U.S.
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 SEPTEMBER 30,
  2008




OR




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




Commission
file number:  333-111486




DAIRY
FRESH FARMS INC.




(Name
of small business issuer in its charter)




Nevada
              98-0407549(State
      or other jurisdiction of incorporation )
              (I.R.S.
      Employer Identification No.)





413
Churchill Avenue N. Ottawa, Ontario, Canada K1Z 5C7


(Address
of principal executive offices)





Tel:
613-724-2484


(Issuer's
telephone number)





Indicate
by check mark whether the Registrant (1) has filed all reports required 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   ̈





Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non–accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b–2 of the Exchange Act. (Check
one):





Large
accelerated filer   ̈                    Accelerated
filer   ̈                    Non–Accelerated
filer   ̈ Small Business
Issuer  x




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





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.





Class
                
                Outstanding
      at  November 12, 2008Common
      stock, $0.001 par value
                
                56,883,478









Part
I.  Financial Information




PagePART I - FINANCIAL INFORMATIONItem 1.
                            
                            Condensed
      Consolidated Financial Statements (unaudited)Condensed
      Consolidated Balance Sheets
                            
                            4Condensed
      Consolidated Statements of Income
                            
                            5Condensed
      Consolidated Statement of Cash Flows
                            
                            6Notes
      to Condensed Consolidated Financial Statements
                            
                            7Item 2.
                            
                            Management
      Discussion & Analysis of Financial Condition and Results of
      Operations
                            
                            14Item 3
                            
                            Quantitative
      and Qualitative Disclosures About Market Risk
                            
                            19Item 4.
                            
                            Controls
      and Procedures
                            
                            19PART II - OTHER INFORMATIONItem 1.
                            
                            Legal
      Proceedings
                            
                            21Item 1A
                            
                            Risk
      Factors
                            
                            21Item 2.
                            
                            Unregistered
      Sales of Equity Securities and Use of Proceeds
                            
                            22Item 3.
                            
                            Defaults
      Upon Senior Securities
                            
                            22Item 4.
                            
                            Submission
      of Matters to a Vote of Security Holders
                            
                            22Item 5
                            
                            Other
      information
                            
                            22Item 6.
                            
                            Exhibits
                            
                            22


CERTIFICATIONSExhibit
      31 – Management certificationExhibit
      32 – Sarbanes-Oxley Act










PART I
FINANCIAL INFORMATION




General




The
accompanying condensed consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q. Therefore, they do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flow, and stockholders’ deficit in
conformity with generally accepted accounting principles in the United States of
America. Except as disclosed herein, there has been no material change in the
information disclosed in the notes to the consolidated financial statements
included in the Company’s annual report on Form 10-KSB for the year ended
December 31, 2007. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal recurring
nature. Operating results for the quarter ended September 30, 2008 are not
necessarily indicative of the results that can be expected for the year ended
December 31, 2008.




3


Dairy
Fresh Farms Inc.
 Condensed
Consolidated Balance Sheets
 Expressed
in U.S. Dollars
  September 30,
                  
                  
                  December 31,2008
                  
                  
                  2007AssetsCurrent
      AssetsCash
                  
                  
                  374
                  
                  
                  
                  299,665Prepaid
      expenses
                  
                  
                  -
                  
                  
                  
                  458Loan
      Receivable – Others
                  
                  
                  188,697
                  
                  
                  
                  -189,071
                  
                  
                  
                  300,123Property
      and equipment
                  
                  
                  5,254
                  
                  
                  
                  7,325194,325
                  
                  
                  
                  307,448LIABILITIESCurrent
      liabilitiesAccounts
      payable and accrued liabilities
                  
                  
                  546,844
                  
                  
                  
                  243,636Management
      contracts payable (Note 6)
                  
                  
                  331,144
                  
                  
                  
                  357,788Notes
      payable
                  
                  
                  77,061
                  
                  
                  
                  41,030Loan
      payable from affiliates
                  
                  
                  1,142,692
                  
                  
                  
                  1,284,8572,097,741
                  
                  
                  
                  1,927,311SHAREHOLDERS’
      DEFICIENCYCommon
      shares, $0.001 par value, voting, 150,000,000 authorized shares,
      56,883,478 shares issued and outstanding as of September 30, 2008 and
      56,633,478 shares as of December 31, 2007
                  
                  
                  43,593
                  
                  
                  
                  43,593Contributed
      surplus
                  
                  
                  4,686,501
                  
                  
                  
                  4,686,501Accumulated
      comprehensive loss
                  
                  
                  (104,772
                  )
                  
                  
                  (312,402
                  )Deficit
                  
                  
                  (6,528,738
                  )
                  
                  
                  (6,037,555
                  )(1,903,416
                  )
                  
                  
                  (1,619,863
                  )194,325
                  
                  
                  
                  307,448


4








Dairy
Fresh Farms Inc.


