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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB



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

For the quarterly period ended March 31, 2008

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

THANKSGIVING COFFEE COMPANY, INC.

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



|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|California                                                    |  | 94-2823626                         
|(State or other jurisdiction ofincorporation or organization) |  | (IRS EmployerIdentification Number)

19100 South Harbor Drive Fort 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.)

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, 2008, 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, 2008 (unaudited) and December 31, 2007                   |  | 4-5 
|                              |  |                                                                                        
|                              |  | Statements of Operations for the Three Months Ended March 31, 2008 and 2007 (unaudited) |  | 6   
|                              |  |                                                                                        
|                              |  | Statements of Cash Flows for the Three Months Ended March 31, 2008 and 2007 (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                             |  | 21  
|                              |  |                                                                                        
|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  



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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, 2008 and 2007



3



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Thanksgiving Coffee Company, Inc.

Balance Sheets



|                                       |  |                          |            |   |                  |   |            |  
|-------------------------------------- |  | ------------------------ | ---------- | - | ---------------- | - | ---------- | -
|                                       |  | March 31,2008(Unaudited) |            |   | December 31,2007 |  
|Assets                                 |  |                          |            |   |                  |   |            |  
|Current assets                         |  |                          |            |   |                  |   |            |  
|Cash                                   |  | $                        | 41,506     |   |                  | $ | 104,035    |  
|Accounts receivable, net of allowance  |  |                          | 194,164    |   |                  |   | 210,040    |  
|Inventories                            |  |                          | 344,555    |   |                  |   | 361,795    |  
|Prepaid expenses                       |  |                          | 15,535     |   |                  |   | 28,373     |  
|                                       |  |                          |            |   |                  |   |            |  
|Total current assets                   |  |                          | 595,760    |   |                  |   | 704,243    |  
|Property and equipment                 |  |                          |            |   |                  |   |            |  
|Property and equipment                 |  |                          | 2,554,967  |   |                  |   | 2,529,930  |  
|Accumulated depreciation               |  |                          | (2,177,103 | ) |                  |   | (2,149,819 | )
|                                       |  |                          |            |   |                  |   |            |  
|Total property and equipment           |  |                          | 377,864    |   |                  |   | 380,111    |  
|Other assets                           |  |                          |            |   |                  |   |            |  
|Deposits and other assets              |  |                          | 15,826     |   |                  |   | 15,590     |  
|Goodwill                               |  |                          | 130,406    |   |                  |   | 130,406    |  
|Other intangibles, net of amortization |  |                          | 14,751     |   |                  |   | 15,957     |  
|                                       |  |                          |            |   |                  |   |            |  
|Total other assets                     |  |                          | 160,983    |   |                  |   | 161,953    |  
|                                       |  |                          |            |   |                  |   |            |  
|Total assets                           |  | $                        | 1,134,607  |   |                  | $ | 1,246,307  |  
|                                       |  |                          |            |   |                  |   |            |  

See accompanying notes to financial statements



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Balance Sheets



|                                                                                                |  |                          |           |   |                  |   |           |  
|----------------------------------------------------------------------------------------------- |  | ------------------------ | --------- | - | ---------------- | - | --------- | -
|                                                                                                |  | March 31,2008(Unaudited) |           |   | December 31,2007 |  
|Liabilities and shareholders equity                                                            |  |                          |           |   |                  |   |           |  
|Current liabilities                                                                             |  |                          |           |   |                  |   |           |  
|Accounts payable                                                                                |  | $                        | 220,501   |   |                  | $ | 213,130   |  
|Notes payable - bank                                                                            |  |                          | 32,834    |   |                  |   | 32,182    |  
|Notes payable - other                                                                           |  |                          | 10,525    |   |                  |   | 10,292    |  
|Note payable - shareholders                                                                     |  |                          | 43,919    |   |                  |   | 43,919    |  
|Capital lease obligations                                                                       |  |                          | 50,213    |   |                  |   | 48,398    |  
|Accrued liabilities                                                                             |  |                          | 49,284    |   |                  |   | 67,500    |  
|                                                                                                |  |                          |           |   |                  |   |           |  
|Total current liabilities                                                                       |  |                          | 407,276   |   |                  |   | 415,421   |  
|Long term debt                                                                                  |  |                          |           |   |                  |   |           |  
|Notes payable - bank                                                                            |  |                          | 238,916   |   |                  |   | 247,170   |  
|Notes payable - other                                                                           |  |                          | 10,388    |   |                  |   | 13,108    |  
|Notes payable - Shareholders                                                                    |  |                          | 29,100    |   |                  |   | 35,100    |  
|Capital lease obligations                                                                       |  |                          | 26,221    |   |                  |   | 39,490    |  
|                                                                                                |  |                          |           |   |                  |   |           |  
|Total long term debt                                                                            |  |                          | 304,625   |   |                  |   | 334,868   |  
|                                                                                                |  |                          |           |   |                  |   |           |  
|Total liabilities                                                                               |  |                          | 711,901   |   |                  |   | 750,289   |  
|Shareholders equity                                                                            |  |                          |           |   |                  |   |           |  
|Common stock, no par value, 1,960,000 shares authorized, 1,236,744 shares issued and oustanding |  |                          | 861,816   |   |                  |   | 861,816   |  
|Additional paid in capital                                                                      |  |                          | 24,600    |   |                  |   | 24,600    |  
|Accumulated deficit                                                                             |  |                          | (463,710  | ) |                  |   | (390,398  | )
|                                                                                                |  |                          |           |   |                  |   |           |  
|Total shareholders equity                                                                      |  |                          | 422,706   |   |                  |   | 496,018   |  
|                                                                                                |  |                          |           |   |                  |   |           |  
|Total liabilities and shareholders equity                                                      |  | $                        | 1,134,607 |   |                  | $ | 1,246,307 |  
|                                                                                                |  |                          |           |   |                  |   |           |  

