UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549


_______________





FORM 10-Q


_______________





(Mark One)


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








For the quarterly period ended March 31, 2011


or


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





For the transition period from ______to______.





FOODFEST INTERNATIONAL 2000 INC.


(Exact name of registrant as specified in charter)





Delaware

333-142658

74-3191757(State or other jurisdiction of

incorporation or organization)

(Commission File Number.)

(I.R.S. Employer Identification No.)





361 CONNIE CRESENT


CONCORD, ONTARIO, CANADA, L4K 5R2


(Address of principal executive offices)


_______________





(905) 709-4775


(Registrant’s telephone number, including area code)


_______________








(Former name, former Address and former fiscal year,  ifchanged since last report)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes x  No o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes o No o





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”,  “ accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:





Large Accelerated Filer o     Accelerated Filer o     Non-Accelerated Filer o (Do not check if a smaller reporting company) Smaller Reporting Company x








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





Indicate the number of shares outstanding of each of the issuer’s classes of common stock: As of 16 May 2011, there were 52,350,809 shares, $.001 par value, of common stock outstanding.














FOODFEST INTERNATIONAL 2000 INC. AND SUBSIDIARY





Quarterly Report on Form 10-Q for the





Quarterly Period Ended March 31, 2011





Table of Contents








PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements

1Condensed Consolidated Balance Sheets as of March 31, 2011 (unaudited) and June 30, 2010 (audited)

2 -3Condensed Consolidated Statements of Operations for the Three Months Ended 31 March 2011 and 2010 (unaudited):

4Condensed Consolidated Statements of Operations for the Nine Months Ended 31 March, 2011 and 2010 (unaudited):

5Condensed Consolidated Statements of Cash Flows for the Nine Months Ended 31 March 2011 and 2010 (unaudited):

6Notes to Unaudited Condensed Consolidated Financial Statements:

7Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

20Item 3. Quantitative and Qualitative Disclosures About Market Risk

23Item 4  Controls and Procedures

23PART II. OTHER INFORMATIONItem 1. Legal Proceedings

24Item 1A Risk Factors

24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

24Item 3. Defaults upon Senior Securities

24Item 4. (Removed and Reserved)

24Item 5. Other Information

24Item 6. Exhibits

24Signatures

25











i







FOODFEST INTERNATIONAL 2000 INC. AND SUBSIDIARY




CONSOLIDATED FINANCIAL STATEMENTS


Unaudited


31 March 2011
















1





FOODFEST INTERNATIONAL 2000 INC. AND SUBSIDIARY





CONSOLIDATED BALANCE SHEETS




AS OF 31 MARCH 2011 AND 30 JUNE 2010




(Expressed in United States Dollars)








31 March

2011

(Unaudited)


30 June

2010

(Audited)ASSETSCurrent AssetsAccounts receivable, less allowance of $166,078 (30 June 2010 - $151,601)

$
2,154,789


$
1,606,855Inventory


2,772,014



1,418,891Prepaid and sundry assets


111,171



93,185Taxes recoverable


-



205Advances to related party


-



197,610Total Current Assets


5,037,974



3,316,746Long Term AssetsProperty and equipment, net


363,990



331,400Deferred income taxes


9,072



39,484Total Long Term Assets


373,062



370,884Total Assets

$
5,411,036


$
3,687,630






The accompanying notes are an integral part to these consolidated financial statements.





2








FOODFEST INTERNATIONAL 2000 INC. AND SUBSIDIARY





CONSOLIDATED BALANCE SHEETS (continued)




AS OF 31 MARCH 2011 AND 30 JUNE 2010




(Expressed in United States Dollars)




31 March

2011

(Unaudited)


30 June

2010

(Audited)LIABILITIES AND STOCKHOLDERS' DEFICITCurrent LiabilitiesBank indebtedness

$
1,130,188


$
1,059,948Accounts payable and accrued liabilities


3,779,302



1,930,241Income taxes payable


74,721



-Loans payable


91,146



109,126Long term debt - current portion


59,474



61,008Obligations under capital lease - current portion


66,767



63,850Total Current Liabilities


5,201,148



3,224,173Long Term LiabilitiesLong term debt


98,335



45,533Obligations under capital lease


36,871



83,021Advances from stockholders


39,275



35,949Advances from related parties


1,426,038



1,621,955Total Long Term Liabilities


1,600,519



1,786,458CommitmentsStockholders' DeficitPreferred stock - no par value, non-cumulative, non-voting, redeemable at amount paid thereon, unlimited shares authorized, none issued and outstanding

(30 June 2010 - none issued and outstanding)


-



-Common stock - no par value, unlimited shares authorized, 52,350,809 issued and outstanding (30 June 2010 - 3,950,809 issued and outstanding)


52,351



3,951Additional paid-in capital


601,298



649,698Accumulated other comprehensive loss


(277,573
)


(214,341
)Deferred stock-based Compensation


-



(93,750
)Accumulated deficit


(1,766,707
)


(1,668,559
)Total Stockholders' Deficit


(1,390,631
)


(1,323,001
)Total Liabilities and Stockholders' Deficit

$
5,411,036


$
3,687,630







The accompanying notes are an integral part to these consolidated financial statements.





