      to purchase 70,000 shares of common stock at a price of $6.00 per share. The
      fair value of these warrants were credited to additional paid in capital. The
      warrants are exercisable for a period of five (5) years and contain provisions
      for cashless exercise, anti-dilution and piggyback registration
      rights.





**NOTE
              14     -**
            **TREASURY
                STOCK AND DIVIDENDS:**




The
      Company utilizes the cost method of accounting for treasury stock. The cost
      of
      reissued shares is determined under the Last in, First out method. During the
      three months ended January 31, 2008, the Company purchased 17,800 shares for
      $88,017.





The
      Company declared a 28 cent per share dividend, aggregating $1,544,568 on January
      31, 2008. The dividend is payable to all shareholders of record as of February
      15, 2008 and was disbursed on February 29, 2008.




10


**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;




·
            the
                success of our hedging strategy;




·
            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.




11


**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;




·
            the
                success of our hedging strategy;




·
            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.




We
      operate from an East Coast facility located in Brooklyn, New York and a Western
      facility located in La Junta, Colorado. Operating out of these two facilities
      allows us to produce and distribute large quantities of fresh coffee products
      throughout the United States. In addition, by operating out of two facilities,
      we are able to gain economies of scale in both manufacturing and logistical
      efficiencies. This has allowed us to compete aggressively throughout the United
      States. As discussed in more detail below, we also own 60% of a specialty coffee
      joint venture located in Brecksville, Ohio.




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. For example, we recently established a West Coast sales
      department to increase our sales to West Coast customers.




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 engages 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 allows us to bid on the private label gourmet whole bean business
      we had 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 $99,000 in net sales for the quarter ended January 31, 2008
      and had eleven accounts, five of which made Generations the exclusive supplier
      for their fast growing and highly visible organic coffee programs.




12


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
      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. **** Our
      first
      production run was in February 2008 and we expect to have Entenmann’s coffee
      products placed in supermarkets in the Northeast by mid-March 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 and an additional price increase of $0.10 per pound in late
      fiscal 2007 which took effect in fiscal 2008. During the beginning of calendar
      2008, prices of Arabica and Robusta coffee have continued to rise, increasing
      over 20% in a few weeks time. These price appreciations have negatively impacted
      our profit margins for a significant portion of our business. We again initiated
      price increases in response to these conditions and have been able to obtain
      price concessions from most of our customers. However, these price increases
      will not have a positive impact until late in our second quarter at the
      earliest. In addition, the recent volatility in the markets has prevented us
      from successfully implementing our hedging strategies.




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.




13


**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 $55,000.




·
            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 $47,000 for
                the three
                months ended January 31, 2008.




·
            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 tax asset as of January 31, 2008 of $142,500 could need
                to be
                written off if we do not remain
                profitable.




·
            In
                addition, the calculation of our tax liabilities involves the inherent
                uncertainty associated with the application of complex tax laws.
                We are
                also subject to examination by various taxing authorities. We will
                estimate and provide adequate accruals, when necessary, for potential
                additional taxes and related interest expense that may ultimately
                result
                from such examinations in accordance with FIN
                48.




14


**Comparison
      of Results of Operations for the Three Months Ended January 31, 2007 and
      2008**




***Net
      Income.*** We had
      net income of $182,265, or $0.03 per share (basic and diluted), for the three
      months ended January
      31, 2008 compared
      to net income of $309,684, or $0.06 per share (basic and diluted), for the
      three
      months ended January 31, 2007. The decrease in net income primarily reflects
      the
      fact that increases in cost of sales outpaced our increased net sales for the
      quarter, resulting in decreased gross profit.




***Net
      Sales.*** Net
      sales totaled $14,962,541 for the three months ended January 31, 2008, an
      increase of $2,327,429, or 18.4%, from $12,635,112 for the three months ended
      January 31, 2007. The increase in net sales reflects both increased amounts
      of
      green coffee and private label coffee sold as well as increased sales prices
      compared to the first quarter of fiscal 2007. The increase in net sales also
      reflects the price increases we implemented in Ja nuary
      2007 and late fiscal 2007. We were forced to implement these price increases
      because sharp increases in the coffee commodity market over the past couple
      of
      years has increased the amount we pay for coffee beans.