See accompanying notes to financial statements



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Statements of Operations

Unaudited



|                                             |  |                                     |           |   |      |   |           |  
|-------------------------------------------- |  | ----------------------------------- | --------- | - | ---- | - | --------- | -
|                                             |  | For the Three MonthsEnded March 31, |          
|                                             |  | 2008                                |           |   | 2007 |  
|Income                                       |  |                                     |           |   |      |   |           |  
|Net sales                                    |  | $                                   | 1,045,072 |   |      | $ | 1,127,734 |  
|Cost of sales                                |  |                                     | 629,920   |   |      |   | 667,890   |  
|                                             |  |                                     |           |   |      |   |           |  
|Gross profit                                 |  |                                     | 415,152   |   |      |   | 459,844   |  
|Operating expenses                           |  |                                     |           |   |      |   |           |  
|Selling, general and administrative expenses |  |                                     | 449,112   |   |      |   | 473,971   |  
|Depreciation and amortization                |  |                                     | 25,846    |   |      |   | 32,577    |  
|                                             |  |                                     |           |   |      |   |           |  
|Total operating expenses                     |  |                                     | 474,958   |   |      |   | 506,548   |  
|                                             |  |                                     |           |   |      |   |           |  
|Operating loss                               |  |                                     | (59,806   | ) |      |   | (46,704   | )
|Other income (expense)                       |  |                                     |           |   |      |   |           |  
|Miscellaneous income (expense)               |  |                                     | (2,410    | ) |      |   | 7,157     |  
|Gain (loss) on sale of equipment             |  |                                     |          |   |      |   |          |  
|Interest expense                             |  |                                     | (10,296   | ) |      |   | (12,163   | )
|                                             |  |                                     |           |   |      |   |           |  
|Total other income (expense)                 |  |                                     | (12,706   | ) |      |   | (5,006    | )
|                                             |  |                                     |           |   |      |   |           |  
|Loss before income taxes                     |  |                                     | (72,512   | ) |      |   | (51,710   | )
|Income tax expense                           |  |                                     | (800      | ) |      |   | (800      | )
|                                             |  |                                     |           |   |      |   |           |  
|Net loss                                     |  | $                                   | (73,312   | ) |      | $ | (52,510   | )
|                                             |  |                                     |           |   |      |   |           |  
|Loss per share (basic)                       |  | $                                   | (0.059    | ) |      | $ | (0.042    | )
|                                             |  |                                     |           |   |      |   |           |  
|Loss per share (dilutive)                    |  | $                                   | (0.059    | ) |      | $ | (0.042    | )
|                                             |  |                                     |           |   |      |   |           |  
|Weighted average number of shares            |  |                                     | 1,236,744 |   |      |   | 1,236,744 |  
|                                             |  |                                     |           |   |      |   |           |  

See accompanying notes to financial statements



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Thanksgiving Coffee Company, Inc.