3





FOODFEST INTERNATIONAL 2000 INC. AND SUBSIDIARY





CONSOLIDATED STATEMENT OF OPERATIONS


Unaudited




FOR THE THREE MONTHS ENDED 31 MARCH




(Expressed in United States Dollars)





2011


2010SALES

$
4,083,870


$
3,621,138COST OF GOODS SOLD


3,270,777



2,688,768GROSS PROFIT


813,093



932,370MANAGEMENT FEES


-



25,351EXPENSESSalaries and wages


319,938



249,949Selling and delivery


255,618



153,425General and administrative


172,262



222,556Financial


48,709



48,238Depreciation


25,564



17,097TOTAL EXPENSES


822,091



691,265(LOSS) EARNINGS BEFORE TAXES


(8,998
)


266,456Current income taxes


37,298



49,306Deferred income taxes


(2,613
)


10,068NET (LOSS) EARNINGS

$
(43,683
)

$
207,082OTHER COMPREHENSIVE INCOME (LOSS)Foreign currency translation


(26,056
)


(15,907
)Unrealized gain on foreign exchange


17,016



32,546COMPREHENSIVE INCOME (LOSS)


(52,723
)


223,721(LOSS) EARNINGS PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED

$
0.00


$
5.23WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED


21,502,457



39,601




The accompanying notes are an integral part to these consolidated financial statements.






4




FOODFEST INTERNATIONAL 2000 INC. AND SUBSIDIARY





CONSOLIDATED STATEMENT OF OPERATIONS


Unaudited




FOR THE NINE MONTHS ENDED 31 MARCH




(Expressed in United States Dollars)





2011


2010SALES

$
11,473,948


$
9,684,012COST OF GOODS SOLD


8,891,424



7,395,684GROSS PROFIT


2,582,524



2,288,328MANAGEMENT FEES


-



75,112EXPENSESSalaries and wages


995,494



701,039General and administrative


761,514



696,970Selling and delivery


539,486



437,261Financial


205,287



116,344Depreciation


74,574



51,290TOTAL EXPENSES


2,576,355



2,002,904EARNINGS BEFORE TAXES


6,169



360,536Current income tax expense


71,506



49,306Deferred income tax expense


32,811



10,068NET (LOSS) EARNINGS

$
(98,148
)

$
301,162OTHER COMPREHENSIVE (LOSS) INCOMEForeign currency translation


(31,957
)


(107,815
)Unrealized (loss) gain on foreign exchange


(31,265
)


73,001COMPREHENSIVE (LOSS) INCOME


(161,370
)


266,348(LOSS) EARNINGS PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED

$
0.00


$
7.60WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED


52,350,809



39,601




The accompanying notes are an integral part to these consolidated financial statements.





5




FOODFEST INTERNATIONAL 2000 INC. AND SUBSIDIARY




CONSOLIDATED STATEMENTS OF CASH FLOWS


Unaudited




FOR THE NINE MONTHS ENDED 31 MARCH




(Expressed in United States Dollars)





2011


2010CASH FLOWS FROM OPERATING ACTIVITIESNet (loss) earnings

$
(98,148
)

$
301,162Items not requiring an outlay of cash:Depreciation


74,574



51,290Accrued interest


8,398



-Deferred stock based compensation


93,750



-Changes in non-cash working capital:Accounts receivable


(378,652
)


(928,009
)Inventory


(1,168,754
)


(313,107
)Prepaid and sundry assets


(9,297
)


-Accounts payable and accrued liabilities


1,635,507



422,639Income taxes and deferred taxes


104,317



52,444CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES


261,695



(413,581
)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from bank indebtedness


(30,111
)


(52,703
)Repayment of loan payable


(32,799
)


(15,022
)Proceeds from (repayment of) long-term debt


39,446



(62,742
)Advances (to) from related party


(119,757
)


648,936Obligations under capital lease


(54,961
)


99,379CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES


(198,182
)


617,848CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property and equipment


(75,477
)


(192,569
)CASH USED IN INVESTING ACTIVITIES


(75,477
)


(192,569
)EFFECT OF EXCHANGE RATE CHANGES ON CASH


11,964



(11,698
)NET CHANGE IN CASH


-



-CASH, BEGINNING OF PERIOD


-



-CASH, END OF PERIOD

$
-


$
-





SUPPLEMENTAL CASH FLOW INFORMATIONINTEREST PAID

$
179,891


$
117,145INCOME TAXES PAID


-



-




The accompanying notes are an integral part to these consolidated financial statements.










