##### Table of Contents

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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2007

OR

 ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to

Commission File No. 33-960-70-LA



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THANKSGIVING COFFEE COMPANY, INC.

(Exact name of small business issuer as
specified in its charter)



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|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|California                                                    |  | 94-2823626                         
|(State or other jurisdiction ofincorporation or organization) |  | (IRS EmployerIdentification Number)
|                                                             
|19100 South Harbor DriveFort Bragg, California 95437         
|                                                             
|(Address of principal executive offices)(Zip Code)           
|                                                             
|Issuers telephone number, including area code: 707: 964-0118

(Former name, former address and former fiscal year,

if changed since last report.)



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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 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 ̈

As of May 14, 2007, there were 1,236,744 shares outstanding of common stock of the issuer.

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

Transitional Small Business Disclosure Format (check
one):    Yes ̈No  x



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##### Table of Contents

THANKSGIVING COFFEE COMPANY, INC.

INDEX



|        |  |                                                                                         |  |     
|------- |  | --------------------------------------------------------------------------------------- |  | ----
|        |  | PART I. FINANCIAL INFORMATION                                                           |  |     
|        |  |                                                                                        
|Item 1. |  | Financial Statements and Notes to Financial Statements                                  |  |     
|        |  |                                                                                        
|        |  | Balance Sheets as of March 31, 2007 (unaudited) and December 31, 2006                   |  | 4-5 
|        |  |                                                                                        
|        |  | Statements of Operations for the Three Months Ended March 31, 2007 and 2006 (unaudited) |  | 6   
|        |  |                                                                                        
|        |  | Statements of Cash Flows for the Three Months Ended March 31, 2007 and 2006 (unaudited) |  | 7   
|        |  |                                                                                        
|        |  | Notes to unaudited Financial Statements                                                 |  | 8-17
|        |  |                                                                                        
|Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations   |  | 18  
|        |  |                                                                                        
|Item 3. |  | Controls and Procedures                                                                 |  | 21  
|        |  |                                                                                        
|        |  | PART II. OTHER INFORMATION                                                              |  |     
|        |  |                                                                                        
|Item 1. |  | Legal Proceedings                                                                       |  | 21  
|        |  |                                                                                        
|Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds                             |  | 22  
|        |  |                                                                                        
|Item 3. |  | Defaults Upon Senior Securities                                                         |  | 22  
|        |  |                                                                                        
|Item 4. |  | Submission of Matters to a Vote of Security Holders                                     |  | 22  
|        |  |                                                                                        
|Item 5. |  | Other Information.                                                                      |  | 22  
|        |  |                                                                                        
|Item 6. |  | Exhibits                                                                                |  | 22  



2



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##### Table of Contents

Financial Statements

and Notes to Financial Statements

Thanksgiving Coffee Company, Inc.

For the Three Months Ended March 31, 2007 and 2006



3



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Balance Sheets



|                                       |  |                          |            |   |                               |   |            |  
|-------------------------------------- |  | ------------------------ | ---------- | - | ----------------------------- | - | ---------- | -
|                                       |  | March 31,2007(Unaudited) |            |   | December 31,2006 (See Note 1) |  
|Assets                                 |  |                          |            |   |                               |   |            |  
|Current assets                         |  |                          |            |   |                               |   |            |  
|Cash                                   |  | $                        | 44,157     |   |                               | $ | 76,974     |  
|Accounts receivable, net of allowance  |  |                          | 238,018    |   |                               |   | 253,209    |  
|Inventories                            |  |                          | 360,937    |   |                               |   | 370,205    |  
|Prepaid expenses                       |  |                          | 12,630     |   |                               |   | 30,856     |  
|                                       |  |                          |            |   |                               |   |            |  
|Total current assets                   |  |                          | 655,742    |   |                               |   | 731,244    |  
|                                       |  |                         
|Property and equipment                 |  |                          |            |   |                               |   |            |  
|Property and equipment                 |  |                          | 2,767,356  |   |                               |   | 2,760,812  |  
|Accumulated depreciation               |  |                          | (2,306,193 | ) |                               |   | (2,271,747 | )
|                                       |  |                          |            |   |                               |   |            |  
|Total property and equipment           |  |                          | 461,163    |   |                               |   | 489,065    |  
|                                       |  |                         
|Other assets                           |  |                          |            |   |                               |   |            |  
|Deposits and other assets              |  |                          | 16,851     |   |                               |   | 18,151     |  
|Goodwill                               |  |                          | 130,405    |   |                               |   | 130,406    |  
|Other intangibles, net of amortization |  |                          | 20,242     |   |                               |   | 21,696     |  
|                                       |  |                          |            |   |                               |   |            |  
|Total other assets                     |  |                          | 167,498    |   |                               |   | 170,253    |  
|                                       |  |                          |            |   |                               |   |            |  
|Total assets                           |  | $                        | 1,284,403  |   |                               | $ | 1,390,562  |  
|                                       |  |                          |            |   |                               |   |            |  