Statements of Cash Flows

Unaudited



|                                                                           |  |                                     |         |   |      |   |         |  
|-------------------------------------------------------------------------- |  | ----------------------------------- | ------- | - | ---- | - | ------- | -
|                                                                           |  | For the Three Months EndedMarch 31, |        
|                                                                           |  | 2008                                |         |   | 2007 |  
|Operating activities                                                       |  |                                     |         |   |      |   |         |  
|Net loss                                                                   |  | $                                   | (73,312 | ) |      | $ | (52,510 | )
|Adjustments to reconcile net loss to cash flows from operating activities: |  |                                     |         |   |      |   |         |  
|Depreciation and amortization                                              |  |                                     | 28,490  |   |      |   | 35,900  |  
|Allowance for bad debts                                                    |  |                                     | 1,352   |   |      |   | (1,221  | )
|(Increase) decrease in:                                                    |  |                                     |         |   |      |   |         |  
|Accounts receivable                                                        |  |                                     | 14,524  |   |      |   | 16,412  |  
|Inventories                                                                |  |                                     | 17,240  |   |      |   | 9,268   |  
|Prepaid expenses                                                           |  |                                     | 12,838  |   |      |   | 18,226  |  
|Deposits and other assets                                                  |  |                                     | (236    | ) |      |   | 1,300   |  
|Increase (decrease) in:                                                    |  |                                     |         |   |      |   |         |  
|Accounts payable                                                           |  |                                     | 7,371   |   |      |   | (18,407 | )
|Accrued liabilities                                                        |  |                                     | (18,216 | ) |      |   | (15,060 | )
|                                                                           |  |                                     |         |   |      |   |         |  
|Net cash provided by (used in) operating activities                        |  |                                     | (9,949  | ) |      |   | (6,092  | )
|Investing activities                                                       |  |                                     |         |   |      |   |         |  
|Purchases of property and equipment                                        |  |                                     | (25,037 | ) |      |   | (6,544  | )
|Proceeds from sale of equipment/disposal                                   |  |                                     |        |   |      |   |        |  
|                                                                           |  |                                     |         |   |      |   |         |  
|Net cash (used in) investing activities                                    |  |                                     | (25,037 | ) |      |   | (6,544  | )
|Financing activities                                                       |  |                                     |         |   |      |   |         |  
|Proceeds from notes payable and capital leases                             |  |                                     |        |   |      |   |        |  
|Repayments of notes payable and capital leases                             |  |                                     | (27,543 | ) |      |   | (20,181 | )
|                                                                           |  |                                     |         |   |      |   |         |  
|Net cash (used in) financing activities                                    |  |                                     | (27,543 | ) |      |   | (20,181 | )
|Decrease in cash                                                           |  |                                     | (62,529 | ) |      |   | (32,817 | )
|Cash at beginning of period                                                |  |                                     | 104,035 |   |      |   | 76,974  |  
|                                                                           |  |                                     |         |   |      |   |         |  
|Cash at end of period                                                      |  | $                                   | 41,506  |   |      | $ | 44,157  |  
|                                                                           |  |                                     |         |   |      |   |         |  

See accompanying notes to financial statements



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Thanksgiving Coffee Company, Inc.

Notes to Financial Statements

March 31, 2008 and December 31, 2007

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 2007
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, 2007 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, 2008 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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Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

2. Accounts Receivable

Accounts receivable consist of the following:



|                                      |  |           |         |   |            |   |         |  
|------------------------------------- |  | --------- | ------- | - | ---------- | - | ------- | -
|                                      |  | 3/31/2008 |         |   | 12/31/2007 |  
|Accounts receivable                   |  | $         | 199,512 |   |            | $ | 216,602 |  
|Less: allowance for doubtful accounts |  |           | (5,348  | ) |            |   | (6,562  | )
|                                      |  |           |         |   |            |   |         |  
|Net accounts receivable               |  | $         | 194,164 |   |            | $ | 210,040 |  
|                                      |  |           |         |   |            |   |         |  

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, 2008 and 2007 was ($1,214) and $ 902 respectively.