6




FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)


1.
ORGANIZATION AND NATURE OF OPERATIONS




Foodfest International 2000 Inc. and Subsidiary (the "Company" or "Foodfest USA") was incorporated on 20 September 2006 in the State of Delaware, under the name Henya Food Corp.




On 20 December 2010, pursuant to a share exchange agreement (the "Share Exchange Agreement"), the Company completed the acquisition of all the issued and outstanding shares of Foodfest International 2000 Inc. ("Foodfest Canada"), a private company incorporated under the laws of the Province of Ontario, Canada.




The acquisition of Foodfest Canada is accounted for under the purchase method as a reorganization of entities under common control, as both companies were managed by the same individuals prior to the transaction. The results are similar to a pooling of interests whereby the assets and liabilities were transferred at historical cost. The outstanding common stock of Foodfest USA is accounted for at its net book value and no goodwill was recognized.




Foodfest Canada has been operating since 25 June 1987 and is in the business of importing, marketing and distributing kosher, vegetarian and organic food products to grocery stores in Canada and the United States.




2.
BASIS OF PRESENTATION




The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Security and Exchange Commission ("SEC") Form 10-Q and Article 8 of SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended 31 March 2011 are not necessarily indicative of the results that may be expected for the year ending 30 June 2011.




3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




The following is a summary of significant accounting policies followed in the preparation of these consolidated financial statements.




Revenue Recognition




Revenue is recognized once products are delivered to the customer and the transfer of ownership risks and benefits inherent to the property occurs. Revenue is recognized if persuasive evidence of an agreement exists, the sales price is fixed or determinable, and collectability is reasonably assured.






7




FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Revenue Recognition (Continued)




We promote our products with advertising, consumer incentive and trade promotions. Such programs include, but are not limited to, co-operative advertising, promotional discounts, coupons, rebates, in-store display incentives, volume based incentives and product introductory payments (i.e. slotting fees). In accordance with ASC 605-50-45, Accounting for Consideration Given by a Vendor to a Customer or Reseller of the Vendors Products, certain payments made to customers by the Company, including promotional sales allowances, co-operative advertising and product introductory expenditures have been deducted from revenue.




Inventory




Inventory is comprised of finished goods that the Company intends to resell to its customers. It is valued at the lower of cost and net realizable value. Cost is determined on a first-in, first-out basis. Import cost components include customs duties and charges for freight and handling.




Trade receivables




The Company's accounts receivable and related allowance for doubtful accounts are analyzed in detail on a quarterly basis and all significant customers with delinquent balances are reviewed to determine future collectability. Reserves are established in the quarter in which the Company makes the determination that the account is deemed uncollectible. As of 31 March 2011 and 30 June 2010, the allowance for doubtful accounts was assessed as $166,078 and $151,601, respectively.




Cost of Products Sold




Included in cost of sales are cost of purchases (FOB cost) and cost associated with the import of the products. Import cost components are customs entry fees levied by the country of import and the freight and handling cost to unload containers.






8


FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Income Taxes




The Company accounts for income taxes in accordance with Accounting Standards Codification ("ASC") No. 740 Income Taxes which prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates.  The effects of future changes in tax laws or rates are not anticipated.




Under ASC No. 740 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the consolidated financial statements than for tax purposes.




Co-operative Advertising Allowances




The Company is granted advertising allowances from its suppliers in exchange for promoting the supplier's products. In accordance with ASC No. 605-50 Revenue Recognition for Customer Payments and Incentives, the consideration received from these suppliers is accounted for as a reduction of the costs of promoting the vendor's products.




Use of Estimates




The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from these estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known.






9


FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Earnings or Loss Per Share




The Company accounts for earnings per share pursuant to ASC No. 260 Earnings Per Share, which requires disclosure on the financial statements of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year.




There were no dilutive financial instruments for the three and nine months ended 31 March 2011 and 2010.




Foreign Currency Translation




Management has determined that the functional currency of Foodfest USA is the United States dollar and the functional currency of Foodfest Canada is the Canadian dollar. The accounts of Foodfest Canada have been translated into U.S. dollars in accordance with the provisions of ASC No. 830 Foreign Currency Matters. Certain assets of Foodfest Canada are denominated in United States dollars. In accordance with the provisions of ASC No. 830, transaction gains and losses on these assets and liabilities are included in the determination of income for the relevant years. Adjustments resulting from the translation of the financial statements from their functional currencies to U.S. dollars are accumulated as a separate component of accumulated other comprehensive income and have not been included in the determination of income for the relevant years.




Stock-Based Compensation




The Company does not have a formal stock option plan. However, the Company offered to some employees and consultants stock-based compensation in the form of shares of the Company's common stock. These issuances of common stock to employees and consultants are accounted for in accordance with ASC 718, Compensation – Stock Compensation.






