ITEM 2 Managements Discussion and Analysis of Financial Condition and Results of Operations

This quarter, we aggressively pursued a joint venture project in China to establish coffee cafes (the "Joint Venture"). We have a twenty percent (20%) interest in the Joint Venture. The first specialty gourmet café will be located in Shanghai, China. The café will be known as "Uncommon Grounds Coffee". We will derive revenue from the sale of roasted coffees to the cafés owned and operated by the Joint Venture and 20% of the net revenue of the Joint Venture. All coffees sold by the Joint Venture in their café in China will feature artisan roasted coffee blends specially created by Uncommon Grounds Inc., our roaster in Berkeley, California, and air-freighted daily to maintain the freshness. Establishing cafes in China enables us to complete our "Growers Direct" distribution strategy from "Tree to Cup". The opening of retail coffee cafes in China will fulfill our objective of building a "Tree-to-Cup" coffee company by supplying green beans, providing roasted coffee beans and operating retail coffee cafes. China is considered to be a growing economy with annual Gross Domestic Product ("GDP") growth of 9.5% average per year since 1978. We anticipate the operational cost of coffee cafés in China to be lower, than in other markets, due to lower labor costs. Usually labor costs are between 35-40% of the total operational costs of such businesses. The establishment of coffee shops in China provides our wholly-owned subsidiary, Uncommon Grounds, Inc., with new sales opportunities for its roasted coffee. Jamaican Blue Mountain coffee is highly sought after in China. The Chinese market is anticipated to boost our total sales of both roasted and green Jamaican Blue Mountain coffee and thereby resulting in increased margins and profits for the Uncommon Grounds. Uncommon Grounds, Inc. has created five (5) new coffee blends that are targeted specifically towards the Chinese' coffee taste preferences. All the new coffee blends utilize Papua New Guinea green beans which represents our primary competitive edge. Uncommon Grounds plans to, at a future date, offer for sale online the new coffee blends, developed for the China market.

Jointly with PNG Coffee Growers Federation Ltd, our PNG strategic partner, we hosted the second "Pride of PNG 2007" international coffee cupping competition in Goroka, Papua New Guinea from October 6th to 31st, 2007. The winning coffees from the "Pride of PNG 2007" competition will be sold by private auction to a select group of coffee buyers in January 2008. We expect such promotional activities to translate into future revenue for our green beans. Our revenue for the nine month period ended September 30, 2007 was $1,398,757 compared to $2,088,810 for the nine month period ended September 30, 2006. For the three month period ended on September 30, 2007, our revenue was $754,568 compared to $349,901 for the three month period ended September 30, 2006. The decrease in annual revenue is attributed to the July 2007 national elections in Papua New Guinea resulting in lower volume of coffees shipped from PNG and the traditional coffee seasonality factors. During the elections in Papua New Guinea the coffee farmers devoted most of their time on election related activities and paid limited attention to the business of processing coffee. As farmers have supplied coffee for the "Pride of PNG 2007" International Cupping competition, we have received an increased volume of unprocessed coffees for processing and shipment. We anticipate a significantly larger increase in revenue in the fourth quarters of 2007 due to the seasonality factors and farmers focused on the processing and shipping of coffee.