3. Inventories

Inventories consist of the following:



|                                                        |  |           |         |            |   |        
|------------------------------------------------------- |  | --------- | ------- | ---------- | - | -------
|                                                        |  | 3/31/2008 |         | 12/31/2007
|Coffee                                                  |  |           |         |            |   |        
|Unroasted                                               |  | $         | 79,133  |            | $ | 109,560
|Roasted                                                 |  |           | 75,959  |            |   | 82,516 
|Tea                                                     |  |           | 3,248   |            |   | 5,822  
|Packaging, supplies and other merchandise held for sale |  |           | 186,215 |            |   | 163,897
|                                                        |  |           |         |            |   |        
|Total inventories                                       |  | $         | 344,555 |            | $ | 361,795
|                                                        |  |           |         |            |   |        

4. Property and Equipment

Property and equipment consist of the following:



|                                      |  |           |            |   |            |   |            |  
|------------------------------------- |  | --------- | ---------- | - | ---------- | - | ---------- | -
|                                      |  | 3/31/2008 |            |   | 12/31/2007 |  
|Equipment                             |  | $         | 1,302,834  |   |            | $ | 1,300,627  |  
|Furniture and fixtures                |  |           | 215,069    |   |            |   | 207,361    |  
|Leasehold improvements                |  |           | 445,056    |   |            |   | 429,934    |  
|Transportation equipment              |  |           | 174,512    |   |            |   | 174,512    |  
|Marketing equipment                   |  |           | 166,162    |   |            |   | 166,162    |  
|Capitalized website development costs |  |           | 14,076     |   |            |   | 14,076     |  
|Property held under capital leases    |  |           | 237,258    |   |            |   | 237,258    |  
|                                      |  |           |            |   |            |   |            |  
|Total property and equipment          |  |           | 2,554,967  |   |            |   | 2,529,930  |  
|Accumulated depreciation              |  |           | (2,177,103 | ) |            |   | (2,149,819 | )
|                                      |  |           |            |   |            |   |            |  
|Property and equipment, net           |  | $         | 377,864    |   |            | $ | 380,111    |  
|                                      |  |           |            |   |            |   |            |  

Depreciation expense for the three months ended March 31, 2008 and 2007 was $27,284 and $35,900 respectively.



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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, 2007 the Company performed a test of impairment on goodwill that resulted in no writedown at that time.

Intangible assets subject to
amortization consist of the following:



|                                       |  |           |         |   |            |   |         |  
|-------------------------------------- |  | --------- | ------- | - | ---------- | - | ------- | -
|                                       |  | 3/31/2008 |         |   | 12/31/2007 |  
|Leasehold value                        |  | $         | 67,000  |   |            | $ | 67,000  |  
|Trademarks                             |  |           | 5,127   |   |            |   | 5,127   |  
|                                       |  |           |         |   |            |   |         |  
|Total intangible assets                |  |           | 72,127  |   |            |   | 72,127  |  
|Accumulated amortization               |  |           | (57,376 | ) |            |   | (56,170 | )
|                                       |  |           |         |   |            |   |         |  
|Other intangibles, net of amortization |  | $         | 14,751  |   |            | $ | 15,957  |  
|                                       |  |           |         |   |            |   |         |  

Amortization expense for the three months ended March 31, 2008 and 2007 was $1,206 and $1,454 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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Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



7. Long Term Debt



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |           |         |            |   |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ------- | ---------- | - | -------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 3/31/2008 |         | 12/31/2007
|Notes Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |           |         |            |   |        
|Note payable to Savings Bank of Mendocino, payable in monthly installments of $4,307 plus interest at 3% over prime rate beginning
January 1, 2005 (7.25% at March 31, 2008), 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.                                                           |  | $         | 270,750 |            | $ | 278,352
|Line of credit to Savings Bank of Mendocino, payable in monthly installments of interest only at 2% over prime rate beginning January 9,
2008 (7.25% at March 31, 2008). 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 $1,000 has been used as of March 31, 2008. |  |           | 1,000   |            |   | 1,000  
|Note payable to majority shareholders, Paul and Joan Katzeff, uncollateralized,payable in monthly installments of $2,000 plus interest at
12%paid monthly, due on July 15, 2009 .                                                                                                                                                                                                                                                                                                                                                              |  |           | 53,100  |            |   | 59,100 
|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.                                                                                                                                                                                                                                                                                                                                                                     |  |           | 11,784  |            |   | 13,630 
|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                                                                                                                                                                                                                                                                                                                                                                 |  |           | 9,129   |            |   | 9,770  



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Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)





|                                                                                                                                                                                             |  |           |  |           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- |  | ----------
|                                                                                                                                                                                             |  | 3/31/2008 |  | 12/31/2007
|Capital Lease Obligations                                                                                                                                                                    |  |           |  |           
|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.                      |  | 14,868    |  | 18,214    
|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.           |  | 13,415    |  | 15,670    
|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.                |  | 10,765    |  | 12,432    
|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. |  | 5,925     |  | 7,073     
|Note payable to Marlin Leasing payable in monthly installments of $544, including interest at 17.172%, collateralized by equipment, final
payment due on March 1, 2010.                      |  | 11,914    |  | 13,043    
|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.                     |  | 9,812     |  | 10,650    