10


FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Comprehensive Income




The Company follows ASC No. 220, Comprehensive Income that establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income is presented in the consolidated statements of changes in stockholders' equity, and consists of foreign currency translation adjustments and unrealized gains and losses on foreign exchange. ASC No. 220 requires only additional disclosures in the financial statements and does not affect the Company's financial position or results of operations.




Leases




The Company leases property and equipment in the ordinary course of business. Significant lease obligations relate to vehicles, equipment, and premises. These leases have varying terms and may or may not include purchase or buyout options and guaranteed residuals. The terms of these leases are considered when determining whether a lease is classified as operating or capital.




Assets under capital lease are capitalized using interest rates appropriate at the inception of each lease and are amortized over their estimated useful lives, using the same method as similar assets that the Company owns. The present value of the lease payments is recorded as a debt obligation.




Other leases are classified as operating when lease terms are significantly shorter than the assets' economic useful lives, or minimum lease payments are significantly lower than the purchase cost of the asset. Management expects that in the normal course of business, these leases will be renewed, replaced with new leases, or replaced with fixed asset expenditures.




Property and Equipment




Property and equipment are recorded at historical cost less accumulated depreciation. Depreciation, based on the estimated useful lives of the assets, is provided using the under noted annual rates and methods:




Equipment
20% declining balanceFurniture and fixtures
20% declining balanceVehicles
30% declining balanceComputer hardware
30% declining balanceLeasehold improvements
5 years straight line




11




FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Valuation of Long-Lived Assets




In accordance with ASC No. 360 Property, Plant, and Equipment, long-lived assets to be held and used are analyzed for impairment whenever events or changes incircumstances indicated that the related carrying amounts may not be recoverable. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value of the asset less costs to sell. Management has assessed that there is no impairment of long-lived assets as of 31 March 2011 and 30 June 2010.




Significant Recent Accounting Pronouncements




Other accounting standards that have been issued or proposed by the Financial Accounting Standards Board that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.




4.
ADVANCES TO RELATED PARTY




The advances to related party, Strubs Food Corp., a company under common control, are unsecured, non-interest bearing and due on demand.




5.
PROPERTY AND EQUIPMENT






Cost


Depreciation


Net

31 March

2011

(Unaudited)


Net

30 June

2010

(Audited)Equipment


555,134



369,792



185,342



206,284Furniture and fixtures


277,970



188,791



89,179



86,729Vehicles


66,763



22,225



44,538



2,532Computer hardware


85,974



56,438



29,536



15,511Leasehold improvements


814,737



799,342



15,395



20,344$
1,800,578


$
1,436,588


$
363,990


$
331,400





12




FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)






6.
BANK INDEBTEDNESS




The Company has available a $1,029,000 ($1,000,000 Canadian dollars) revolving operating line which bears interest at the Royal Bank of Canada ("RBC") prime rate plus 2.75% and is repayable on demand. This revolving loan is secured under a general security agreement covering all of the Company's assets and also secured by limited personal guarantees from the stockholders of the Company.




7.
LOANS PAYABLE




31 March

2011

(Unaudited)


30 June

2010

(Audited)Loan payable to Kosher City - These advances are unsecured, non-interest bearing and are repayable on demand. The balance was paid in January 2011.

$
-


$
31,001Loan from stockholder - In August 2008, the Company borrowed $50,000 from a stockholder of the Company to finance operations. The loan is unsecured, bears interest at an effective rate of 25% per annum and was initially set to mature one year from the grant date. In August 2009, the principle loan balance plus accrued interest, totalling $62,500 was renewed for another year under the same terms. In August 2010, the principle loan balance plus accrued interest, totalling $78,125 was renewed for another year under the same terms.


91,146



78,125$
91,146


$
109,126








13




FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)






8.
LONG-TERM DEBT




Each of the loans below are payable to the Business Development Bank of Canada ("BDC"), are secured by a general security agreement and limited guarantees from the stockholders of the Company and Coastal Water Seafoods Ltd (the related party described in note 11).




31 March

2011

(Unaudited)


30 June

2010

(Audited)Term loan bearing interest the BDC daily floating base rate plus 1.5%, repayable monthly by principal payments of $2,150 Canadian Dollars ("CAD") plus interest maturing on February 23, 2013.

$
50,884


$
64,625Term loan bearing interest at the BDC daily floating base rate plus 4.0%, repayable monthly by principal payments of $3,450 CAD plus interest maturing on November 23, 2010.


-



16,203Term loan bearing interest at the BDC daily floating base rate plus 4.0%, repayable monthly by principal payments of $1,825 CAD plus interest maturing on September 23, 2011.


11,268



25,713Term loan bearing interest at the BDC daily floating base rate plus 1.5%, repayable monthly by principal payments of $1,754 CAD plus interest maturing on August 23, 2015.