During the quarter represented by this filing we imported and sold 396,000 lbs of Ethiopian organic and fair trade certified coffees to our existing customers. Those sales of Ethiopian coffee generated increased revenue in the third and fourth quarter of 2007. We anticipate receiving shipment(s) of Jamaican "Penlyne Castle" coffee in December 2007 which will likely result in increased revenues in the fourth quarter of 2007 and the first quarter of 2008. Our gross profits have marginally improved on sales for the period ended September 30, 2007, to approximately 38% compared to 36% in for the same period during 2006. The increase is attributed to improved costs management. We anticipate continuing to improve our margins resulting from sales of our green beans at premium prices and the forecasted higher New York "C" contract prices. Our operating expenses for the period ended September 30, 2007 were $7,478,174 compared to $7,836,941 in 2006. The general and administration expenses to September 30, 2007 were $4,618,759 compared to $5,936,941in 2006, the marketing expenses were $ 2,039,015 in 2007 compared to $1,900,000 in 2006. During the period we also recorded compensation expenses of $820,400 related to 1,100,000 stock options issued to our officers. The general and administration expenses of $4,618,759 included travel $170,012, professional fees $366,858, advertising and promotion $325,957, office expenses $1,402,901and consulting $2,353,031. During the nine months ended September 30, 2007, we expensed convertible note related expenses; amortization of warrants $294,475, amortization of derivative and original discount of $177,766, financing expenses $566,582 and unrealized loss on derivate liability of $131,610 and liquidated damages of $241,074 The net loss for the nine months ended September 30, 2007 was $8,353,055 compared to $7,084,264 in 2006. While loss for three month periods were $2,464,180 in 2007 compared to $3,140,049 in 2006. The losses included the fair market value of the common shares issued for certain expenses and services recorded at fair market value which aggregated to $4,979,520 (2007) and $6,534,500 (2006). For the nine months ended September 30, 2006, we generated revenue of $2,088,810 and incurred a net loss of $7,084,264 consisting of following expenses; marketing $1,900,000 and general and administrative expenses of $5,936,941 which included travel $115,695, professional fees $302,385, advertising and promotion $517,868, office expenses $1,576,700 and consulting $3,424,293. Our accumulated losses, as of September 30, 2007 were $21,220,321. At September 30, 2007, we had $1,914,622 in current assets and $569,096 in current liabilities. Our long term liabilities, as of September 30, 2007, resulting from the convertible notes funding, was a total of $2,809,298 which consists of $2,337,057 for convertible debt, net of discounts, and $472,241 for discount on debt, and we recorded a derivate liability totalling $405,702. At September 30, 2007, we had $794,171 in cash and deposits which are adequate to meet our operational expenses for approximately next twelve months. Any revenue we earn is used for working capital.

We have had various discussions with additional coffee bean suppliers and are currently negotiating for and evaluating green bean coffees from other countries to add to product offerings. We announced in a press release dated October 16, 2007, that our recently appointed Chief Operating Officer would be the liaison contact for coffee farmers in Jamaica, Columbia, Guatemala, Nicaragua and El Salvador. He is tasked with incorporating these countries coffee famers in our "Growers Direct" distribution system under the "Tree to Cup" umbrella. We have had various discussions and continue to negotiate with and evaluate other regional coffee roasting companies as potential acquisition targets.

As of the date of this report, the Company has not incurred any coffee related research and development expenses and does not plan to incur any research or development expenses in the future.

As of the date of this report, the Company did not have any off-balance sheet arrangements.

Seasonality and Other Factors That May Affect Our Future Results

Our business is seasonal in nature because the Papua New Guinea coffee harvest season is from May to August. The seasonal availability of green bean coffee in the second quarter of the year may result in increased sales in the last two quarters. Because of the seasonality of our 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.

Our business strategy is centered on a single product, green bean coffee. If the demand for green bean coffee decreases, our business could suffer. Additionally, if we fail to continue developing and maintaining the quality of the green bean coffee we sell or the farmers allow the quality of the green bean coffee to diminish, our business revenue and profitability could be adversely affected.

The demand for green bean coffee is affected by consumer taste and preferences. The green bean coffee market is highly fragmented. Competition in the green bean coffee market is intense as relatively low barriers to entry encourage new competitors to enter the green bean coffee market. The new market entrants may have substantially greater financial, marketing and operating resources than us, which may adversely affect our ability to compete in the market.

We have only one coffee roasting facility. A significant interruption in the operation of this facility due to natural disaster or other causes could significantly impair our ability to operate our coffee roasting business on a day-to-day basis.

Our roasted coffees compete directly against gourmet specialty coffees sold at specialty retailers, discount stores, and a growing number of specialty coffee stores. Many specialty coffee companies, including Starbucks and Peets Coffee sell whole bean coffees through these channels. The gourmet specialty market contains competitors with substantially greater financial, marketing and operating resources than we have.