Condensed
Consolidated Statements of Operations


Expressed
in U.S. Dollars





UnauditedThree Months Ended
                        
                        
                        Nine Months EndedSeptember 30
                        
                        
                        September 302008
                        
                        
                        2007
                        
                        
                        2008
                        
                        
                        2007$
                        
                        
                        $
                        
                        
                        $
                        
                        
                        $Operating
      ExpensesFreight
      and Product costs
                        
                        
                        -
                        
                        
                        
                        331
                        
                        
                        
                        -
                        
                        
                        
                        13,692Advertising
                        
                        
                        -
                        
                        
                        
                        (494
                        )
                        
                        
                        -
                        
                        
                        
                        6,628Depreciation
      of property andEquipment
                        
                        
                        540
                        
                        
                        
                        948
                        
                        
                        
                        1,646
                        
                        
                        
                        2,715Interest
      and Bank Charges, Net
                        
                        
                        1,973
                        
                        
                        
                        2,400
                        
                        
                        
                        5,251
                        
                        
                        
                        13,034Management
      Fees
                        
                        
                        88,434
                        
                        
                        
                        85,569
                        
                        
                        
                        309,216
                        
                        
                        
                        244,875Office
                        
                        
                        30
                        
                        
                        
                        737
                        
                        
                        
                        3,000
                        
                        
                        
                        6,265Investor
      Relations
                        
                        
                        -
                        
                        
                        
                        250,721
                        
                        
                        
                        -
                        
                        
                        
                        732,482Professional
      Fees
                        
                        
                        20,375
                        
                        
                        
                        16,538
                        
                        
                        
                        109,764
                        
                        
                        
                        68,177Rent
                        
                        
                        3,101
                        
                        
                        
                        4,536
                        
                        
                        
                        6,051
                        
                        
                        
                        12,982Telecommunications
                        
                        
                        1,307
                        
                        
                        
                        3,219
                        
                        
                        
                        9,423
                        
                        
                        
                        10,724Travel
                        
                        
                        7,977
                        
                        
                        
                        6,351
                        
                        
                        
                        46,833
                        
                        
                        
                        30,971123,737
                        
                        
                        
                        370,856
                        
                        
                        
                        491,184
                        
                        
                        
                        1,142,545Net
      Loss
                        
                        
                        (123,737
                        )
                        
                        
                        (370,856
                        )
                        
                        
                        (491,184
                        )
                        
                        
                        (1,142,545
                        )Other
      comprehensive lossForeign
      currency translation Adjustment
                        
                        
                        (2,191
                        )
                        
                        
                        (22,504
                        )
                        
                        
                        (50,358
                        )
                        
                        
                        (81,251
                        )Comprehensive
      Loss
                        
                        
                        (125,928
                        )
                        
                        
                        (393,360
                        )
                        
                        
                        (541,542
                        )
                        
                        
                        (1,223,796
                        )Net
      loss per share, basic and diluted
                        
                        $
                        (0.02
                        )
                        
                        
                        (0.02
                        )
                        
                        
                        (0.01
                        )
                        
                        
                        (0.05
                        )Weighted
      average common shares Outstanding
                        
                        
                        56,883,478
                        
                        
                        
                        23,003,549
                        
                        
                        
                        56,883,478
                        
                        
                        
                        22,487,549











5








Dairy
Fresh Farms Inc.


Condensed
Consolidated Statements of Cash Flows


Expressed
in U.S. Dollars




Nine Months Ended
                    September 302008
                  
                  
                  2007OPERATING
      ACTVITIESNet
      Loss
                  
                  
                  (491,184
                  )
                  
                  
                  (1,142,545
                  )Adjustments
      to reconcile net income (loss) to net cashProvide
      by (used in) operating activitiesDepreciation
      and amortization
                  
                  
                  1,646
                  
                  
                  
                  2,715Issuance
      of common stocks in exchange for services
                  
                  
                  -
                  
                  
                  
                  1,020,600Changes
      in working capital itemsAccounts
      Receivable
                  
                  
                  -
                  
                  
                  
                  24,923Prepaid
      Expenses
                  
                  
                  458
                  
                  
                  
                  (261,348
                  )Accounts
      payable and accrued liabilities
                  
                  
                  303,208
                  
                  
                  
                  (70,620
                  )Management
      contracts payable
                  
                  
                  (26,644
                  )
                  
                  
                  78,590(212,516
                  )
                  
                  
                  (347,685
                  )INVESTING
      ACTIVITIESPurchase
      of property and equipment
                  
                  
                  -
                  
                  
                  
                  -Cash
      Flows used in investing activities
                  
                  
                  -
                  
                  
                  
                  -FINANCING
      ACTIVITIESLoan
      Receivable – Others
                  
                  
                  (188,697
                  )
                  
                  
                  -Loan
      Payable from Affiliates
                  
                  
                  (142,165
                  )
                  
                  
                  -Proceeds
      from notes payable
                  
                  
                  36,031
                  
                  
                  
                  -Cash
      flows provided by financing activities
                  
                  
                  (294,831
                  )
                  
                  
                  -Effect
      of changes in exchange rates on cash
                  
                  
                  208,056
                  
                  
                  
                  5,741Net
      increase in cash
                  
                  
                  (299,291
                  )
                  
                  
                  (341,944
                  )Cash,
      beginning of period
                  
                  
                  299,665
                  
                  
                  
                  375,858Cash,
      end of period
                  
                  
                  374
                  
                  
                  
                  33,914











6




Dairy
Fresh Farms Inc.