95,657



-157,809



106,541Less: current portion


59,474



61,008$
98,335


$
45,533






The Company's future commitments under this long-term debt are summarized as follows:







2011 (Three months)

$
17,6862012


53,8402013


39,3572014


21,6582015


21,658Thereafter


3,610$
157,809







14




FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




9.
OBLIGATIONS UNDER CAPITAL LEASE




On 1 January 2010 the Company entered into a direct financing lease with Gould Leasing to construct a walk-in freezer. Under the lease agreement, the Company is obligated to make monthly payments of $4,678 for a term of 39 months. Interest is calculated at the rate implicit in the lease of 7.5%. The financing has been secured by the constructed asset.




On 1 May 2009 the Company entered into direct financing leases with Equilease Corporation and Blue Chip Leasing Corporation for computer equipment. Under these lease agreements, the Company is obligated to make monthly payments of $2,187 for a term of 36 months. Implicit interest is calculated at the Company's incremental borrowing rate of 5%. The financing has been secured by the leased computer equipment.




The Company's future commitments under these capital leases are summarized as follows:







2011 (Three months)

$
19,7992012


72,3802013


34,620126,799Less: imputed interest


(23,161
)103,638Less: current portion


(66,767
)$
36,871




10.
ADVANCES FROM STOCKHOLDERS




On 31 March 2011, the Company had advances from its stockholders totalling $39,275 (30 June 2010 - $35,949). These advances are unsecured, non-interest bearing, and have been postponed in favour of RBC in respect of the Company's line of credit.






15


FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




11.
ADVANCES FROM RELATED PARTIES




Each of the loans below bear interest at the RBC prime rate plus 1.5% and are repayable in monthly instalments of interest only. These loans have been postponed in favour of RBC in respect of the Company's line of credit. Changes in the balances from year-to-year are due to changes in foreign exchange rates.




31 March

2011

(Unaudited)


30 June

2010

(Audited)Coastal Water Seafoods Ltd. - a company controlled by a director and stockholder of the Company

$
258,102


$
235,603Canadian Triloon Corporation - a company controlled by the spouse of a director and stockholder of the Company


292,850



279,396Yael Ender - the spouse of a director and stockholder of the Company


523,050



482,684Triloon Corporation - a company controlled by a director and stockholder of the Company


352,036



624,272$
1,426,038


$
1,621,955





12.
CAPITAL STOCK




On 20 December 2010, in accordance with the Share Exchange Agreement as discussed in note 1, the Company issued 48,400,000 shares of common stock in exchange for all the issued and outstanding shares of Foodfest Canada.




13.
COMMITMENTS




The Company's future commitments under various lease agreements including vehicles, equipment, and premises are summarized as follows:




2011 (Three months)

$
149,4542012


608,8312013


552,0102014


506,5192015


531,618Thereafter


2,737,848$
5,086,280







16




FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




13.
COMMITMENTS (Continued)




On 21 January 2008, the Company entered into a settlement agreement with a former stockholder of the Company whereby, in exchange for the return of 10,667 shares on 31 October, 2007, the Company agreed to pay $200,000 to the former stockholder with the following terms:




1) This amount is payable one day following a restriction period of one year from the date the Company's shares of common stock begins to trade publicly. The funds will be raised by issuing new shares of common stock in a private placement. As security for this transaction, the Company has placed 3,000,000 shares of its common stock in escrow with a law firm. $200,000 has been accrued for this as severance expense. The expense has been netted against amounts forgiven by the former stockholder as part of the settlement agreement.




2) Within five business days of the Company receiving funds totalling $3,500,000 from a private placement, the Company will pay a total of $50,000 in final settlement of all obligations owed to the former stockholder. If the Company does not receive the funds from a private placement before the end of the restriction period stated in #1 above, interest at a rate of 5% per annum will accrue on the outstanding balance from the end of the restriction period. Additionally, if the Company does not receive the funds from a private placement before the end of the restriction period stated in #1 above, an amount of the shares held in escrow valued at $50,000 shall be delivered to the former stockholder.  $50,000 of accrued management fees remains payable in relation to this.




14.
RELATED PARTY TRANSACTIONS




The following transactions with related parties were in the normal course of operations and were measured at the exchange value, which represented the amount of consideration established and agreed to by the related parties.




As of 31 March 2011 accounts receivable of $153,997 (30 June 2010 - $140,573) were due from Coastal Water Seafoods Ltd. (the related party described in note 11) and are subject to normal trade terms. In addition, management fees of $92,597 were paid to Coastal Water Seafoods Ltd. during the nine months ended 31 March 2011 (nine months ended 31 March 2010 - $17,601). Management fees of $31,728 were paid to Coastal Water Seafoods Ltd. during the three months ended 31 March 2011 (three months ended 31 March 2010 - $6,014).