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



7. Long Term Debt (continued)



|                                                                                                                                                                                                |  |           |         |            |   |          |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ------- | ---------- | - | -------- | -
|                                                                                                                                                                                                |  | 3/31/2008 |         | 12/31/2007 |  
|Capital Lease Obligations                                                                                                                                                                       |  |           |         |            |   |          |  
|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. |  | $         | 9,735   |            | $ | 10,806   |  
|                                                                                                                                                                                                |  |           |         |            |   |          |  
|                                                                                                                                                                                                |  |           | 442,116 |            |   | 469,659  |  
|Less current portion                                                                                                                                                                            |  |           | 137,491 |            |   | (134,791 | )
|                                                                                                                                                                                                |  |           |         |            |   |          |  
|Long term portion of notes payable                                                                                                                                                              |  | $         | 304,625 |            | $ | 334,868  |  
|                                                                                                                                                                                                |  |           |         |            |   |          |  

Interest paid for the three months ended March 31, 2008 and 2007 was $10,296 and $12,163, respectively.

As of March 31, 2008, 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, |  |  
|2008                      |  | $ | 109,041
|2009                      |  |   | 314,065
|2010                      |  |   | 18,685 
|2011                      |  |   | 325    
|2012                      |  |   |       
|Thereafter                |  |   |       
|                          |  |   |        
|                          |  | $ | 442,116
|                          |  |   |        

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

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 carryforwards 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 operation loss
carryforwards. Net operating loss carryforwards may be further limited by a change in company ownership and other provisions of the tax laws.



13



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)



The Companys deferred tax assets, valuation allowance, and change in valuation allowance as of March 31,
2008 are as follows:



|               |  |                                                    |         |            |      |                |   |                    |  |   |                             |   |  |                |         |   |  |   |  
|-------------- |  | -------------------------------------------------- | ------- | ---------- | ---- | -------------- | - | ------------------ |  | - | --------------------------- | - |  | -------------- | ------- | - |  | - | -
|Period Ending  |  | Estimated NOLCarryforwardless TemporaryDifferences |         | NOLExpires |      | BenefitFromNOL |   | ValuationAllowance |  |   | Change inValuationAllowance |   |  | Net TaxBenefit
|March 31, 2008 |  | $                                                  | 41,516  |            | 2017 |                | $ | 6,227              |  | $ | (6,227                      | ) |  | $              | (6,227  | ) |  | $ | 
|Federal        |  |                                                    | 128,576 |            | 2018 |                |   | 19,286             |  |   | (19,286                     | ) |  |                | (19,286 | ) |  |   | 
|               |  |                                                    | 96,867  |            | 2023 |                |   | 14,530             |  |   | (14,530                     | ) |  |                | (14,530 | ) |  |   | 
|               |  |                                                    | 49,714  |            | 2024 |                |   | 7,457              |  |   | (7,457                      | ) |  |                | (7,457  | ) |  |   | 
|               |  |                                                    | 18,755  |            | 2025 |                |   | 2,813              |  |   | (2,813                      | ) |  |                | (2,813  | ) |  |   | 
|               |  |                                                    | 135,234 |            | 2026 |                |   | 20,285             |  |   | (20,285                     | ) |  |                | (20,285 | ) |  |   | 
|               |  |                                                    |         |            |      |                |   |                    |  |   |                             |   |  |                |         |   |  |   |  
|               |  | $                                                  | 470,662 |            |      |                | $ | 70,598             |  | $ | (70,598                     | ) |  | $              | (70,598 | ) |  | $ | 
|               |  |                                                    |         |            |      |                |   |                    |  |   |                             |   |  |                |         |   |  |   |  
|               |  |                                                    |         |            |      |                |   |                    |  |   |                             |   |  |                |         |   |  |   | 
|State          |  | $                                                  | 37,203  |            | 2016 |                | $ | 3,289              |  | $ | (3,289                      | ) |  | $              | (3,289  | ) |  | $ | 
|               |  |                                                    |         |            |      |                |   |                    |  |   |                             |   |  |                |         |   |  |   |  
|               |  | $                                                  | 37,203  |            |      |                | $ | 3,289              |  | $ | (3,289                      | ) |  | $              | (3,289  | ) |  | $ | 
|               |  |                                                    |         |            |      |                |   |                    |  |   |                             |   |  |                |         |   |  |   |  