Notes
to Condensed Consolidated Financial Statements


September
30, 2008


Expressed
in U.S. Dollars


(Unaudited)




1
– BASIS OF PRESENTATION




The
accompanying unaudited condensed consolidated financial statements of Dairy
Fresh Farms Inc. (“Dairy Fresh” or the “Company”) and its subsidiaries have been
prepared pursuant to the rules and regulations of the United States Securities
and Exchange Commission (“SEC”).  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles in the United States of America
(“US GAAP”) have been condensed or omitted pursuant to such rules and
regulations. These condensed consolidated financial statements should be read in
conjunction with the financial statements and notes included in the latest
annual report on Form 10-KSB. These statements have been prepared on the same
basis as the audited consolidated financial statements for the year ended
December 31, 2007 and, in the opinion of management, include all adjustments
considered necessary for a fair presentation of financial position, results of
September 30, 2008 are not necessarily indicative of the results to be expected
for the full year.




2 – COMPANY
BACKGROUND AND LIQUIDITY




COMPANY
BACKGROUND





The
Company was incorporated under the name of Northwest Horizon Corporation in the
State of Nevada, United States of America on February 5, 2003. The name was
changed to Dairy Fresh Farms Inc. on August 11, 2005.





The
Company was in the development stage until January 1, 2005. The Company
originally intended to establish itself as a transportation broker specializing
in trucking as the efficient mode of transporting both raw materials and
finished products to their destination. On December 17, 2004 the Board of
Directors passed a resolution indicating that the Company would be unable to
raise the necessary funds to proceed with this original plan.





On March
3, 2005, the company merged via a reverse takeover with Dairy Fresh Technologies
Ltd.  Dairy Fresh Technologies Ltd. was incorporated under the Canada
Business Corporations Act on May 14, 2002 to develop and exploit a unique
patented dairy process in Canada.  This patent, "Dairy Fresh Farms TM"
produces monounsaturated-enhanced dairy products. Dairy Fresh Technologies Ltd.
was also in the development stage until January 1, 2005.




7





Dairy
Fresh Farms Inc.


Notes
to Condensed Consolidated Financial Statements


September
30, 2008


Expressed
in U.S. Dollars


(Unaudited)




LIQUIDITY





The
Company has incurred a net loss of $123,727 and $491,184 during the three and
nine months ended September 30, 2008. In addition, the Company generated
negative cash flows from operations of $212,516 for the nine months
endedSeptember 30, 2008 and has generated negative cash flows from operations
since inception.




The audit
states that the net loss incurred during the year ended December 31, 2007, the
accumulated deficit as of that date and the other factors described in Note 2 to
the Consolidated Financial Statements included in the Company’s Annual Report on
Form 10-KSB for the year ended December 31, 2007 raise substantial doubt about
the Company’s ability to continue as a going concern.  The auditors’
report on the Company’s financial statements for the year ended December 31,
2006 contained a similar statement.  The consolidated financial
statements have been prepared assuming the Company will continue as a going
concern and do not include any adjustments that might result from the outcome of
this uncertainty.





Management
plans to address these issues by continuing to seek new financing and continuing
to control expenses. The Company’s ability to continue as a going concern is
subject to management’s ability to successfully implement the above plans.
Failure to implement these plans could have a material adverse effect on the
Company’s position and/or results of operation and may necessitate a reduction
in operating activities. These condensed consolidated financial statements do
not include adjustments that may be required if the assets are not realized and
the liabilities settled in the normal course of operations.





In the
longer term, the Company has to generate the levels of revenue which would
result in cash sufficiency and it may need to continue to raise capital by
selling additional equity or by obtaining credit facilities. No assurance can be
given that any such financing will be available or that, if available, it can be
obtained on terms favourable to the company.




8





Dairy
Fresh Farms Inc.


Notes
to Condensed Consolidated Financial Statements


September
30, 2008


Expressed
in U.S. Dollars


(Unaudited)




3 - RELATED
PARTY TRANSACTIONS




The
Company entered into the following related party transactions. These
transactions were concluded in the normal course of operations at the exchange
amount, which is the amount established and accepted by the
parties.







Three
                
                
                Three
                
                
                Nine
                
                
                NineMonths
                
                
                Months
                
                
                Months
                
                
                Monthsended
                
                
                ended
                
                
                ended
                
                
                endedSept.30,
                
                
                Sept.30,
                
                
                Sept.30,
                
                
                Sept.30,2008
                
                
                2007
                
                
                2008
                
                
                2007(Unaudited)
                
                
                (Unaudited)
                
                
                (Unaudited)
                
                
                (Unaudited)ExpensesManagement
      fees (a)
                
                
                88,434
                
                
                
                85,569
                
                
                
                307,216
                
                
                
                244,875Amounts
      due to and due from related partiesAmount
      due from companies under Common control (b)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                15,413Notes
      payable to related parties (c)
                
                
                -
                
                
                
                -
                
                
                
                77,061
                
                
                
                30,157Amount
      due to a company under Common control (d)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                7,840




(a)
During the nine moth periods ended September 30, 2008 and September 30, 2007,
the Company incurred management services to four companies controlled by
officers of the Company. The management fees payable are $331,144 as at
September 30, 2008 and $292,500 as at September 30, 2007.