17


FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




14.
RELATED PARTY TRANSACTIONS (Continued)




Management fees of $111,116 were paid to Canadian Endernational Ltd (a company controlled by a director and stockholder of of the Company) during the nine months ended 31 March 2011 (nine months ended 31 March 2010 - $36,026). Management fees of $37,039 were paid to Canadian Endernational Ltd. during the three months ended 31 March 2011 (three months ended 31 March 2010 - $12,029). As of 31 March 2011 the Company owed $376,039 (30 June 2010 - $152,948) to Canadian Endernational Ltd. and is included in accounts payable and accrued liabilities, subject to normal trade terms.




Management fees of $54,652 were paid a stockholder of the Company for the nine months ended 31 March 2011 (nine months ended 31 March 2010 - $39,442). Management fees of $19,291 were paid a stockholder of the Company for the three months ended 31 March 2011 (three months ended 31 March 2010 - $13,472).




Interest payments totalling $74,949 were accrued to related parties during the nine months ended 31 March 2011 (nine months ended 31 March 2010 - $29,838) on the advances described in note 11. Interest payments totalling $17,004 were accrued to related parties during the three months ended 31 March 2011 (three months ended 31 March 2010 - $29,838) on the advances described in note 11.




Rental payments totalling $232,835 were made to Triloon Corp. (the related party described in note 11) during the nine months ended 31 March 2011 (nine months ended 31 March 2010 - $226,815). Rental payments totalling $79,901 were made to Triloon Corp. during the three months ended 31 March 2011 (three months ended 31 March 2010 - $75,730). As of 31 March 2011 the Company owed $39,373 (30 June 2010 - $49,876 to Triloon Corp. and is included in accounts payable and accrued liabilities, subject to normal trade terms.




The Company transacted with Strubs Food Corp (a company under common control) during the nine months ended  31 March 2011 as follows:




●
Accounts payable, subject to normal trade terms, of $414,992 as of 31 March 2011 (30 June 2010 - $1,830)


●
Rental payments received of $8,889 (nine months ended 31 March 2010 - $8,448). Rental payments received of $3,046 for the three months ended 31 March 2011 (three months ended 31 March 2010 - $2,887).


●
Management fees received of $175,747 (nine months ended 31 March 2010 - $75,128). Management fees received of $45,689 for the three months ended 31 March 2011 (three months ended 31 March 2010 - $25,982)


●
Purchases made of $894,591 (nine months ended 31 March 2010 - $959,410). Purchases made of $347,511 for the three months ended 31 March 2011 (three months ended 31 March 2010 - $347,511).







18




FOODFEST INTERNATIONAL 2000 INC.
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 Unaudited
  FOR THE THREE AND NINE MONTHS ENDED 31 MARCH 2011
  (Expressed in United States Dollars)




15.
FINANCIAL INSTRUMENTS




Fair Values




The Company's financial instruments include accounts receivable and payable, bank indebtedness, income taxes recoverable and payable, obligations under capital lease, long-term debt, advances to and from related parties, and advances from stockholders.




The estimated fair value of financial instruments has been determined by the Company using available market information and valuation methodologies. Considerable judgement is required to estimate fair value. Accordingly, the estimates may not be indicative of the amounts the Company could realize in a current market exchange. As of 31 March 2011 and 30 June 2010, the carrying amounts of the above financial instruments approximate their fair values due to the short maturities of these instruments.




Credit Risk Management




The Company is exposed to credit risk on accounts receivable from its customers. In order to reduce its credit risk, the Company has adopted credit policies which include the analysis of the financial position of its customers and the regular review of their credit terms.




During the nine months ended 31 March 2011, the Company's three largest customers made up 74% of total revenues and 77% of total receivables (nine months ended 31 March 2010 - 81% of total revenues and 77% of total receivables).




Foreign Currency Risk




Foreign currency risk arises from fluctuations in foreign exchange rates and the degree of volatility of these rates relative to the Canadian dollar, Foodfest Canada's functional currency. Consequently, some assets, liabilities, revenues and purchases are exposed to foreign exchange fluctuations. The Company does not use derivative instruments to hedge its foreign exchange risk. However, the Company actively monitors changes in foreign exchange rates to determine if a derivative instrument may be appropriate to hedge its foreign currency risk.




Interest Rate Risk




Interest rate risk is the risk that fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk arising from fluctuations in interest rates on its bank indebtedness, advances from stockholders and related parties and long term debt.




16.
COMPARITIVE FIGURES




Certain comparative figures have been reclassified to conform with the basis of presentation in the current period.





19




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





Caution Regarding Forward-Looking Information





Certain statements contained herein, including, without limitation, statements containing the words “believes”, “anticipates”, “expects” and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.





Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.





RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED 31 MARCH 2011 COMPARED TO THE THREE MONTHS ENDED 31 MARCH 2010





Sales





We had $4,083,870 in sales for the three months ended March 31, 2011 compared to $3,621,138 for the three months ended March 31, 2010. This represents a 12.8% increase. This increase is primarily due to:





●
increased market demand for Kosher, organic and natural food products;





●
new product listings with major retail chains.