Decreased availability of quality green bean coffee would have an adverse affect on our purchasing costs, revenue and profitability and would jeopardize our ability to grow our business. A significant portion of our revenue is realized during the Papua New Guinea coffee harvest season, which is from May to August. Any coffee tree and/or coffee bean diseases and/or severe adverse weather conditions such as a prolonged period of drought, would have an adverse effect upon the supply of quality green bean coffee at a reasonable price, which, in turn, would directly impact our ability to market and distribute green bean coffee. As a result, our business would be impaired and we may have to curtail or cease our operations.

Green bean coffee trades on the commodities market. The supply and price of green bean coffee is affected by multiple factors in the various producing countries, including weather, political, and economic conditions. We sell our green bean coffee on a negotiated basis based upon the supply and demand at the time of purchase/sale. The benchmark (beginning) price will be directly tied to the then current prevailing price of New York "C" futures coffee contracts trading on the New York Coffee, Sugar & Cocoa Exchange. If the cost of green bean coffee increases we may not be able to pass along those costs to our customers because of the competitive nature of the coffee industry. If we are unable to pass along increased coffee costs, our margins will decrease and profitability will suffer. As a result, our business will be adversely affected and we may have to curtail or cease our operations.

Our ability to continue with our business plan is subject to our ability to continue generating additional revenue. Our ability to continue as a going concern is an issue raised by our auditors in their audit report for the financial statements for the year ended December 31, 2006, as a result of our limited revenue and accumulated losses. There are no assurances that we may be successful in generating any additional revenue. To fund the ongoing operations, we may be forced to find alternate sources of financing, which at this time cannot be assured. If we are unsuccessful in securing such financing on acceptable terms, our potential as a going concern could be affected and our ability to continue with our business would be harmed. In such event, we may curtail or cease our operations.

We are aware there are other companies conducting similar activities. As a small company with little operating capital in a rapidly evolving and highly competitive coffee industry, we may encounter financial difficulties. Coffee brands are being established across multiple distribution markets. Several competitors are aggressive in obtaining distribution in specialty grocery and gourmet food stores. We have only begun to penetrate these markets, which gives other competitors advantages over us based on their earlier entry into these distribution markets. The new market entrants may adversely affect our ability to implement our business plan. We may have to curtail or cease our business.

Political and social instability in Papua New Guinea may also negatively impact our supply of green coffee beans and our purchasing costs. We purchase green bean coffee from Papua New Guinea. Consequently, any political, economic and social unrest and/or instability in Papua New Guinea may adversely affect our business operations. In particular, instability in coffee growing regions of Papua New Guinea could result in a decrease in the availability of quality green coffee beans needed for the continued operation and growth of our business. It could also lead to an increase in our purchasing costs and increased operating costs. This may impair our business and we may have to cease or curtail our operations.

Our ability to implement the marketing and sales strategy is partially dependent on our ability to increase awareness and recognition of Papua New Guinea grown green bean coffee in United States, Canada and Europe. We may have difficulty selling the Papua New Guinea grown green bean coffee to roaster retailers, commercial roasters, gourmet roasters and retailers, and coffee brokers. Consequently, if we fail to implement our marketing and sales strategy, or if our resources on a marketing and sales strategy ultimately proves unsuccessful, our revenue and operating results may be adversely affected and we may have to curtail or cease our operations. As a result, investors could lose their entire investment.

Factors That May Affect Owning Company Common Stock

As of September 30 2007, directors and officers collectively owned approximately 22% of our outstanding shares of common stock. Such concentrated control of the Company may adversely affect the price of our common stock in that it may be more difficult for the Company to attract investors because such investors will know that matters requiring shareholder consent will likely be decided by our officers and directors. Our officers and directors may control matters requiring approval by our security holders, including the election of directors. Moreover, if our officers and directors decide to sell a substantial number of their shares, investors will likely lose confidence in our ability to earn revenue and will see such a sale as a sign that our business is failing. Each of these factors, independently or collectively, will likely harm the market price of our stock.