(b) The
Company issued $41,030 of 5% promissory notes to an officer of the Company
during the year ended December 31, 2007. The notes are repayable when a major
financing is completed.




9





Dairy
Fresh Farms Inc.


Notes
to Condensed Consolidated Financial Statements


September
30, 2008


Expressed
in U.S. Dollars


(Unaudited)




(d) The
Company incurred royalty expense to Dairy One Technologies Limited, a company
under common control. The amount payable as at September 30, 2008 is $NIL
(September 30, 2007 - $7,840). The Company expensed $nil in the three and nine
months ended September30, 2008 and $nil in the three and nine months ended June
30, 2007, respectively.




4
– NOTES PAYABLE




Notes
payable bear interest at 5%, unsecured and repayable when a major financing is
completed.




5
– LOSS PER SHARE




For the
purpose of the loss per share computation, the weighted average number of common
shares outstanding has been used.  Had the treasury stock method been
applied to the unexercised share warrants, the effect on the loss per share
would be anti-dilutive.




6
–COMPREHENSIVE LOSS




Comprehensive
loss includes changes in the balances of items that are reported directly in a
separate component of shareholders’ equity in the Company’s unaudited condensed
consolidated balance sheets. The components of comprehensive loss are as
follows:




Three months
                        
                        
                        Three months
                        
                        
                        Nine months
                        
                        
                        Nine monthsended
                        
                        
                        ended
                        
                        
                        ended
                        
                        
                        endedSept. 30, 2008
                        
                        
                        Sept.30, 2007
                        
                        
                        Sept. 30, 2008
                        
                        
                        Sept. 30, 2007(Unaudited)
                        
                        
                        (Unaudited)
                        
                        
                        (Unaudited)
                        
                        
                        (Unaudited)$
                        
                        
                        $
                        
                        
                        $
                        
                        
                        $Net
      Loss as reported
                        
                        
                        (123,737
                        )
                        
                        
                        (370,856
                        )
                        
                        
                        (491,184
                        )
                        
                        
                        (1,142,545
                        )Foreign
      currency translation adjustment
                        
                        
                        (2,191
                        )
                        
                        
                        (22,504
                        )
                        
                        
                        (50,358
                        )
                        
                        
                        (81,251
                        )Comprehensive
      loss
                        
                        
                        (125,928
                        )
                        
                        
                        (393,360
                        )
                        
                        
                        (541,542
                        )
                        
                        
                        (1,223,796
                        )




10





Dairy
Fresh Farms Inc.


Notes
to Condensed Consolidated Financial Statements


September
30, 2008


Expressed
in U.S. Dollars


(Unaudited)




7
- NEW ACCOUNTING PRONOUNCEMENTS




Determining
Whether Instruments Granted in Share-Based Payment Transactions are
Participating Securities





In
September 2008, the FASB issued FSP Emerging Issues Task Force (“EITF”) Issue
No.03-6-1, “Determining Whether Instruments Granted in Share-Based Payment
Transactions are Participating Securities.” The FSP addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting and, therefore, need to be included in the earnings
allocation in computing earnings per share under the two-class method. The FSP
affects entities that accrue dividends on share-based payment awards during the
awards’ service period when the dividends do not need to be returned if the
employees forfeit the award. This FSP is effective for fiscal years beginning
after December 15, 2008. The Company is currently assessing the impact of FSP
EITF 03-6-1 on its consolidated financial position and results of
operations.





Determining
Whether an Instrument (or an Embedded Feature) is Indexed to an entity’s Own
Stock





In
September 2008, the FASB ratified EITF Issue No. 07-5, “Determining Whether an
Instrument (or an Embedded Feature) is Indexed to an Entity’s Own Stock” (EITF
07-5), EITF 07-5 provides that an entity should use a two step approach to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock, including evaluating the instrument’s contingent
exercise and settlement provisions. It also clarifies on the impact of foreign
currency denominated strike prices and market-based employee stock option
valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years
beginning after December 15, 2008. The Company is currently assessing the impact
of EITF 07-5 on its consolidated financial position and results of
operations.





Accounting
for Convertible Debt Instruments that May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)





In May
2008, the FASB issued FSP Accounting Principles Board (“APB”) Opinion No. 14-1,
“Accounting for Convertible Debt Instruments That may Be Settled in Cash upon
Conversion (Including Partial Cash Settlement).” The FSP clarifies the
accounting for convertible debt instruments that may be settled in cash
(including partial cash settlement) upon conversion. The FSP requires issuers to
account separately for the liability and equity components of certain
convertible debt instruments in a manner that reflects the issuer’s
nonconvertible debt (unsecured debt) borrowing rate when interest cost is
recognized. The FSP requires bifurcation of a component of the debt,
classification of that component in equity and the accretion of the resulting
discount on the debt to be recognized as part of interest expense in our
consolidated statement of operations. TheFSP requires
retrospective application to the terms of instruments as they existed for all
periods presented. The FSP is effective for us as of January 1, 2009 and early
adoption is not permitted. The Company is currently evaluating the potential
impact of FSP APB 14-1 upon its consolidated financial statements.