See accompanying notes to financial statements



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Balance Sheets



|                                                                                                 |  |                          |           |   |                  |   |           |  
|------------------------------------------------------------------------------------------------ |  | ------------------------ | --------- | - | ---------------- | - | --------- | -
|                                                                                                 |  | March 31,2007(Unaudited) |           |   | December 31,2006 |  
|Liabilities and shareholders equity                                                             |  |                          |           |   |                  |   |           |  
|Current liabilities                                                                              |  |                          |           |   |                  |   |           |  
|Accounts payable                                                                                 |  | $                        | 451,379   |   |                  | $ | 469,786   |  
|Notes payable - bank                                                                             |  |                          | 48,872    |   |                  |   | 48,872    |  
|Notes payable - other                                                                            |  |                          | 9,628     |   |                  |   | 9,418     |  
|Note payable - shareholders                                                                      |  |                          | 19,919    |   |                  |   | 19,919    |  
|Capital lease obligations                                                                        |  |                          | 43,458    |   |                  |   | 43,296    |  
|Accrued liabilities                                                                              |  |                          | 57,988    |   |                  |   | 73,048    |  
|                                                                                                 |  |                          |           |   |                  |   |           |  
|Total current liabilities                                                                        |  |                          | 631,244   |   |                  |   | 664,339   |  
|                                                                                                 |  |                         
|Long term debt                                                                                   |  |                          |           |   |                  |   |           |  
|Notes payable - bank                                                                             |  |                          | 271,217   |   |                  |   | 278,245   |  
|Notes payable - other                                                                            |  |                          | 20,823    |   |                  |   | 23,401    |  
|Capital lease obligations                                                                        |  |                          | 76,434    |   |                  |   | 87,381    |  
|                                                                                                 |  |                          |           |   |                  |   |           |  
|Total long term debt                                                                             |  |                          | 368,474   |   |                  |   | 389,027   |  
|                                                                                                 |  |                          |           |   |                  |   |           |  
|Total liabilities                                                                                |  |                          | 999,718   |   |                  |   | 1,053,366 |  
|                                                                                                 |  |                         
|Shareholders equity                                                                             |  |                          |           |   |                  |   |           |  
|Common stock, no par value, 1,960,000 shares authorized, 1,236,744 shares issued and outstanding |  |                          | 861,816   |   |                  |   | 861,816   |  
|Additional paid in capital                                                                       |  |                          | 24,600    |   |                  |   | 24,600    |  
|Accumulated deficit                                                                              |  |                          | (601,731  | ) |                  |   | (549,220  | )
|                                                                                                 |  |                          |           |   |                  |   |           |  
|Total shareholders equity                                                                       |  |                          | 284,685   |   |                  |   | 337,196   |  
|                                                                                                 |  |                          |           |   |                  |   |           |  
|Total liabilities and shareholders equity                                                       |  | $                        | 1,284,403 |   |                  | $ | 1,390,562 |  
|                                                                                                 |  |                          |           |   |                  |   |           |  

See accompanying notes to financial statements



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##### Table of Contents

Statements of Operations

Unaudited



|                                             |  |                                     |           |   |      |   |           |  
|-------------------------------------------- |  | ----------------------------------- | --------- | - | ---- | - | --------- | -
|                                             |  | For the Three MonthsEnded March 31, |          
|                                             |  | 2007                                |           |   | 2006 |  
|Income                                       |  |                                     |           |   |      |   |           |  
|Net sales                                    |  | $                                   | 1,127,734 |   |      | $ | 1,103,564 |  
|Cost of sales                                |  |                                     | 667,890   |   |      |   | 676,423   |  
|                                             |  |                                     |           |   |      |   |           |  
|Gross profit                                 |  |                                     | 459,844   |   |      |   | 427,141   |  
|                                             |  |                                    
|Operating expenses                           |  |                                     |           |   |      |   |           |  
|Selling, general and administrative expenses |  |                                     | 473,971   |   |      |   | 535,937   |  
|Depreciation and amortization                |  |                                     | 32,577    |   |      |   | 30,722    |  
|                                             |  |                                     |           |   |      |   |           |  
|Total operating expenses                     |  |                                     | 506,548   |   |      |   | 566,659   |  
|                                             |  |                                     |           |   |      |   |           |  
|Operating loss                               |  |                                     | (46,704   | ) |      |   | (139,518  | )
|                                             |  |                                    
|Other income (expense)                       |  |                                     |           |   |      |   |           |  
|Miscellaneous income (expense)               |  |                                     | 7,157     |   |      |   | (2,111    | )
|Gain (loss) on sale of equipment             |  |                                     |          |   |      |   |          |  
|Interest expense                             |  |                                     | (12,163   | ) |      |   | (12,333   | )
|                                             |  |                                     |           |   |      |   |           |  
|Total other income (expense)                 |  |                                     | (5,006    | ) |      |   | (14,444   | )
|                                             |  |                                     |           |   |      |   |           |  
|Loss before income taxes                     |  |                                     | (51,710   | ) |      |   | (153,962  | )
|Income tax expense                           |  |                                     | (800      | ) |      |   | (800      | )
|                                             |  |                                     |           |   |      |   |           |  
|Net loss                                     |  | $                                   | (52,510   | ) |      | $ | (154,762  | )
|                                             |  |                                     |           |   |      |   |           |  
|Loss per share (basic)                       |  | $                                   | (0.042    | ) |      | $ | (0.125    | )
|                                             |  |                                     |           |   |      |   |           |  
|Loss per share (dilutive)                    |  | $                                   | (0.042    | ) |      | $ | (0.125    | )
|                                             |  |                                     |           |   |      |   |           |  
|Weighted average number of shares            |  |                                     | 1,236,744 |   |      |   | 1,236,744 |  
|                                             |  |                                     |           |   |      |   |           |  