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



|                                           |  |        |   
|------------------------------------------ |  | ------ | --
|                                           |  | 2008   |   
|Tax (benefit) at federal statutory rate    |  | (15.00 | )%
|State tax (benefit) net of federal benefit |  | (7.50  | ) 
|Non-taxable differences                    |  | 2.63   |   
|Temporary differences                      |  | 0.52   |   
|Valuation allowance                        |  | 20.45  |   
|                                           |  |        |   
|Tax provision (benefit) - effective rate   |  | 1.10   |   
|                                           |  |        |   

Income taxes paid for the three months ended March 31, 2008 and the year ended December 31, 2007 were
$800 and $800 respectively.



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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, 2008, minimum annual lease payments due under these agreements for each of the next five years and in the aggregate were:



|                          |  |   |       
|------------------------- |  | - | ------
|Years Ending December 31, |  |  
|2008                      |  |   | 8,263 
|2009                      |  |   | 5,454 
|2010                      |  |   | 1,979 
|                          |  |   |       
|                          |  | $ | 15,696
|                          |  |   |       

Total operating lease payments for the three months ended March 31, 2008 and 2007 were $8,548 and $11,380
respectively. No operating lease payments are due after December 31, 2010.

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, 2008 and 2007 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, 2008 and 2007 was $12,660 and $13,008, respectively.

As of March 31, 2008, 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, |  |  
|2008                      |  | $ | 154,470  
|2009                      |  |   | 157,020  
|2010                      |  |   | 159,690  
|2011                      |  |   | 147,120  
|2012                      |  |   | 103,200  
|Thereafter                |  |   | 309,600  
|                          |  |   |          
|                          |  | $ | 1,031,100
|                          |  |   |          



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

11. Related Party Transactions

As of March 31, 2008, the Company has an interest only note payable, due on demand to Paul and Joan Katzeff (the Companys majority shareholders, directors and
officers). In addition, the Company has a note payable to Paul and Joan Katzeff with a principal balance of $53,100, as of March 31, 2008. The loan is uncollateralized, is due July 15, 2009, requires monthly payments of $2,000 and bears
interest at 12% per annum. 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, 2008, is as follows:



|                   |  |   |       
|------------------ |  | - | ------
|Principal payments |  | $ | 6,000 
|Interest payments  |  | $ | 2,035 
|Rent Payments      |  | $ | 25,800

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



|                              |  |           |           |   |           |   |           |  
|----------------------------- |  | --------- | --------- | - | --------- | - | --------- | -
|                              |  | 3/31/2008 |           |   | 3/31/2007 |  
|Net Sales                     |  |           |           |   |           |   |           |  
|Specialty Coffee              |  | $         | 931,337   |   |           | $ | 1,001,626 |  
|Bakery                        |  |           | 120,967   |   |           |   | 137,428   |  
|                              |  |           |           |   |           |   |           |  
|Total                         |  | $         | 1,052,304 |   |           | $ | 1,139,054 |  
|                              |  |           |           |   |           |   |           |  
|Intersegment Sales            |  |           |           |   |           |   |           |  
|Specialty Coffee              |  | $         | 7,232     |   |           | $ | 11,320    |  
|                              |  |           |           |   |           |   |           |  
|Total Sales                   |  | $         | 1,045,072 |   |           | $ | 1,127,734 |  
|                              |  |           |           |   |           |   |           |  
|Operating (Loss)              |  |           |           |   |           |   |           |  
|Specialty Coffee              |  | $         | (29,699   | ) |           | $ | (27,103   | )
|Bakery                        |  |           | (30,107   | ) |           |   | (19,601   | )
|                              |  |           |           |   |           |   |           |  
|Total                         |  | $         | (59,806   | ) |           | $ | (46,704   | )
|                              |  |           |           |   |           |   |           |  
|Depreciation and Amortization |  |           |           |   |           |   |           |  
|Specialty Coffee              |  | $         | 21,536    |   |           | $ | 28,010    |  
|Bakery                        |  |           | 4,310     |   |           |   | 4,567     |  
|                              |  |           |           |   |           |   |           |  
|Total                         |  | $         | 25,846    |   |           | $ | 32,577    |  
|                              |  |           |           |   |           |   |           |  



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##### Table of Contents

Thanksgiving Coffee Company, Inc.