11





Dairy
Fresh Farms Inc.


Notes
to Condensed Consolidated Financial Statements


September
30, 2008


Expressed
in U.S. Dollars


(Unaudited)








The
Hierarchy of Generally Accepted Accounting Principles





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally
Accepted Accounting Principles” (FAS No. 162). SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
used in the preparation of financial statements. SFAS No. 162 is effective 60
days following the SEC’s approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, “The meaning of Present Fairly in Conformity
with Generally Accepted Accounting Principles”.  The implementation of
this standard will not have a material impact on the Company’s consolidated
financial position and results of operations.





Determination
of the Useful Life of Intangible Assets





In April
2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position on Financial Accounting Standard (“FSP FAS”) No. 142-3, “Determination
of the Useful Life of Intangible Assets”, which amends the factors that should
be considered in developing renewal or extension assumptions used to determine
the useful life of intangible assets under SFAS No. 142 “Goodwill and Other
Intangible Assets”. The intent of this FSP is to improve the consistency between
the useful life of a recognized intangible asset under SFAS No. 142 and the
period of the expected cash flows used to measure the fair value of the asset
under SFAS No. 141 (revised 2007) “Business Combinations” and other U.S.
generally accepted accounting principles. The Company is currently evaluating
the potential impact of FSP FAS No. 142-3 on its consolidated financial
statements.





Disclosure
about Derivative Instruments and Hedging Activities





In March
2008, the FASB issued SFAS No. 161, “Disclosure about Derivative Instruments and
Hedging Activities, an amendment of SFAS No. 133”, (SFAS 161). This statement
requires that objectives for using derivative instruments be disclosed in terms
of underlying risk and accounting designation. The Company is required to adopt
SFAS No. 161 on January 1, 2009. The Company is currently evaluating the
potential impact of SFAS No. 161 on the Company’s consolidated financial
statements.





Delay in Effective
Date





In
February 2008, the FASB issued FSP FAS No. 157-2, “Effective Date of FASB
Statement No. 157”. This FSP delays the effective date of SFAS No. 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods within
those fiscal years. The impact of adoption was not material to the Company’s
consolidated financial condition or results of operations.


12


Dairy
Fresh Farms Inc.


Notes
to Condensed Consolidated Financial Statements


September
30, 2008


Expressed
in U.S. Dollars


(Unaudited)








Business
Combinations





In
December 2007, the FASB issued SFAS No. 141 “Business Combinations” (SFAS 141)).
This Statement replaces the original SFAS No. 141. This Statement retains the
fundamental requirements in SFAS No. 141 that the acquisition method of
accounting (which SFAS No. 141 called the purchase method) be used for
all business combinations and for an acquirer to be identified for each business
combination.  The objective of SFAS No. 141(R) is to improve the
relevance, and comparability of the information that a reporting entity provides
in its financial reports about a business combination and its effects. To
accomplish that, SFAS No. 141 (R) establishes principles and requirements for
how the acquirer:





a.
            Recognizes
      and measures in its financial statements the identifiable assets required,
      the liabilities assumed, and any noncontrolling interest in the
      acquire.





b.
            Recognizes
      and measures the goodwill acquired in the business combination or a gain
      from a bargain purchase.





c.
            Determines
      what information to disclose to enable users of the financial statements
      to evaluate the nature and financial effects of the business
      combination.





This
Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008 and may not be applied before
that date. The Company is unable at this time to determine the effect that its
adoption of SFAS No. 141(R) will have on its consolidated results of operations
and financial condition.


13




ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





This
Management's Discussion and Analysis of Financial Condition and Results of
Operation contains various "forward looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933, regarding future events or the future financial
performance of the Company that involve risks and uncertainties. Certain
statements included in this Form 10−Q, including, without limitation, statements
related to anticipated cash flow sources and uses, and words including but not
limited to “anticipates", "believes", "plans", "expects", "future" and similar
statements or expressions, identify forward looking statements. Any forward
looking statements herein are subject to certain risks and uncertainties in the
Company’s business, including but not limited to, reliance on key customers and
competition in its markets, market demand, product performance, technological
developments, maintenance of relationships with key suppliers, difficulties of
hiring or retaining key personnel and any changes in current accounting rules,
all of which may be beyond the control of the Company. The Company's actual
results could differ materially from those anticipated in these forward looking
statements as a result of certain factors, including those set forth
therein.





Management’s
Discussion and Analysis of Financial Condition and Results of Operations
("MD&A") should be read in conjunction with the consolidated condensed
financial statements included herein. Further, this quarterly report on Form
10−Q should be read in conjunction with the Company’s consolidated financial
statements and notes to consolidated financial statements included in its 2007
Annual Report on Form 10−KSB. In addition, you are urged to read this report in
conjunction with the risk factors described herein.