Gross Profit Margin





Total cost of goods sold for the three months ended March 31, 2011 was $3,270,777 and our gross profit margin was 19.9% as compared to cost of goods sold of $2,688,768 and gross profit margin of 25.7% for the three months ended March 31, 2010. Our gross profit margin decreased due to matching competitive promotions and higher fuel expenses on our imports and deliveries.





Selling, General and Administrative Expenses





Total expenses for the three months March 31, 2011 were $822,091 as compared to $691,265 for the three months ended March 31, 2010.





Wages, salaries and management fees grew as a result of wage increases and additional employees to handle the increased volume of business.





We incurred higher travel costs to the United States to promote our products and seek out new product lines. The bulk of our sales are made in Canada but we are also exploring the opportunity to expand our market in the United States.  These sales will be made directly to customers in the United States therefore minimizing our foreign exchange risk on the Canadian dollar.





Income taxes





We recorded a current tax provision of $37,298 for the three months ended March 31, 2011 which represents taxable income in Foodfest Canada, less tax loss carry-forwards.





We recorded a deferred tax provision of ($2,613) for the three months ended March 31, 2011.  This provision resulted from the difference in the carrying value of our property and equipment compared to the tax values.





20








Net (Loss) Earnings





Net loss was $43,683 for the three months ended March 31, 2011 compared to net income of $207,082 for the three months ended March 31, 2010.  We incurred higher expenses such as salaries and wages, management fees and travel costs, which all contributed to reduced net earnings.





RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED 31 MARCH 2011 COMPARED TO THE NINE MONTHS ENDED 31 MARCH 2010





Sales





We had $11,473,948 in sales for the nine months ended March 31, 2011 compared to $9,684,012 for the nine months ended March 31, 2010. This represents an 18.5% increase. This increase is primarily due to:





●
increased market demand for Kosher, organic and natural food products;





●
introducing new product lines such as a new Crouton line, Soy based cream cheese line, a puff pastry line, and new Kosher poultry products from one of our main suppliers; and





●
new product listings with major retail chains.





Gross Profit





Total cost of goods sold for the nine months ended March 31, 2011 was $8,891,424 and our gross profit was 22.5% as compared to cost of goods sold of $7,395,684 and gross profit of 23.6% for the nine months ended March 31, 2010. Our gross profit margin decreased slightly due to matching competitive promotions and incurring higher fuel expenses on our imports and deliveries, however overall the gross margin remains relatively consistent as a result of the strong Canadian dollar.





Our head office is located in Canada and our functional currency is the Canadian dollar. All of our purchases are made in U.S. dollars.  The Canadian dollar strengthened compared to the U.S. dollar during the nine months ended March 31, 2011 as compared to the nine months ended March 31, 2010, which has resulted in lower inventory purchase costs.





Selling, General and Administrative Expenses





Total expenses for the nine months ended March 31, 2011 were $2,576,355 as compared to $2,002,904 for the nine months ended March 31, 2010.





Wages, salaries and management fees grew as a result of wage increases and additional employees to handle the increased volume of business. The other change of note for this period is the realization of deferred stock based compensation of $93,750 which is related to management fees realized during the nine months ended March 31, 2011.





Interest and bank charges increased as a result of the settlement of a contingent liability to settle a prior lawsuit in the amount of approximately $63,000.  This was a one-time non-recurring event. Posted interest rates also increased during the nine months ended March 31, 2011 resulting in higher interest charges on our variable rate debt.





We incurred higher travel costs to the United States to promote our products and seek out new product lines. The bulk of our sales are made in Canada but we are also exploring the opportunity to expand our market in the U.S.  These sales will be made directly to customers in the U.S. therefore minimizing our foreign exchange risk on the Canadian dollar.





Income taxes





We recorded a current tax provision of $71,506 for the nine months ended March 31, 2011 which represents taxable income in Foodfest Canada, less tax loss carry-forwards.


We recorded a deferred tax provision of $32,811 for the nine months ended March 31, 2011.  This provision resulted from the difference in the carrying value of our property and equipment compared to the tax values.





Net (Loss) Earnings





Net loss was $161,370 for the nine months ended March 31, 2011 compared to net earnings of $266,348 for the nine months ended March 31, 2010.  Our gross profit margin remained the same, however this was offset due to higher expenses such as salaries and wages, stock based compensation and travel costs.





21




Liquidity and Capital Resources





As of March 31, 2011, we had current ratio of 0.97 to 1 or working capital deficit of $163,174.  We expect to reduce our inventory levels over the next three months of our fiscal year and our accounts payable which will help to increase our working capital and fund operating activities.  We will also have repaid one of our term loans by September 2011, which will help to reduce our overall debt.