Notes to Financial Statements (continued)

12. Information of Business Segments (continued)



|                 |  |           |           |            |   |          
|---------------- |  | --------- | --------- | ---------- | - | ---------
|                 |  | 3/31/2008 |           | 3/31/2007 
|Interest Expense |  |           |           |            |   |          
|Specialty Coffee |  | $         | 10,286    |            | $ | 12,163   
|Bakery           |  |           | 10        |            |   |         
|                 |  |           |           |            |   |          
|Total            |  | $         | 10,296    |            | $ | 12,163   
|                 |  |           |           |            |   |          
|                 |  |          
|                 |  | 3/31/2008 |           | 12/31/2007
|Assets           |  |           |           |            |   |          
|Specialty Coffee |  | $         | 889,887   |            | $ | 1,016,918
|Bakery           |  |           | 244,720   |            |   | 229,389  
|                 |  |           |           |            |   |          
|Total            |  | $         | 1,134,607 |            | $ | 1,246,307
|                 |  |           |           |            |   |          
|Fixed Assets     |  |           |           |            |   |          
|Specialty Coffee |  | $         | 306,130   |            | $ | 320,067  
|Bakery           |  |           | 71,735    |            |   | 60,044   
|                 |  |           |           |            |   |          
|Total            |  | $         | 377,864   |            | $ | 380,111  
|                 |  |           |           |            |   |          



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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 2008 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 $1,000 is currently outstanding and a term debt facility of $270,750 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.



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##### Table of Contents

Results of Operations

Three months ended March 31, 2008 versus March 31, 2007



|                              |  |                     |         |    |               |       |   
|----------------------------- |  | ------------------- | ------- | -- | ------------- | ----- | --
|Consolidated                  |  | Increase (Decrease) |         |    | PercentChange |      
|Net Sales                     |  | $                   | (82,662 | )  |               | (7.3  | )%
|Cost of Sales                 |  |                     | (37,970 | )  |               | (1.3  | )%
|Gross Margin %                |  |                     | (1.1    | )% |               | (2.7  | )%
|Selling, G&A Expense          |  |                     | (24,859 | )  |               | (5.2  | )%
|Depreciation And Amortization |  |                     | (6,731  | )  |               | (20.7 | )%
|Interest Expense              |  |                     | (1,867  | )  |               | (16.3 | )%
|Net (Loss)                    |  |                     | 20,802  |    |               |      | % 

Consolidated net sales for the three months ended March 31, 2008 were $1,045,072, down 7.3%, or nearly
$83,000 when compared to net sales of $1,127,734 for the three months ended March 31, 2007.

Distribution revenues (e.g., revenues generated on our
own truck distribution) were down $40,000 or nearly 4% for the three month period ended March 31, 2008, when compared with distribution sales for the same period in 2007. A large chain continues to eliminate the Companys products as it
remodels its stores. No other accounts have been lost in the first three months of the year. The decrease has been attributed to a general slow down in customer business.

National revenues (e.g., revenues not derived by mail order and direct truck distribution) were down $10,000, or 1% for the three month period ended March 31, 2008 when compared to national sales for the same
period in 2007. The decrease was attributed to a slow down in business for the Companys customers as no accounts were lost during this three month period.

Mail order revenues (e.g., revenues generated from product sold directly to the consumer either through print media or the Internet) decreased by $15,000, or 8% for the three month period ended March 31, 2008 when compared to mail
order sales for the same period in 2007. Most of the decrease was a result of the cornucopia program (non-profit organizations that use the Companys coffee for fund-raising purposes). One of the Companys partners promoted the program
last year in their membership magazine but did not do so this year.

Sales of the Company bakery were down $17,000 for the three months ended
March 31, 2008 when compared to bakery sales for the same period in 2007. The bakery was closed for over one week in February of 2008 to make repairs to the facility. In addition, customer counts are down in the three months ended
March 31, 2008.

Consolidated cost of sales for the three months ended March 31, 2008 were $629,920, down 1.3%, or nearly $38,000 when compared
with the cost of sales of $667,890 for the three months ended March 31, 2007. This decrease was a result of the decline in sales volume.

Consolidated
gross margin percentage (gross profit as a percentage of net sales) for the three months ended March 31, 2008 was 39.7%, down 2.7 % when compared with gross margin of 40.8% for the same period in 2007. The decline in gross margin was a
result of higher green bean prices. The per pound price of green beans averaged $2.15 for the three month period ending March 31, 2008 versus $1.98 per pound for the three month period ending March 31, 2007 or over $26,000 higher.