Company’s
overview




Dairy
Fresh Farms Inc. (“Dairy Fresh” or the “Company”) and its wholly owned
subsidiary, Dairy Fresh Technologies Ltd., have the exclusive license in Canada
to develop and exploit the patented formula for a healthy milk based product
”Dairy Fresh Farms”. The Company launched a test trial of 2-litre regular milk
and a 1-litre lactose free product with Canada Safeway stores in Western Canada
during the period of January 2005 to December 2005.





The
Company realizes that it has to look at different opportunities in order to
expand on it’s current business plan and to provide for the long term success of
the Company. After a considerable and lengthy overview of opportunities,
management determined that it would be in the best interests of the Company and
its shareholders to enter into an agreement to merge an operating entity into
the Company.





Great
Bear Explorations Inc.





The
ongoing operations of Dairy Fresh Farms/Great Bear Exploration (DYFR) the
operating company have continued to focus its efforts on the Oil and Gas side of
the business in this most recent quarter ending September 30, 2008. Early stage
discussions with Peace East Energy Corporation have continued regarding an
operation role for DYFR on a going forward basis. The current turmoil in the
financial markets is not expected to effect these discussions at this stage;
however, management is keeping a close eye on developments as they may effect
going forward business into 2009.


14





On
October 23, 2007, we entered into a definitive Agreement and Plan of Merger (the
“Merger Agreement”) with Great Bear Explorations Inc., an Alberta, Canada
corporation (“GBE”). Pursuant to the terms and conditions of the Merger
Agreement, GBE merged with and into our company (the “Merger”).




Also as a
result of the Merger all of the outstanding shares of GBE common stock were
converted into the right to receive, on a pro rata basis, thirty million
(30,000,000) shares of our common stock as set forth in the Merger
Agreement.





The
original business model surrounding the Dairy Fresh Farms Intellectual Property
has evolved with the merger with Great Bear Exploration. At the present time we
have two distinct business groups within the company. As we move forward, we
intend to see the role of the Dairy Business reduced in our overall plans with
the option of selling off this section of the business using a third party arms
length value assessor for the eventual sale. This will leave us with a business
plan focused on the Oil and Gas business. For instance, we anticipate that on a
moving forward basis our first plan of action within the old Dairy Fresh
Business is to keep the value of the past work at its highest possible value,
this would include all of the licensing agreements, trademarks, research and
manufacturing contacts as well as suppliers of ingredients. On a moving forward
basis we would look at several options. The first would be to sell off what we
have achieved to date as a turn key opportunity. The second would be to just
sell off the licensing to a manufacturer who wanted to expand their product line
into the health food category. The number of employees in this area is one. The
mandate that management has been working under is to keep the optimum value of
the Dairy Fresh business intact while looking or accepting offers. To date we
have not received any offers but have several interested parties doing due
diligence.





On
October 23, 2007, Dairy Fresh Farms, Inc., an Nevada company (the “Company”),
entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”)
with Great Bear Explorations Inc., an Alberta, Canada corporation (“GBE”). Dairy
Fresh Farms Inc. is the surviving entity. The Board of Directors has voted to
change the operating name from Dairy Fresh Farms Inc. to Great Bear Oil and Gas,
Inc.  Management is proceeding with corporate and regulatory
requirements to finalize this name change. For the remainder of this document we
will refer to the new entity as Dairy Fresh/Great Bear)





Dairy
Fresh/Great Bear is a Nevada Corporation with a Canadian oil and gas exploration
business. This corporation has recently acquired a 35% interest in Peace East
Energy Corp, which has joint venture and farm out agreements with the Tall Cree
First Nation. The agreements provide for Peace East Energy Corp to participate
in oil and gas activities on the Tall Cree Reserve lands (approximately 8,200
ha.) and to post and bid on other lands that have been extensively analyzed by
the Peace East Energy Corp over the last 18 months. The “Peace East” area is
located in North Central Alberta.


An
extensive Business Plan is being developed for the Dairy Fresh/Great Bear side
of the business.


15





The
principals of Dairy Fresh/Great Bear have a historical relationship with several
of the First Nations in British Columbia and Alberta based on past business
activities in the forestry, mining and energy sectors during the past twenty
years.





We share
a key objective to create a sustainable economy for all concerned.





Opening
these oil and gas properties to the world markets ensures that new funds will
flow through to each individual band member ensuring long-term economic
benefits.





Included
in this plan is the task of providing comprehensive training for the individual
Band Members in a wide range of career fields including but not limited to:
construction estimating, pipeline construction, well site maintenance,
environmental assessment and environmental reclamation as well as archeological
site impact assessment.





Together
we will add value to Albert’s skilled labor pool and enhance Northern Alberta’s
regional economy.




Critical
accounting policies and estimates




Our
discussion and analysis of our financial condition and results of operations are
based on our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of financial statements requires
application of management’s subjective judgments, often requiring the need to
make estimates about the effect of matters that are inherently uncertain and may
change in the subsequent periods. Our actual results may differ substantially
from these estimates under different assumptions or conditions. While our
significant accounting policies are described in more detail in the notes to the
condensed consolidated financial statements included in the Form 10-KSB for the
year ended December 31, 2006, we believe that the following accounting policies
require the application of significant judgments and estimates.