***Cost
      of Sales.*** Cost of
      sales for the three months ended January 31, 2008 was $13,082,423 or 87.4%
      of
      net sales, as compared to $10,466,517 or 82.8% of net sales for the three months
      ended January 31, 2007. The increase in cost of sales primarily reflects
      increased purchases of green coffee. Green coffee purchases increased $2,386,679
      from $9,123,877 to $11,510,556 due to higher green coffee prices and private
      label sales volumes. Net gains on options and futures contracts, a component
      of
      cost of sales, remained relatively unchanged at $593,443 for the first quarter
      of fiscal 2008 compared to $590,316 for the first quarter of fiscal 2007. The
      increase in cost of sales as a percentage of net sales reflects higher green
      coffee prices which could not fully be passed along to customers through sales
      price increases.




***Gross
      Profit.*** Gross
      profit decreased by $288,477 from $2,168,595 for the three months ended January
      31, 2007 to $1,880,118 for the three months ended January 31, 2008. Gross profit
      as a percentage of net sales decreased to 12.6% for the three months ended
      January 31, 2008 from 17.2% for the three months ended January 31, 2007. 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.




During
      the beginning of calendar 2008, prices of Arabica and Robusta coffee have risen
      over 20% in a few weeks time. We have initiated price increases in response
      to
      these conditions and have been able to obtain price concessions from most of
      our
      customers. However, these price increases will not have a positive impact until
      late in our second quarter at the earliest and will negatively impact our profit
      margins for a significant portion of our business to the extent we are not
      able
      to fully pass the price increases on to our customers.




***Operating
      Expenses.*** Total
      operating expenses decreased by $209,401, or 12.0%, to $1,540,301 for the three
      months ended January
      31, 2008 from
      $1,749,702 for the three months ended January 31, 2007. The decrease in
      operating expenses primarily reflects a $242,000 write-down of amount due from
      Café La Rica during the three months ended January 31, 2007 and no corresponding
      write-down during the corresponding period in 2008. Selling and administrative
      expenses also decreased by $11,766 and officers’ salaries increased by $44,365.
      The decrease in selling and administrative expenses mainly reflects decreases
      of
      approximately $69,000 in professional services and $67,000 in shipping costs,
      partially offset by increases of approximately $26,000 in utilities, $15,000
      in
      office salaries and $14,000 in show and demo expense. The decrease in
      professional services expense reflects litigation costs associated with Café La
      Rica during the first quarter of fiscal 2007. Shipping costs decreased due
      to
      increased sales to our large green coffee customers who pay the shipping
      expenses for product they purchase from us. Utilities expense increased due
      to
      higher natural gas prices. Office salaries expense increased due to hiring
      and
      salary increases to support increased net sales. We attended more shows and
      demos during the first quarter of fiscal 2008, which is the reason for the
      expense increase in that category.




15


***Other
      Expense.*** Other
      expense decreased by $70,294 to $4,735 for the three months ended January 31,
      2008 compared to $75,029 for the three months ended January 31, 2007. The major
      components of other expense, interest income and interest expense, decreased
      by
      $9,845 and increased by $4,774, respectively, during the first quarter of fiscal
      2008 compared to fiscal 2007. However, we incurred expense of $63,939 during
      the
      three months ended January 31, 2007, which constituted our share of the loss
      incurred by our Café La Rica joint venture. We also wrote-down $33,000 of our
      investment in Café La Rica during that quarter. Because Café La Rica was
      dissolved effective October 17, 2007, we incurred neither of those expenses
      during the first quarter of fiscal 2008.




***Income
      Before Income Taxes and Minority Interest in
      Subsidiary.*** We had
      income of $335,082 before income taxes and minority interest in subsidiary
      for
      the three months ended January 31, 2008 compared to $343,864 during the
      comparable period in 2007. The decrease was attributable to decreased income
      from operations, partially offset by decreased other expense.




***Income
      Taxes*** **.** Our
      provision for income taxes for the three months ended January 31, 2008 totaled
      $142,051 compared to a provision of $37,850 for the three months ended January
      31, 2007. A decrease in net deferred tax assets and a decrease in current taxes
      as a result of a decrease in taxable income resulted in the net increase in
      tax
      expense for the quarter, despite lower book income.