Consolidated selling, general and administrative expenses were $449,112 for the three months ended March 31, 2008, a decrease of 5.2% or nearly
$25,000 when compared with the selling, general and administrative expenses of $473,971 for the three month period ending March 31, 2007. The decrease was a result lower wage related expenses because of a reduction of employees and an
elimination of a route of $40,000 and lower liability and general insurance of $5,000 offset by an increase in travel expenses to promote the Mirembe Kawomera program of nearly $20,000.

Depreciation and amortization expenses for the three months ended March 31, 2008 were $25,846, a 20.7% decrease, or nearly $7,000, when compared to depreciation and amortization expenses of $32,577 for the period
ended March 31, 2007. The decrease in depreciation expenses was a result of fewer assets being depreciated compared to 2007.

Interest expense for the
three months ended March 31, 2008 was $10,296, a 16.3% decrease or nearly $2000 when compared to interest expense of $12,163 for the three months ended March 31, 2007. Total debt is $442,116 at March 31, 2008 versus $469,659 at
December 31, 2007.

As a result of the foregoing factors, the Company had a consolidated net loss of $73,312 for the three months ended March 31,
2008, compared to a loss of $52,510 for the three month period ended March 31, 2007. 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.



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##### Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2008, the Company had working capital of $188,484 versus working capital of $288,822 as of December 31, 2007. The decrease in working capital is due primarily to a decrease in cash of over
$60,000, receivables of nearly $16,000, inventories of over $17,000 and a slight drop in payables.

Net cash used in operating activities was $9,949 for
the three months ended March 31, 2008 compared to net cash used in operating activities for the three months ended March 31, 2007 of $6,092. The increase in net cash used in operating activities in the three months of 2008 was due to the
increased loss for the period offset by variances in the current assets.

Net cash used in investing activities was $25,037 for the three months ended
March 31, 2008 compared to $6,544 used in the same period in 2007. Capital additions for the first three months of 2008 were $12,000 for improvements at the Bakery, $5,000 for new computers and office equipment, $5,000 for improved electrical
service in the plant and $2,000 for production equipment.

Net cash used in financing activities for the three months ended March 31, 2008 was $27,543
compared to net cash used in financing activities of $20,181 during the same period in 2007. The increase in cash used by financing activities was a result of the note payments to the majority shareholders on the note for the rent that was in
arrears. The note was not established until June of 2007.

Because of the operating loss and capital acquisitions and repayment of debt, cash at
March 31, 2008 is $41,506 compared to cash at March 31, 2007 of $44,157.

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 7.25% at March 31, 2008. 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, 2008 the balance on the note is $270,750. (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 2% over the prime rate. Prime rate was 7.25% at March 31, 2008 with an outstanding balance on the line of $1,000. 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 an interest-only note for $19,919 and a principal and interest note for $53,100 at March 31, 2008, payable to the majority shareholders, directors
and officers, Joan and Paul Katzeff. The interest-only note is at 12% due on demand after June 30, 1996, and is uncollateralized. The principal and interest note is at 12% payable in monthly installments of $2,000 plus interest with the balance
due on July 15, 2009 and is uncollateralized. (See Note 7 and Note 11 of Notes to Financial Statements)

At March 31, 2008, the Company had total
borrowings of $442,116 including $271,750 owing to the Savings Bank of Mendocino. This compares to total borrowings of $469,659 as of December 31, 2007, including $279,352 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 thanOne year |   | 1-3 years |  | 4-5 years |         | After 5 years
|Long Term Debt          |  | $                      | 442,116   |                   | $ | 109,041   |  | $         | 314,065 |               | $ | 19,010  |  | $ |       
|Operating Leases        |  |                        | 15,696    |                   |   | 8,263     |  |           | 5,454   |               |   | 1,979   |  |   |       
|Real Estate Leases      |  |                        | 1,031,100 |                   |   | 154,470   |  |           | 316,710 |               |   | 250,320 |  |   | 309,600
|Total Cash Obligations  |  | $                      | 1,488,912 |                   | $ | 271,774   |  | $         | 636,229 |               | $ | 271,309 |  | $ | 309,600



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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, 2008. 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 2008 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-



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

-None-



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|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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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, 2008
|                              |  |                        
|/s/ Joan Katzeff Joan Katzeff |  | President               |  | May 15, 2008
|                              |  |                        
|/s/ Sam Kraynek Sam Kraynek   |  | Chief Financial Officer |  | May 15, 2008



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