See accompanying notes to financial statements



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Statements of Cash Flows

Unaudited



|                                                                           |  |                                     |         |   |      |   |          |  
|-------------------------------------------------------------------------- |  | ----------------------------------- | ------- | - | ---- | - | -------- | -
|                                                                           |  | For the Three MonthsEnded March 31, |        
|                                                                           |  | 2007                                |         |   | 2006 |  
|Operating activities                                                       |  |                                     |         |   |      |   |          |  
|Net loss                                                                   |  | $                                   | (52,510 | ) |      | $ | (154,762 | )
|Adjustments to reconcile net loss to cash flows from operating activities: |  |                                     |         |   |      |   |          |  
|Depreciation and amortization                                              |  |                                     | 35,900  |   |      |   | 35,019   |  
|Allowance for bad debts                                                    |  |                                     | (1,221  | ) |      |   | (2,102   | )
|(Increase) decrease in:                                                    |  |                                     |         |   |      |   |          |  
|Accounts receivable                                                        |  |                                     | 16,412  |   |      |   | 47,154   |  
|Inventories                                                                |  |                                     | 9,268   |   |      |   | 25,733   |  
|Prepaid expenses                                                           |  |                                     | 18,226  |   |      |   | 16,374   |  
|Deposits and other assets                                                  |  |                                     | 1,300   |   |      |   |         |  
|Increase (decrease) in:                                                    |  |                                     |         |   |      |   |          |  
|Accounts payable                                                           |  |                                     | (18,407 | ) |      |   | 16,039   |  
|Accrued liabilities                                                        |  |                                     | (15,060 | ) |      |   | (37,501  | )
|                                                                           |  |                                     |         |   |      |   |          |  
|Net cash used in operating activities                                      |  |                                     | (6,092  | ) |      |   | (54,046  | )
|                                                                           |  |                                    
|Investing activities                                                       |  |                                     |         |   |      |   |          |  
|Purchases of property and equipment                                        |  |                                     | (6,544  | ) |      |   | (48,828  | )
|Proceeds from sale of equipment/disposal                                   |  |                                     |        |   |      |   |         |  
|                                                                           |  |                                     |         |   |      |   |          |  
|Net cash used in investing activities                                      |  |                                     | (6,544  | ) |      |   | (48,828  | )
|                                                                           |  |                                    
|Financing activities                                                       |  |                                     |         |   |      |   |          |  
|Proceeds from notes payable and capital leases                             |  |                                     |        |   |      |   | 31,732   |  
|Repayments of notes payable and capital leases                             |  |                                     | (20,181 | ) |      |   | (22,014  | )
|                                                                           |  |                                     |         |   |      |   |          |  
|Net cash provided by (used in) financing activities                        |  |                                     | (20,181 | ) |      |   | 9,718    |  
|                                                                           |  |                                    
|Decrease in cash                                                           |  |                                     | (32,817 | ) |      |   | (93,156  | )
|Cash at beginning of period                                                |  |                                     | 76,974  |   |      |   | 113,385  |  
|                                                                           |  |                                     |         |   |      |   |          |  
|Cash at end of period                                                      |  | $                                   | 44,157  |   |      | $ | 20,229   |  
|                                                                           |  |                                     |         |   |      |   |          |  

See accompanying notes to financial statements



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements

December 31, 2007 and 2006

1. Basis of
Presentation

The condensed financial statements in this Form 10-QSB have been prepared in accordance with accounting principles generally accepted in
the United States for interim financial information and with the instructions to Form 10-QSB and Article 10 of Regulation S-X. We have continued to follow the accounting policies disclosed in the financial statements included in our 2006 Form 10-KSB
filed with the Securities and Exchange Commission (SEC). It is suggested that these statements be read in conjunction with the December 31, 2006 audited financial statements and the accompanying notes on Form 10-KSB, as filed with the
Securities and Exchange Commission.

The interim financial information in this Form 10-QSB reflects all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of our results of operations for the interim periods. The results of operations for the three months ended March 31, 2007 are not necessarily indicative of results to be expected for the full year.

Segment Reporting

SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, changed the way public companies report information about segments of their business in their financial statements. It also requires entity-wide disclosures
about the products and services an entity provides, the material countries in which it holds assets and report revenues and its major customers. See Note 12

Income Taxes

The Company accounts for income taxes under the asset and liability method as prescribed by Statement of Financial Accounting
Standards (FASB) No. 109, Accounting for Income Taxes. As such, deferred income tax assets and liabilities are recognized for the future tax consequences of the differences between the financial statement carrying amount of existing
assets and liabilities and their respective tax basses. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled.

A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Use of Estimates

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



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



2. Accounts Receivable

Accounts receivable consist of the following:



|                                      |  |           |         |   |            |   |         |  
|------------------------------------- |  | --------- | ------- | - | ---------- | - | ------- | -
|                                      |  | 3/31/2007 |         |   | 12/31/2006 |  
|Accounts receivable                   |  | $         | 244,718 |   |            | $ | 261,130 |  
|Less: allowance for doubtful accounts |  |           | (6,700  | ) |            |   | (7,921  | )
|                                      |  |           |         |   |            |   |         |  
|Net accounts receivable               |  | $         | 238,018 |   |            | $ | 253,209 |  
|                                      |  |           |         |   |            |   |         |  

The Company utilizes a percentage method to establish the allowance for doubtful accounts. The estimated allowance
ranges from 1% to 10% of outstanding receivables based on factors pertaining to the credit risk of specific customers, historical trends and other information. Delinquent accounts are written off when it is determined that amounts are uncollectible.
Bad debt expense (recovery) for the three months ended March 31, 2007 and 2006 was $0 for both periods.

3. Inventories

Inventories consist of the following:



|                                                        |  |           |         |            |   |        
|------------------------------------------------------- |  | --------- | ------- | ---------- | - | -------
|                                                        |  | 3/31/2007 |         | 12/31/2006
|Coffee                                                  |  |           |         |            |   |        
|Unroasted                                               |  | $         | 106,994 |            | $ | 98,260 
|Roasted                                                 |  |           | 83,205  |            |   | 81,755 
|Tea                                                     |  |           | 5,515   |            |   | 5,296  
|Packaging, supplies and other merchandise held for sale |  |           | 165,223 |            |   | 184,894
|                                                        |  |           |         |            |   |        
|Total inventories                                       |  | $         | 360,937 |            | $ | 370,205
|                                                        |  |           |         |            |   |        

4. Property and Equipment

Property and equipment consist of the following:



|                                      |  |           |            |   |            |   |            |  
|------------------------------------- |  | --------- | ---------- | - | ---------- | - | ---------- | -
|                                      |  | 3/31/2007 |            |   | 12/31/2006 |  
|Equipment                             |  | $         | 1,393,070  |   |            | $ | 1,392,820  |  
|Furniture and fixtures                |  |           | 264,690    |   |            |   | 263,113    |  
|Leasehold improvements                |  |           | 461,830    |   |            |   | 461,830    |  
|Transportation equipment              |  |           | 174,512    |   |            |   | 169,795    |  
|Marketing equipment                   |  |           | 166,162    |   |            |   | 166,162    |  
|Capitalized website development costs |  |           | 14,076     |   |            |   | 14,076     |  
|Property held under capital leases    |  |           | 293,016    |   |            |   | 293,016    |  
|                                      |  |           |            |   |            |   |            |  
|Total property and equipment          |  |           | 2,767,356  |   |            |   | 2,760,812  |  
|Accumulated depreciation              |  |           | (2,306,193 | ) |            |   | (2,271,747 | )
|                                      |  |           |            |   |            |   |            |  
|Property and equipment, net           |  | $         | 461,163    |   |            | $ | 489,065    |  
|                                      |  |           |            |   |            |   |            |  

Depreciation expense for the three months ended March 31, 2007 and 2006 was $35,900 and $34,771 respectively.