Cash flows from operating activities





Cash flows from operating activities improved during the nine months ended March 31, 2011 as compared to the nine months ended March 31, 2010. During the three months ended March 31, 2011, due to economic conditions, a number of our customers were delaying payments to us.  During the current period we experienced improved collection of our receivables.





Cash flows from investing activities





During the nine months ended March 31, 2011 we purchased new delivery vehicles and upgraded our computer hardware.





Cash flows from financing activities





During the nine months ended March 31, 2011 we repaid our bank indebtedness, long-term debt and obligations under capital leases as required, and as a result of improved cash flow we repaid loans due to related parties and stockholders.





We intend to raise $5,000,000 through equity financing to support our sales and marketing efforts in the North American market as well as pursue acquisitions of manufacturers and distribution based companies that focus on Kosher, organic and natural foods.  We anticipate completing our financing goals by the end of the fourth quarter 2011 to enable us to continue our sales growth, introduction of new product lines, and actively pursue potential acquisitions and/or joint ventures.





We will be seeking out and pursuing foreign manufacturers that specialize in Kosher, organic and natural foods to import into the North American market. The addition of such products will further enhance the Company’s overall business plan. Concurrently we will be seeking out opportunities to export domestically produced Kosher, organic and natural foods that can fill a need in foreign markets.





While we continually seek out new products, acquisition and/or joint venture opportunities in the domestic market we will be looking at the same opportunities in foreign markets to potentially establish domestic production facilities for new products or for products previously imported. If successful this would reduce costs, lead times and reduce inventories, improve cash flow and result in better value for the customer.





We do not anticipate the purchase or sale of any significant equipment in the near future. We also do not expect any significant changes in the number of employees although depending on if financing is raised we may add additional representatives. We do not intend to increase our staff until such time as we can raise the capital or generate revenues to support the increase in overhead expense. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. The exact allocation, purposes and timing of any monies raised in subsequent private financings may vary significantly depending upon the exact amount of funds raised and status of our business plan.





Seasonal





The only seasonal aspect of our business is around Passover, which raises inventory levels and sales around March to April which is typically in our 3rd and 4th quarter of our fiscal year.





Off-Balance Sheet Arrangements





We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.





22




Item 3. Quantitative and Qualitative Disclosures About Market Risk





The Company is subject to certain market risks, including changes in interest rates and currency exchange rates.  The Company does not undertake any specific actions to limit those exposures.





Item 4.  Controls and Procedures





Disclosure Controls and Procedures.Management is responsible for maintaining disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial and other required disclosures.





Our management, including our Chief Executive Officer along with our Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a — 15(e) under the Exchange Act of 1934, as amended) as of March 31, 2011. Based upon this review and evaluation, these officers have concluded that our disclosure controls and procedures are ineffective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the forms and rules of the Securities and Exchange Commission; and to ensure that the information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management including our principal executive and principal financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.





Discussion of Internal Controls over Financial Reporting.Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a-15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company's Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's consolidated financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the consolidated financial statements.





Management has identified certain material weaknesses relating to the accounting of inventory:





●
Inventory was not counted on March 31, 2011, due to our staff being busy handling sales orders for Passover. We were unable to determine if there were any differences between our inventory on hand and the accounting records.


●
Our controls over the foreign exchange transactions of our inventory purchases are ineffective.





Management has identified certain material weaknesses related to the financial reporting processes:





●
The consolidated financial statements are prepared by our special advisor. Our auditors have discovered errors resulting in adjustments to inventory and for foreign exchange on balances not in our functional currency.


●
Untimely and late filings with the Securities and Exchange Commission


●
An inability to maintain effective controls over changes to financial application programs, specifically posting transactions to previous reporting periods.





Management will be taking steps to resolve the above weaknesses as follows:





●
We will be counting our inventory at the end of each quarter and reconcile to our accounting records in order to determine if there are any discrepancies.


●
We are planning on meeting with our principal accountant to review our controls over processing foreign exchange transactions.


●
We will also meet with our principal accountant to review comments provided by our auditors in relation to the consolidation of our financial statements to ensure accounting and consolidation errors are not repeated.





While the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with U.S. generally accepted accounting principles.




23





Changes in internal control over financial reporting.There were no changes in our internal control over financial reporting that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





PART II - OTHER INFORMATION





Item 1. Legal Proceedings.





Currently we are not aware of any litigation pending or threatened by or against the Company.





Item 1A. Risk Factors





Not applicable.





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





None.





Item 3. Defaults Upon Senior Securities.





None





Item 4. (Removed and Reserved).





None.





Item 5. Other Information.





None





Item 6. Exhibits





(a)    Exhibits





31.1 Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002





31.2 Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002





32.1 Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002





32.2 Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002





24






SIGNATURES





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





Signature
Title
Date/s/ Henry Ender
President  and Chief Executive Officer
May 20, 2011Henry Ender/s/ Fred Farnden
Chief Financial Officer
May 20, 2011Fred Farnden