RESULTS
OF OPERATIONS





Fluctuations
in operating results





Our
results of operations have fluctuated significantly from period to period and
are likely to continue to do so in the future. We anticipate that our annual
results of operations will be impacted for the foreseeable future by several
factors including the progress and timing of financing related to the ongoing
development of our oil and gas properties.





Dairy
Fresh/Great Bear is a development stage Nevada Company with Canadian interests.
The Company has acquired a 35% interest in Peace East Energy Corp, whose assets
consists of joint venture and farm out agreements with the Tall Cree First
Nation in North Central Alberta, Canada. These agreements provide for Peace East
Energy Corp., to participate in oil and gas activities on certain property
(approximately 8,200 ha.) and to post and bid on other properties that have been
extensively analyzed by Peace East Energy Corp over the past 18 months. In
addition, the owners of Peace East Energy Corp. have given Dairy Fresh/Great
Bear first right of refusal to acquire the remaining 65% of the Peace East
Energy Corp.


16


Our
partners the Tall Cree First nations are based and live on 5 widely spaced
reserves which are like islands within a larger Tall Cree First Nations
Traditional Land-use Area of approximately 6,000,000 acres. Our mandate at Dairy
Fresh/Great Bear is to expand our land lease base to acquire up
to  531 sections (339,840 acres or 531 square miles), of both on and
off reserve property.





Management
is looking to self fund the project in the short term with the eventual goal of
utilizing a convertible debenture loan vehicle to raise additional capital for
the Company. This will be specifically targeted on the four key areas of the Oil
and Gas Business:


(i.) The
first area is the acquisition of the remaining 65% of the Peace East Energy
Corp., to ensure 100% ownership of the project moving forward, although not a
critical need management believes it is desirable. If we cannot close the
remaining 65% management would move to have a value associated with the
remaining 65% so that this ownership issue does not come back once we go into
full production with a huge cost overhang;


(ii.) The
second funding requirement is to Post and pay for land acquisition. Our current
Joint Venture agreements allow us to acquire up to 531 square miles (sections)
of territory in our mandate. Without this property we would have no land to
explore and drill on. In our agreements with the Tall Cree First Nation partners
of North Central Alberta the ability to acquire up to 5% of the territory of
Peace East lands which are the traditional hunting and gathering lands of the
Tall Cree. The Company has a time limit of 3 years to acquire all of the
property; however, management may if the price is advantageous move to purchase
the entire package in years one and two. Geological promising locations have
been identified by the Company to acquire over the past 18 months of
analysis;


(iii.)
The third area is again part of our mandate with the Tall Cree and that is to
ensure we comply with and do preliminary environmental assessment work on
potential seismic testing routes and shoot the first 15km of seismic in year
one. It is important to understand that this is just the preliminary work and
failure to meet these minimum targets will mean the loss of the agreement with
the Tall Cree energy companies. Once through the first year we have additional
requirements to purchase additional leases (200 square miles) and do more
seismic (100km) and to start to drill wells at a pace of 21 per
year;


(iv.)
Over the next twelve months the operations budget, (office lease, travel,
employees, telephone, insurance, audit/legal, compliance work etc.), is
estimated at $950,000 USD. This does not include the costs associated with land
acquisition, environmental work, seismic or test drilling.





In
summary, we believe that Dairy Fresh/Great Bear represents a significant
opportunity for our shareholders. The Peace East property is located in close
proximity at its southern end to major pipelines and infrastructure including
paved road, air fields and supplies.




Off-Balance
Sheet Arrangements




The
Company did not engage in any off-balance sheet arrangements during the
quarter.


17




Liquidity
and Capital Resources




At
September 30, 2008, we have an accumulated deficit of $6,528,738 and we expect
to incur additional losses in the short term at least until such time, if ever,
that our products are manufactured and marketed profitably. We have financed our
operations since inception primarily through the private placements of equity
and debt securities.





At
September 30, 2008, we have $374. in cash.





Assuming
our funding is raised, we intend to focus our efforts over the next twelve
months on creating and entering into marketing and sales agreements in the
Canadian marketplace. In such event, if we are unable to raise additional funds
on a timely basis or at all, any progress with respect to our products and,
therefore, our potential revenues, would be adversely affected.





In the
event that our plans change, our assumptions change or prove inaccurate, or if
our existing cash resources, together with other funding resources including
anticipated sales of our products, otherwise prove to be insufficient to fund
our operations, we could be required to seek additional financing. We have no
current arrangements with respect to sources of additional
financing.





The
auditors’ report on the Company’s consolidated financial statements as of
December 31, 2007 states that the net loss incurred during the year ended
December 31, 2007, the accumulated deficit as of that date, and the other
factors described in Note 2 to the consolidated financial statements included in
the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2007,
as well as the accumulated deficit as of September 30, 2008, and the other
factors described in Note 2 to the consolidated financial statements included in
the Company’s Quarterly Report on Form 10-Q raise substantial doubt about the
Company’s ability to continue as a going concern.  The consolidated
financial statements have been prepared assuming the Company will continue as a
going concern and do not include any adjustments that might result from the
outcome of this uncertainty.