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



5. Goodwill and Other Intangible Assets

As part of the adoption of Statement of Financial Accounting Standards (FASB) No. 142, Goodwill and Other Tangible Assetsas of January 1, 2002, the Company no longer amortizes goodwill. At
December 31, 2006 the Company performed a test of impairment on goodwill that resulted in a write down of approximately $41,000 in the value as of December 31, 2006, and is included in goodwill value as of March 31, 2007.

Intangible assets subject to amortization consist of the following:



|                                       |  |           |         |   |            |   |         |  
|-------------------------------------- |  | --------- | ------- | - | ---------- | - | ------- | -
|                                       |  | 3/31/2007 |         |   | 12/31/2006 |  
|Leasehold value                        |  | $         | 67,000  |   |            | $ | 67,000  |  
|Trademarks                             |  |           | 5,127   |   |            |   | 5,127   |  
|                                       |  |           |         |   |            |   |         |  
|Total intangible assets                |  |           | 72,127  |   |            |   | 72,127  |  
|Accumulated amortization               |  |           | (51,885 | ) |            |   | (50,431 | )
|                                       |  |           |         |   |            |   |         |  
|Other intangibles, net of amortization |  | $         | 20,242  |   |            | $ | 21,696  |  
|                                       |  |           |         |   |            |   |         |  

Amortization expense for the three months ended March 31, 2007 and 2006 was $1,454 and $248 respectively.

6. Deposits and Other Assets

Included in Deposits and
Other Assets are artwork that was developed for the labels for the tea program and long-term deposits.



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



7. Long Term Debt



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |           |         |            |   |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ------- | ---------- | - | -------
|Notes Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | 3/31/2007 |         | 12/31/2006
|Note payable to Savings Bank of Mendocino, payable in monthly installments of $4,307 plus interest at 3% over prime rate beginning
January 1, 2006 (11% at March 31, 2007), final payment is due on December 1, 2009. The note payable is collateralized by a security interest of first priority in all accounts receivable, inventory, equipment, instruments, general
intangibles and contract rights along with a personal guarantee from the Companys majority shareholders.                                                             |  | $         | 300,089 |            | $ | 307,117
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |          
|Line of credit to Savings Bank of Mendocino, payable in monthly installments of interest only at 3% over prime rate beginning January 1,
2006 (11% at March 31, 2007). The note payable for the line of credit is collateralized by a security interest of first priority in all accounts receivable, inventory, equipment, instruments, general intangible and contract rights along with a
personal guarantee from the Companys majority shareholders. The line is for a maximum of $25,000 and $20,000 has been used as of March 31, 2007. |  |           | 20,000  |            |   | 20,000 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |          
|Note payable to majority shareholders, Paul and Joan Katzeff, payable in monthly installments of interest only at 12%, with balance due on
demand after June 30, 1996.                                                                                                                                                                                                                                                                                                                                                                         |  |           | 19,919  |            |   | 19,919 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |          
|Note payable to Mercedes-Benz, payable in monthly installments of $691, including interest at 6.99%, collateralized by a vehicle, final
payment due on September 24, 2009.                                                                                                                                                                                                                                                                                                                                                                     |  |           | 18,892  |            |   | 20,705 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |          
|Note payable to Chrysler Financing, payable in monthly installments of $329, including interest at 15.492%, collateralized by a vehicle, final
payment due on January 24, 2011                                                                                                                                                                                                                                                                                                                                                                 |  |           | 11,559  |            |   | 12,114 



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



|                                                                                                                                                                                             |  |           |  |           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- |  | ----------
|Capital Lease Obligations                                                                                                                                                                    |  | 3/31/2007 |  | 12/31/2006
|Note payable to Manifest Leasing, payable in monthly installments of $444, including interest at 12.203%, collateralized by equipment, final
payment due on March 1, 2007.                   |  |          |  | 1,040     
|                                                                                                                                                                                             |  |          
|Note payable to G.E. Capital, payable in monthly installments of $1,355, including interest at 16.78%, collateralized by equipment, final
payment due on March 1, 2009.                      |  | 27,454    |  | 30,284    
|                                                                                                                                                                                             |  |          
|Note payable to Avaya Financial Services, payable in monthly installments of $824, including interest at 5.855%, collateralized by equipment,
final payment due on August 1, 2009.           |  | 22,242    |  | 24,365    
|                                                                                                                                                                                             |  |          
|Note payable to Axis Capital, payable in monthly installments of $709, including interest at 15.473%, collateralized by store fixtures, final
payment due September 14, 2009.                |  | 17,068    |  | 18,499    
|                                                                                                                                                                                             |  |          
|Note payable to US Bancorp Manifest Funding Services payable in monthly installments of $462, including interest at 14.237%, collateralized by
equipment, final payment due on May 22, 2009. |  | 10,281    |  | 11,277    
|                                                                                                                                                                                             |  |          
|Note payable to US Bancorp Manifest Funding Services payable in monthly installments of $522, including interest at 17.172%, collateralized by
equipment, final payment due on June 1, 2010. |  | 16,176    |  | 16,956    
|                                                                                                                                                                                             |  |          
|Note payable to Marlin Leasing payable in monthly installments of $428, including interest at 18.00%, collateralized by equipment, final
payment due on October 1, 2010.                     |  | 12,956    |  | 13,666    



12



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



7. Long Term Debt (continued)



|                                                                                                                                                                                                |  |           |          |   |            |   |        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | -------- | - | ---------- | - | -------
|Capital Lease Obligations                                                                                                                                                                       |  | 3/31/2007 |          |   | 12/31/2006
|Note payable to US Bancorp Manifest Funding Services payable in monthly installments of $533, including interest at 22.24%, collateralized by
equipment, final payment due on January 10, 2010. |  | $         | 13,715   |   |            | $ | 14,590 
|                                                                                                                                                                                                |  |           |          |   |            |   |        
|                                                                                                                                                                                                |  |           | 490,351  |   |            |   | 510,532
|Less current portion                                                                                                                                                                            |  |           | (121,877 | ) |            |   | 121,505
|                                                                                                                                                                                                |  |           |          |   |            |   |        
|Long term portion of notes payable                                                                                                                                                              |  | $         | 368,474  |   |            | $ | 389,027
|                                                                                                                                                                                                |  |           |          |   |            |   |        

Interest paid for the three months ended March 31, 2007 and 2006 was $12,163 and $12,333, respectively.