There is currently a limited trading market for our shares of common stock, and there can be no assurance that a more substantial market will ever develop or be maintained. Any market price for shares of common stock of the Company is likely to be very volatile, and numerous factors beyond our control may have a significant adverse effect. In addition, the stock markets generally have experienced, and continue to experience, extreme price and volume fluctuations which have affected the market price of many companies, and which have often been unrelated to the operating performance of these companies. These broad market fluctuations, as well as general economic and political conditions, may also adversely affect the market price of our common stock. Further, there is no correlation between the present limited market price of our common stock and our revenues, book value, assets or other established criteria of value. The present limited quotations of our common stock should not be considered indicative of the actual value of our common stock.

The Company's common stock (OTC-BB: CFPC) is deemed to be a "penny stock" as that term is defined in Rule 3a51-1 of the Securities and Exchange Commission. Penny stocks are stocks (i) with a price of less than $5.00 per share; (ii) that are not traded on a "recognized" national exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation system. Until recently, there had been no "established public market" for our common stock during the last five years. While our stock has traded between $0.48 and $2.20 per share over the past twelve months, there is no assurance that this price level will continue, as there has thus far been low volume. Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 of the Securities and Exchange Commission require broker/dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account. Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be a "penny stock." Moreover, Rule 15g-9 of the Securities and Exchange Commission requires broker/dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stocks to that investor. This procedure requires the broker/dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker/dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for investors in our common stock to resell their shares to third parties or to otherwise dispose of them.

Critical Accounting Policies & Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make a variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and (ii) the reported amounts of revenues and expenses during the reporting periods covered by the financial statements.

Our management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective and complex. Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from these estimates. Changes in estimates and assumptions based upon actual results may have a material impact on our results of operation and/or financial condition. We have identified certain accounting policies that we believe are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in Note 3 to the Consolidated Financial Statements included in this Report on Form 10-QSB.

Fair Value of Financial Instruments

The Company's financial instruments as defined by Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," include cash and cash equivalents, marketable securities, receivables, advances to employees, accounts payable and accrued expenses. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2007 and December 31, 2006.

Property and equipment

Property and equipment are stated at cost. Depreciation is provided using the straight-line or accelerated methods over the estimated useful lives of the assets. The useful lives of property, plant and equipment for purposes of computing depreciation are five to seven years for equipment.

The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts.
Maintenance and repairs are expensed as incurred. Replacements and betterments are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in results of operations.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery occurs, the sales price is fixed or determinable and collectibility is reasonably assured. Product is considered delivered when title and risk have been transferred to the customer. Retail and wholesale sales are recorded when payment is tendered at point of sale for retail, and upon shipment of product for wholesale, respectively.

Trademark

On October 10, 2005, the Company recorded a registered trademark for $72,691. In July 2001, the Financial Accounting Standards Board ("FASB") issued Statements of Financial Accounting Standards ("SFAS") Nos. 141 and 142, "Business Combinations," and "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 141 also specifies criteria intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include significant underperformance relative to expected historical or projected future operating results, significant changes in the manner of use of acquired assets or the strategy for the overall business, and significant negative industry or economic trends. The Company has performed an evaluation of its trademark on December 31, 2006. The test for impairment revealed that there was no impairment of the trademark.

Receivables

Trade accounts receivable are recorded at the net realizable value and do not bear interest. No allowance for doubtful accounts was made during the period ended September 30, 2007 based on management's best estimate of the amount of probable credit losses in existing accounts receivable. The Company evaluates its allowance for doubtful accounts based upon knowledge of its customers and their compliance with credit terms. The evaluation process includes a review of customers' accounts on a regular basis. The review process evaluates all account balances with amounts outstanding 60 days and other specific amounts for which information obtained indicates that the balance may be uncollectible. As at September 30, 2007, there was no allowance for doubtful accounts. The Company does not have any off-balance-sheet credit exposure related to its customers.