**Liquidity
      and Capital Resources**




As
      of
      January 31, 2008, we had working capital of $7,877,713 which represented a
      $1,403,634 decrease from our working capital of $9,281,347 as of October 31,
      2007, and total stockholders’ equity of $10,752,023, which decreased by
      $1,450,320 from our total stockholders’ equity of $12,202,343 as of October 31,
      2007. Our working capital decreased primarily due to a decrease in accounts
      receivable of $1,587,124, a $1,544,568 increase in dividend payable and a
      $385,659 decrease in commodities held at broker, offset in part by a $1,823,100
      decrease in accounts payable and accrued expenses, a $237,416 increase in
      inventories and a $198,392 increase in cash. At January 31, 2008, the
      outstanding balance on our line of credit was $889,253 compared to $897,191
      at
      October 31, 2007. Total stockholders’ equity decreased due to the declaration of
      a cash dividend of $0.28 per share and the repurchase of 17,800 shares of our
      outstanding common stock during the quarter at a cost of $88,017.




As
      of
      January 31, 2008, 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, 2008 and requires monthly interest payments at a rate of LIBOR
      plus 1.95%. 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 January 31, 2008, we were in
      compliance with all covenants contained in the credit facility.




For
      the
      three months ended January 31, 2008, our operating activities provided net
      cash
      of $391,546 as compared to the three months ended January 31, 2007 when net
      cash
      provided by operating activities was $2,368,781 The decreased cash flow from
      operations for the three months ended January 31, 2008 was primarily due to
      decreased accounts payable and accrued expenses and increased inventories,
      partially offset by decreased accounts receivable and commodities held at
      broker.




For
      the
      three months ended January 31, 2008, our investing activities used net cash
      of
      $107,965 as compared to the three months ended January 31, 2007 when net cash
      used in investing activities was $92,091. During each of the three month periods
      ended January 31, 2008 and January 31, 2007, all of the net cash used in
      investing activities related to purchases of property and
      equipment.




16




For
      the
      three months ended January 31, 2008, our financing activities used net cash
      of
      $95,955 as compared to the three months ended January 31, 2007 when net cash
      used by financing activities was $1,557,662. The decreased cash flow from
      financing activities reflects increased net cash payments under our line of
      credit and repurchases of our common stock.




We
      expect
      to fund our operations, including paying our liabilities, payment of any
      dividends, 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
      January 31, 2008, our debt consisted of $889,253 of variable rate debt under
      our
      revolving line of credit. At January 31, 2008, interest on the variable rate
      debt was payable at 5.21 (or 1.95% 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
      hedging and minimizing the effects of changing green coffee prices, as further
      explained in Note 7 of the notes to condensed consolidated financial statements
      in this report. At January 31, 2008, we held 210 options (generally with terms
      of two months or less) covering an aggregate of 7,875,000 pounds of green coffee
      beans at a price of $1.30 per pound. The fair market value of these options,
      which was obtained from major financial institutions, was $654,000 at January
      31, 2008. 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
      January 31, 2008, we held 35 futures contracts for the purchase of 1,312,500
      pounds of coffee at an average price of $1.33 per pound. The market
      price of coffee applicable to such contracts was $1.38 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** **.**





We
      are
      not a party to, and none of our property is the subject of, any pending legal
      proceedings other than routine litigation that is incidental to our business.
      To
      our knowledge, no governmental authority is contemplating initiating any such
      proceedings.





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





Not
      applicable.




**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 January 31, 2008.




**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)**November
                1, 2007 through November 30, 2007
            
            
            8,600
            
            $
            4.92
            
            
            8,600
            
            
            252,991December
                1, 2007 through December 31, 2007
            
            
            1,400
            
            $
            4.89
            
            
            1,400
            
            
            251,591January
                1, 2008 through January 31, 2008
            
            
            7,800
            
            $
            4.98
            
            
            7,800
            
            
            243,791**Total**
            
            
            17,800
            
            $
            4.94
            
            
            17,800
            
            
            243,791


__________




(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.




19


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





None.




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





During
      the three months ended January 31, 2008, no matters were submitted to a vote
      of
      security holders.




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





None.




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





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


20


**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
                GordonPresident,
                Chief Executive Officer and Chief Financial Officer(Principal
                Executive, Financial and Accounting
                Officer)




March
      14,
      2008




21