As of March 31, 2007, maturities of notes payable and capital lease obligations for each of the next five years and in the aggregate were as follows:



|                          |  |   |        
|------------------------- |  | - | -------
|Years Ending December 31, |  |  
|2007                      |  | $ | 121,877
|2008                      |  |   | 89,875 
|2009                      |  |   | 270,029
|2010                      |  |   | 8,245  
|2011                      |  |   | 325    
|Thereafter                |  |   |       
|                          |  |   |        
|                          |  | $ | 490,351
|                          |  |   |        

Based on current borrowing rates, the fair value of the notes payable and capital lease obligations approximate
their carrying amounts.



13



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



8. Income Taxes

Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Companys deferred tax assets consist of the benefit from net operating loss (NOL)
carryforwards and temporary differences. The net operating loss carry forwards expire in various years through 2026. The Companys deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the net
operating loss carryforwards. Net operating loss carryforwards may be further limited by a change in company ownership and other provisions of the tax laws.

The Companys deferred tax assets, valuation allowance, and change in valuation allowance are as follows:



|                  |  |                                                     |  |            |  |                              |  |                    |   |  |                             |   |  |               
|----------------- |  | --------------------------------------------------- |  | ---------- |  | ---------------------------- |  | ------------------ | - |  | --------------------------- | - |  | --------------
|Period Ending     |  | EstimatedNOL Carry-forward lesstemporarydifferences |  | NOLExpires |  | EstimatedTax Benefitfrom NOL |  | ValuationAllowance |   |  | Change inValuationAllowance |   |  | Net TaxBenefit
|December 31, 2006 |  | 595,000                                             |  | 2026       |  | 169,295                      |  | (169,295           | ) |  | (169,295                    | ) |  |              
|March 31, 2007    |  | 647,000                                             |  | 2027       |  | 181,171                      |  | (181,171           | ) |  | (11,876                     | ) |  |               

Income taxes at the statutory rate are reconciled to the Companys actual income taxes as follows:



|                                           |  |        |   
|------------------------------------------ |  | ------ | --
|Tax (benefit) at Federal statutory rate    |  | (20.00 | )%
|State tax (benefit) net of Federal benefit |  | (8.00  | ) 
|Temporary differences                      |  | 4.30   |   
|Valuation allowance                        |  | 23.70  |   
|Tax provision (benefit)                    |  |       |   

Income taxes paid for the three months ended March 31, 2007 and December 31, 2006 were $800 respectively.



14



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



9. Operating Leases

The Company leases its delivery fleet, other vehicles and some office equipment under noncancelable operating leases with terms ranging from three to five years.

As of March 31, 2007, minimum annual lease payments due under these agreements for each of the next five years and in the aggregate were:



|                          |  |   |       
|------------------------- |  | - | ------
|Years Ending December 31, |  |  
|2007                      |  | $ | 31,544
|2008                      |  |   | 9,853 
|2009                      |  |   | 5,454 
|2010                      |  |   | 1,979 
|                          |  |   |      
|                          |  |   |       
|                          |  | $ | 48,830
|                          |  |   |       

Total operating lease payments for the three months ended March 31, 2007 and 2006 were $11,380 and $14,286
respectively.

10. Long Term Leases

The Company leases
its corporate headquarters, warehouse and waterfront facilities from Paul and Joan Katzeff (the Companys majority shareholders). The lease is classified as an operating lease and provides for monthly rental payments of $8,600. The Company is
responsible for all real estate taxes, insurance and maintenance costs related to the facilities. The ten-year lease term ends May 31, 2015. Rental expense under the lease for the three months ended March 31, 2007 and 2006 was $25,800 in
both years.

The Company also leases a bakery establishment in Mendocino, California and warehouse premises in Santa Rosa, California under operating
leases expiring September 30, 2011 and January 31, 2007, respectively. The Company terminated the lease for the Santa Rosa facility when it expired in January of 2007. Rental expense under these operating leases for the three months ended
March 31, 2007 and 2006 was $13,008 and $13,782, respectively.

As of March 31, 2007, minimum future rental payments under noncancelable
facilities operating leases for each of the next five years and in the aggregate are as follows:



|                          |  |   |          
|------------------------- |  | - | ---------
|Years ending December 31, |  |  
|2007                      |  | $ | 152,988  
|2008                      |  |   | 154,470  
|2009                      |  |   | 157,020  
|2010                      |  |   | 159,690  
|2011                      |  |   | 147,120  
|Thereafter                |  |   | 412,800  
|                          |  |   |          
|                          |  | $ | 1,184,088
|                          |  |   |          



15



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



11. Related Party Transactions

As of March 31, 2007, the Company has an interest only note payable, due on demand, to Paul and Joan Katzeff (the Companys majority shareholders). The Company also leases properties from its majority
shareholders.

The summary of payments made to Paul and Joan Katzeff in connection with these related party transactions for the three months ended
March 31, 2007, is as follows:



|                  |  |   |       
|----------------- |  | - | ------
|Interest payments |  | $ | 658   
|Rent payments     |  | $ | 12,900

The Companys majority shareholders also guarantee certain notes payable of the Company (See
Note 7).

12. Information on Business Segments

As
noted in Note 1 in the Notes to the financial statements, the Company operates in two different business segments: the specialty coffee business and the retail bakery business. The specialty coffee business, although primarily based in California,
sells to grocery stores, serving locations and other retail outlets throughout the United States and some international business. The bakery sells exclusively on the north coast of California in Mendocino and Fort Bragg.