On
October 23, 2007, we entered into a definitive Agreement and Plan of Merger (the
“Merger Agreement”) with Great Bear Explorations Inc., an Alberta, Canada
corporation (“GBE”). Pursuant to the terms and conditions of the Merger
Agreement, GBE  merged with and into our company (the
“Merger”).




Also as a
result of the Merger all of the outstanding shares of GBE common stock were
converted into the right to receive, on a pro rata basis, thirty million
(30,000,000) shares of our common stock as set forth in the Merger
Agreement.




Additional
Information




We file
reports and other materials with the Securities and Exchange
Commission.  These documents may be inspected and
copied  the Commission’s Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. The public may obtain information on the operation of
the Public Reference Room by calling the Commission at
1-800-SEC-0330.  The Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the
Commission.


18





ITEM 3.
                QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





We do not
hold any derivative instruments and do not engage in any hedging
activities.





ITEM
4.  CONTROLS AND PROCEDURES




(a)
Evaluation of Disclosure Controls and Procedures.Our Chief
Executive Officer and Chief Financial Officer evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
report. Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures as of
the end of the period covered by this report were effective such that the
information required to be disclosed by us in reports filed under the Securities
Exchange Act of 1934 is (i) recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms and
(ii) accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding disclosure. A controls system cannot provide absolute
assurance, however, that the objectives of the controls system are met, and no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been
detected.




Management’s
Report on Internal Control over Financial Reporting.Our management is
responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).
Our internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United
States.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives. Furthermore, smaller reporting companies face additional
limitations.  Smaller reporting companies employ fewer individuals and find
it difficult to properly segregate duties.  Often, one or two individuals
control every aspect of the Company’s operation and are in a position to
override any system of internal control.  Additionally, smaller reporting
companies tend to utilize general accounting software packages that lack a
rigorous set of software controls.




OurChief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of the Company’s
internal control over financial reporting as of September 30, 2008.  In
making this assessment, our management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control — Integrated Framework.  Based on this evaluation,
our management, with the participation of the President, concluded that, as of
September 30, 2008, our internal control over financial reporting was
effective.




19





(b)
 Changes in Internal
Control over Financial Reporting.  There were no changes in our
internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, during our most recently completed fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.


20




PART
II – OTHER INFORMATION




ITEM 1. Legal Proceedings




We are
currently not involved in any litigation that we believe could have a material
adverse effect on our financial condition or results of operations. There is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our common stock, any
of our subsidiaries or of our companies or our subsidiaries' officers or
directors in their capacities as such, in which an adverse decision could have a
material adverse effect.





ITEM 1A
- Risk Factors





We have
updated the risk factors previously disclosed in Annual Report on Form 10–KSB
for the year ended December 31, 2007, which was  filed with the
Securities and Exchange Commission on April 15, 2008 (the “Fiscal 2007 10–KSB”).
We believe there are no changes that constitute material changes from the risk
factors previously disclosed in the Fiscal 2007 10–KSB except as disclosed
below.





Our
Common Stock Is Subject To Penny Stock Regulation





Our
shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly
referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be penny stock unless
that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
the NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
registrant's net tangible assets; or exempted from the definition by the
Commission. Since our shares are deemed to be "penny stock", trading in the
shares will be subject to additional sales practice requirements on
broker/dealers who sell penny stock to persons other than established customers
and accredited investors.





The
Liquidity Of Our Common Stock Is Seriously Limited And There Is A Limited Market
For Our Common Stock





Our stock
is currently being traded on the NASDAQ Over-The-Counter Bulletin Board, and the
liquidity of our common stock is limited. The Bulletin Board is a limited market
and subject to substantial restrictions and limitations in comparison to the
NASDAQ system. Any broker/dealer that makes a market in our stock or other
person that buys or sells our stock could have a significant influence over its
price at any given time.


21





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





There
were no changes in securities and small business issuer purchase of equity
securities during the period ended September 30, 2008.




ITEM
3.  DEFAULTS UPON SENIOR SECURITIES





There
were no defaults upon senior securities during the period ended September 30,
2008.





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





There
were no matters submitted to the vote of securities holders during the period
ended September 30, 2008.




ITEM
5.  OTHER INFORMATION





There is
no information with respect to which information is not otherwise called for by
this form.




ITEM
6.  EXHIBITS




31.1
                    Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act31.2
                    Certification
      of Chief Financial Officer and Principal Accounting Officer Pursuant to
      Section 302 of the Sarbanes-Oxley Act.32.1
                    Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act.32.2
                    Certification
      of Chief Financial Officer and Principal Accounting Officer Pursuant to
      Section 906 of the Sarbanes-Oxley
Act.




22


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(b) of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Ottawa,
Canada.





DAIRY
      FRESH FARMS INC.By
              /s/Ian MorriceIan
      MorriceChief
      Executive Officer





Date:  November
      12, 2008





By
              /s/ John Fairbairn CAJohn
      Fairbairn CAPrincipal
      Accounting Officer





Date:  November
      12, 2008


23