Selected financial data by business segment



|                              |  |           |           |   |           |   |           |  
|----------------------------- |  | --------- | --------- | - | --------- | - | --------- | -
|                              |  | 3/31/2007 |           |   | 3/31/2006 |  
|Net Sales                     |  |           |           |   |           |   |           |  
|Specialty Coffee              |  | $         | 1,001,626 |   |           | $ | 1,014,853 |  
|Bakery                        |  |           | 137,428   |   |           |   | 97,432    |  
|                              |  |           |           |   |           |   |           |  
|Total                         |  | $         | 1,139,054 |   |           | $ | 1,112,285 |  
|                              |  |           |           |   |           |   |           |  
|Intersegment Sales            |  |           |           |   |           |   |           |  
|Specialty Coffee              |  | $         | 11,320    |   |           | $ | 8,721     |  
|                              |  |           |           |   |           |   |           |  
|Total Sales                   |  | $         | 1,127,734 |   |           | $ | 1,103,564 |  
|                              |  |           |           |   |           |   |           |  
|Operating (Loss)              |  |           |           |   |           |   |           |  
|Specialty Coffee              |  | $         | (27,103   | ) |           | $ | (107,539  | )
|Bakery                        |  |           | (19,601   | ) |           |   | (31,979   | )
|                              |  |           |           |   |           |   |           |  
|Total                         |  | $         | (46,704   | ) |           | $ | (139,518  | )
|                              |  |           |           |   |           |   |           |  
|Depreciation and Amortization |  |           |           |   |           |   |           |  
|Specialty Coffee              |  | $         | 31,790    |   |           | $ | 33,295    |  
|Bakery                        |  |           | 4,567     |   |           |   | 1,725     |  
|                              |  |           |           |   |           |   |           |  
|Total                         |  | $         | 36,357    |   |           | $ | 35,020    |  
|                              |  |           |           |   |           |   |           |  



16



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



12. Information of Business Segments (continued)



|                 |  |           |           |            |   |          
|---------------- |  | --------- | --------- | ---------- | - | ---------
|Interest Expense |  | 3/31/2007 |           | 3/31/2006 
|Specialty Coffee |  | $         | 12,163    |            | $ | 12,333   
|Bakery           |  |           | 0         |            |   | 0        
|                 |  |           |           |            |   |          
|Total            |  | $         | 12,163    |            | $ | 12,333   
|                 |  |           |           |            |   |          
|                 |  |          
|                 |  | 3/31/2007 |           | 12/31/2006
|Assets           |  |           |           |            |   |          
|Specialty Coffee |  | $         | 1,038,491 |            | $ | 1,138,160
|Bakery           |  |           | 245,912   |            |   | 252,402  
|                 |  |           |           |            |   |          
|Total            |  | $         | 1,284,403 |            | $ | 1,390,562
|                 |  |           |           |            |   |          
|Fixed Assets     |  |           |           |            |   |          
|Specialty Coffee |  | $         | 393,114   |            | $ | 417,657  
|Bakery           |  |           | 68,049    |            |   | 71,408   
|                 |  |           |           |            |   |          
|Total            |  | $         | 461,163   |            | $ | 489,065  
|                 |  |           |           |            |   |          



17



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##### Table of Contents

THANKSGIVING COFFEE COMPANY, INC.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-QSB contains forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934. In some cases, forward-looking statements may be identified by words such as believe, anticipate, expect, intend,
plan, will, may, and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.
These statements relate to, among other things, possible expansions into new and existing markets and trends in the operations of Thanksgiving Coffee Company, Inc. (the Company). Any forward-looking statements should be considered in
light of various risks and uncertainties that could cause results to differ materially from expectations, estimates or forecasts expressed. These various risks and uncertainties include, but are not limited to: changes in general economic
conditions, changes in business conditions in the coffee industry, fluctuations in consumer demand for coffee products and in the availability and costs of green beans, continuing competition within the Companys businesses, variances from
budgeted sales mix and growth rate, consumer acceptance of the Companys products, inability to secure adequate capital to fund its operating expenses and working capital requirements, inability to hire, train and retain qualified personnel,
concentration of production and sales in Northern California, the loss of one or more major customers, inability to successfully implement the Companys sales goals, natural disasters, civil unrest in countries which produce coffee and tea,
weather and other risks identified herein. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this Quarterly Report on Form 10-QSB. The Companys forward-looking statements
should also be considered in light of its reviewed financial statements, related notes and the other financial information appearing elsewhere in this report and in its other filings with the Securities and Exchange Commission. As a result of these
risks and uncertainties, the Companys actual results may differ materially and adversely from those expressed in any forward-looking statements. The Company assumes no obligation to update any forward-looking statements.

SUMMARY

Sales of the Company have eroded over the last five years
primarily due to declines in the direct distribution sales method of the Companys business (i.e., delivery by company truck). Increased competition, customer attrition and customers roasting green beans for their own use have all had a
negative impact on the Companys sales. The Company has tried a number of strategies that have not proven effective in abating these declines. In 2004, the Company began changing its method of distribution to rely less on direct distribution
and instead use independent distributors or shipping direct (via UPS or other common carrier). The effect of these changes on the Companys sales has been limited but has reduced distribution expenses. Because of the limited impact of these
changes, as well as the increase in cost of sales and other factors noted herein, there can be no assurances that the Company will be profitable in any future period, and, as a consequence, the Company is considering various strategic alternatives.

The Company pays substantially more for its green beans than the market price, because of quality, organic nature of many of its lines and the fact that
it uses fair-traded coffees. Green bean costs continue to be firm in 2007 and have placed pressure on margins. If green bean costs do not decline or continue to rise, whether as a consequence of inclement weather in a major producing area or any
other event that affects green bean pricing, and the Company cannot offset costs by raising prices, it would have a negative impact on the Company and its margins.

The Company has a revolving line of credit for $25,000 of which $20,000 is currently outstanding and a term debt facility of $300,089 with the Savings Bank of Mendocino. The term debt is a five-year note due December 1, 2009 and the
line of credit is renewed annually. If the credit line should not be renewed, the stability of the Companys business would be in question. See Liquidity and Capital Resources.

Results of Operations

Three months ended March 31, 2007
versus March 31, 2006



18



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##### Table of Contents

|                     |  |                    |         |   |               |       |   
|-------------------- |  | ------------------ | ------- | - | ------------- | ----- | --
|Consolidated         |  | Increase(Decrease) |         |   | PercentChange |      
|Net Sales            |  | $                  | 24,170  |   |               | 2.2   | % 
|Cost of Sales        |  |                    | (8,533  | ) |               | (1.3  | )%
|Gross Margin %       |  |                    | 2.1     | % |               | 5.3   | % 
|Selling, G&A Expense |  |                    | (61,966 | ) |               | (11.6 | )%
|Depreciation And     |  |                    |         |   |               |       |   
|Amortization         |  |                    | 1,855   |   |               | 6.0   | % 
|Interest Expense     |  |                    | (170    | ) |               | (1.4  | )%
|Net Income (Loss)    |  |                    | 102,252 |   |               |      | % 

Consolidated net sales for the three months ended March 31, 2007 were $1,127,734, up 2.2%, or over $24,000
when compared with net sales of $1,103,564 for the same period in fiscal 2006.

Distribution revenues (e.g., revenues generated on our own truck
distribution) were flat for the three month period ended March 31, 2007, when compared with distribution sales for the same period in fiscal 2006.

National revenues (e.g., revenues not derived by mail order and direct truck distribution) were down $20,000, or 5% for the three months ended March 31, 2007 when compared to national sales for the same period in 2006. A portion of the
decrease was a result of a $10,000 decline to a national chain that did not accept a price increase. The remainder was a result of a decline in sales to a distributor.

Mail order revenues (e.g., revenues generated from product sold directly to the consumer either through print media or the Internet) increased over $24,000, or 30% for the three months ended March 31, 2007 when
compared to mail order sales for the same period in 2006. Increases of the Companys Ugandan Mirembe coffee through the cornucopia program (non-profit organizations that use the Companys coffee for fund-raising purposes) and
promoting of the Companys mail order and web store business has improved performance of this method of distribution.

Sales of the Company bakery
were up over $20,000 for the three months ended March 31, 2007 when compared to bakery sales for the same period in 2006. The bakery was closed over three weeks in late February and early March of 2006 to repair and replace the floor of the
facility. It has been opened during that same period in 2007.

Although sales for the quarter have improved over the previous year, there can be no
assurances that sales will increase in any other period in the future.

Consolidated cost of sales for the three months ended March 31, 2007 were
$667,890, down 1.3%, or over $8,000 when compared with the cost of sales of $676,423 for the same period in 2006. This decrease was a result of an increase in green bean costs offset by lower wages, workers compensation and general insurance
costs.

Consolidated gross margin percentage (gross profit as a percentage of net sales) for the three months ended March 31, 2007 was 40.8%, up
5.3 % when compared with gross margin of 38.7% for the same period in 2006. The increase in gross margin was a result of improved sales as a percentage of total sales of the mail order and cornucopia sales methods which have a higher margin
than the other sales methods.

Consolidated selling, general and administrative expenses were $473,971 for the three months ended March 31, 2007, a
decrease of 11.6% or nearly than $62,000 when compared with the selling, general and administrative expenses of $535,937 for the same period in 2006. The decrease was a result of a $20,000 decrease in payroll expenses through a reduction in
personnel and hours worked, a $5,000 reduction in shareholder expense by performing shareholder relations tasks by Company staff, a $10,000 reduction in travel expenses, a $15,000 reduction in commissions by the elimination of a broker and a $10,000
decrease in fees by certifying agencies.

Depreciation and amortization expenses for the three months ended March 31, 2007 were $32,577, a 6%
increase, or over $1,800, when compared to depreciation and amortization expenses of $30,722 for the same period in fiscal 2006. The increase in depreciation expenses was a result of the fixed assets purchased in the last nine months of 2006 that
were depreciated this year.

Interest expense for the three months ended March 31, 2007 was $12,163, a 1.4% decrease from interest of $12,333 for the
same period in 2006. Total debt is $490,351 at March 31, 2007 versus $535,312 for the same period in 2006.

As a result of the foregoing factors, the
Company had a consolidated net loss of $52,510 for the three months ended March 31, 2007, compared to a loss of $154,762 for the same period in 2006. Because of the sales declines and the increase in the cost of green beans, there can be no
assurances that the Company will be profitable in future periods.



19



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##### Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2007, the Company had working capital of $38,398 versus working capital of $66,905 as of December 31, 2006. The decrease in working capital is due primarily to a decrease in inventories of
over $58,000 and higher payables due to rent payable in arrears to the majority shareholders of $68,800. From time to time, beginning in May 2006, the majority shareholders, who lease the main office, production and warehouse facilities to the
Company, have accepted the deferment of the rent for the facility when the Company did not have sufficient cash on hand to make the payment. The amount in payables represents approximately eight months rent.

Net cash used in operating activities was $6,092 for the three months ended March 31, 2007 compared to net cash used in operating activities for the three months
ended March 31, 2006 of $54,046. The decrease in net cash used in operating activities in the three months of 2007 was the result of the reduced loss this year compared to the same period in fiscal 2006 of over $100,000 offset somewhat by
changes in assets and liabilities.

Cash used in investing activities was $6,544 for the three months ended March 31, 2007 compared to 48,828 used in
the same period in 2006. Capital additions for the first three months of 2007 were $4,000 for a transmission of a delivery truck and $1,000 for two new brewers.

Net cash used in financing activities for the three months ended March 31, 2007 was $20,181 compared to net cash provided by financing activities of $9,718 during the same period in 2006. The cash used by financing was a result of
paying debt. Last year, for the same period, new debt was acquired in the first quarter of 2006 to purchase capital assets.

Because of the operating loss
and capital acquisitions and repayment of debt, cash at March 31, 2007 is over $32,000 lower than the cash balance at January 1, 2007 but nearly $24,000 higher than cash at March 31, 2006.

In November 2004, the Company secured a term note with the Savings Bank of Mendocino. This note is amortized over ten years and is payable in five years with a balloon
payment on December 1, 2009 at 3% over prime rate. The rate was 11% at March 31, 2007. The note is collateralized by the Companys accounts receivable, inventory, equipment, instruments, general intangibles and contract rights. This
note is personally guaranteed by the Companys majority shareholders. As of March 31, 2007 the balance on the note is $300,089 (See Note 7 of Notes to the Financial Statements)

The Company also has a $25,000 line of credit with the Savings Bank of Mendocino. The credit line is interest only payments renewable annually at 3% over the prime rate. Prime rate was 11% at March 31, 2007 with
an outstanding balance on the line of $20,000. The credit line is collateralized by a security interest of first priority in all accounts receivable, inventory, equipment, instruments, general intangibles and contract rights. The line of credit is
personally guaranteed by the Companys majority shareholders. (See Note 7 of Notes to Financial Statements)

The Company has a loan outstanding for
$19,919 at March 31, 2007, payable to the majority shareholders Joan and Paul Katzeff in monthly installments of interest only at 12%, with balance due on demand after June 30, 1996. (See Note 7 and Note 11 of Notes to Financial
Statements)

At March 31, 2007, the Company had total borrowings of $490,351 including $320,089 owing to the Savings Bank of Mendocino. This compares
to total borrowings of $510,532 as of December 31, 2006, including $327,117 outstanding to the Savings Bank of Mendocino.

For long-term debt, see
Note 7 and Note 11 of the Notes to Financial Statements. For operating leases, see Note 9 of the Notes to Financial Statements. For real estate leases, see Note 10 and Note 11 of the Notes to Financial Statements.



|                        |  |                        |           |                    |   |           |  |           |         |               |   |         |  |   |        
|----------------------- |  | ---------------------- | --------- | ------------------ | - | --------- |  | --------- | ------- | ------------- | - | ------- |  | - | -------
|                        |  | Payments Due By Period
|Contractual Obligations |  | Total                  |           | Less than One year |   | 1-3 years |  | 4-5 years |         | After 5 years
|Long Term Debt          |  | $                      | 490,351   |                    | $ | 121,877   |  | $         | 359,904 |               | $ | 8,570   |  | $ |       
|Operating Leases        |  |                        | 48,830    |                    |   | 31,544    |  |           | 15,307  |               |   | 1,979   |  |   |       
|Real Estate Leases      |  |                        | 1,184,088 |                    |   | 152,988   |  |           | 311,490 |               |   | 306,810 |  |   | 412,800
|                        |  |                        |           |                    |   |           |  |           |         |               |   |         |  |   |        
|Total Cash Obligations  |  | $                      | 1,723,269 |                    | $ | 306,409   |  | $         | 686,701 |               | $ | 317,359 |  | $ | 412,800
|                        |  |                        |           |                    |   |           |  |           |         |               |   |         |  |   |        



20



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##### Table of Contents

The Company is dependent on successfully executing its business plan to achieve profitable operations, obtaining
additional sources of borrowings (including normal trade credit) and securing favorable financing arrangements (including lease financing) to finance its working capital needs. There can be no assurance that the Company will be successful in this
regard. If the Company is not able to meet its credit obligations the stability of the Companys business would be in question.

RELATED PARTY
TRANSACTIONS

From time to time, the Company enters into various transactions with its majority shareholders, Paul and Joan Katzeff. See note
11Related Party Transactions in the Notes to the Financial Statements.

SEASONALITY AND OTHER FACTORS AFFECTING PERFORMANCE

The Companys business is seasonal in nature. The seasonal availability of green bean coffee in the first two quarters of the year and increased
sales in the last quarter historically creates a high use of cash and a build up in inventories in the first two quarters, with a corresponding decrease in inventory and increase in cash in the last quarter. Because of the seasonality of the
Companys business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year. Furthermore, past seasonal patterns are not necessarily indicative of future results.

INDEMNIFICATION MATTERS

The Companys Bylaws provide that the
Company may indemnify its directors, officers, employees and other agents to the fullest extent permitted by California law. The Company believes that indemnification under its Bylaws also permits the Company to secure insurance on behalf of any
officer, director, employee or other agent for any liability arising out of his or her actions in such capacity, regardless of whether California law would permit indemnification. The Company maintains such liability insurance for its directors and
certain officers and employees.

At present, there is no pending litigation or proceeding involving any director, officer, employee or agent of the Company
where indemnification would be required or permitted. The Company is not aware of any pending or threatened litigation or proceeding that might result in a claim for such indemnification.

CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Companys
management, including the Chief Executive Officer, the President and Chief Financial Officer, of the effectiveness of the Companys disclosure controls and procedures as of March 31, 2007. Based on that evaluation, the Companys
management, including the Chief Executive Officer, the President and Chief Financial Officer concluded that the Companys disclosure controls and procedures were effective. There have been no changes in the Companys Disclosure controls
over financial reporting during the first quarter of 2007 that have materially affected or are reasonably likely to affect the Companys internal controls over financial reporting.

Part II  Other Information

ITEM 1. LEGAL PROCEEDINGS

-None-



21



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##### Table of Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

- None 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

- None 

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

- None -

ITEM 5. OTHER INFORMATION

- None 

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | a. | Exhibits
| | -- | --------



| |  | 31.1 Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 31.2 Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (President)
| |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  | 31.3 Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (President).
| |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  | 32.3 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | No reports filed on Form 8-K
| | -- | ----------------------------



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##### Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THANKSGIVING COFFEE COMPANY, INC.



|                              |  |                         |  |             
|----------------------------- |  | ----------------------- |  | ------------
|Name                          |  | Title                   |  | Date        
|                              |  |                        
|/s/ Paul Katzeff Paul Katzeff |  | Chief Executive Officer |  | May 15, 2007
|                              |  |                        
|/s/ Joan Katzeff Joan Katzeff |  | President               |  | May 15, 2007
|                              |  |                        
|/s/ Sam Kraynek Sam Kraynek   |  | Chief Financial Officer |  | May 15, 2007



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