UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
  -
        2nd
        Quarter 2008 -
  FORM
        10-Q
 
 x
              QUARTERLY
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934
  For
                  the quarterly period ended June 30, 2008
                  or
  o
              TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                  ACT
  For
                  the transition period from _______________ to
                  ____________________Commission
                  File Number: 000-21247
  B
&
D
        FOOD CORP.
  (Exact
        Name of Small Business Issuer as Specified in Its Charter)
  Delaware
              
              13-2622429(State
                  or Other Jurisdiction
                of
                  Incorporation or Organization)
              
              (IRS
                  Employer
                Identification
                  No.)
  575
        Madison Avenue
 Ste
        1006
 New
        York,
        New York 10022-257
 (Address
        of Principal Executive Offices)
  (212)
        937-8456
 (Registrant’s
        Telephone Number)
  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
        as required to file such reports) and (2) has been subject to such filing
        requirements for the past 90 days.
 YES xNO o
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes oNo x
  As
        of
        August 13, 2008, there were 154,986,955 shares of Common Stock, par value
        $0.001
        per share issued and outstanding.
  Small
        Company Disclosure (check one): YES xNO o
  
 
 **TABLE
        OF CONTENTS**
 
 **Page****PART
                  I**Item
                  1.
              Financial
                  Statements
              1Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              14Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              19Item
                  4.
              Controls
                  and Procedures
              20**PART
                  II**Item
                  1.
              Legal
                  Proceedings
              21Item
                  1A.
              Risk
                  Factors
              21Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              21Item
                  3.
              Defaults
                  Upon Senior Securities
              21Item
                  4.
              Submission
                  of Matters to a Vote of Securities Holders
              21Item
                  5.
              Other
                  Information
              21Item
                  6.
              Exhibits
              21
  
  PART
        I.
        FINANCIAL INFORMATION
  ITEM
        1.
        FINANCIAL STATEMENTS
 
 **B&D
        FOOD CORP. AND SUBSIDIARY**
  **CONSOLIDATED
        FINANCIAL STATEMENTS**
  **June
        30 , 2008**
  1
  **B&D
        FOOD CORP. AND SUBSIDIARY**
  **June
        30 , 2008**
  **CONTENTS**
 
 Page**CONSOLIDATED
                  FINANCIAL STATEMENTS**Consolidated
                  Balance Sheets as at June 30, 2008 and December 31, 2007
              3 - 4Consolidated
                  Statements of Loss and Comprehensive Loss for the Three and Six
                  Months
                  Ended
              5-6Consolidated
                  Statements of Cash Flows for the Six Months Ended
              7Notes
                  to the Consolidated Financial Statements
              8 -
                  13
  2
  **B&D
        FOOD CORP. AND SUBSIDIARY**
  **CONSOLIDATED
        BALANCE SHEETS**
  **AS
        AT**
  **(Expressed
        in United States Dollars)**
 
 **Note**
              
              **June 30, 2008**
              
              **Dec 31, 2007****ASSETS****Current
                  Assets**Cash
                  and cash equivalents
              
              
              
              
              $
              1,659
              
              $
              3,175Accounts
                  receivable - trade, net of allowance for doubtful accounts of $52,869
                  (2007 - $47,787)
              
              
              
              
              
              16,572
              
              
              19,213Prepaid
                  and sundry assets
              
              
              
              
              
              137,428
              
              
              4,689**Total
                  Current Assets**
              
              
              
              
              
              155,659
              
              
              27,077**Long-Term
                  Assets**Other
                  receivables
              
              
              
              
              
              500
              
              
              500Property,
                  plant and equipment, net
              
              
              5
              
              
              1,651,317
              
              
              1,719,723**Total
                  Long-Term Assets**
              
              
              
              
              
              1,651,817
              
              
              1,720,223**Total
                  Assets**
              
              
              
              
              $
              1,807,476
              
              $
              1,747,300
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  3
  **B&D
        FOOD CORP. AND SUBSIDIARY**
  **CONSOLIDATED
        BALANCE SHEETS (Continued)**
  **AS
        AT JUNE 30**
  **(Expressed
        in United States Dollars)**
 
 **Note**
              
              **June 30, 2008**
              
              **Dec 31, 2007****LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****Current
                  Liabilities**Bank
                  loans
              
              
              6
              
              $
              1,694,829
              
              $
              1,380,572Accounts
                  payable
              
              
              7
              
              
              695,035
              
              
              611,689Accrued
                  liabilities and other payables
              
              
              8
              
              
              6,079,995
              
              
              5,198,371Long-term
                  debt - current portion
              
              
              9
              
              
              1,397,652
              
              
              1,213,938Convertible
                  debentures - current portion
              
              
              10
              
              
              12,402,131
              
              
              11,472,557**Total
                  Current Liabilities**
              
              
              
              
              
              22,269,642
              
              
              19,877,127**Long-Term
                  Liabilities**Allowance
                  for severance pay
              
              
              
              
              
              173,837
              
              
              144,582Long-term
                  debt
              
              
              9
              
              
              -
              
              
              32,453Convertible
                  debentures
              
              
              10
              
              
              1,906,703
              
              
              1,023,474**Total
                  Long-Term Liabilities**
              
              
              
              
              
              2,080,540
              
              
              1,200,509**Total
                  Liabilities**
              
              
              
              
              
              24,350,182
              
              
              21,077,636**Stockholders'
                  Deficit**Common
                  shares of $ 0.001 par value; Authorized: 400,000,000 shares as
                  of March
                  31, 2008 and December 31, 2007; Issued and outstanding: 148,986,955
                  shares
                  as of March 31, 2008 and December 31, 2007
              
              
              
              
              
              148,987
              
              
              148,987Additional
                  paid-in capital
              
              
              
              
              
              2,682,769
              
              
              2,682,769Accumulated
                  other comprehensive loss
              
              
              
              
              
              (379,634
              )
              
              (379,635
              )Accumulated
                  deficit
              
              
              
              
              
              (24,994,828
              )
              
              (21,782,457
              )**Total
                  Stockholders' Deficit**
              
              
              
              
              
              (22,542,706
              )
              
              (19,330,336
              )**Total
                  Liabilities and Stockholders' Deficit**
              
              
              
              
              $
              1,807,476
              
              $
              1,747,300
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  4
  **B&D
        FOOD CORP. AND SUBSIDIARY**
  **CONSOLIDATED
        STATEMENTS OF LOSS AND COMPREHENSIVE LOSS**
  **FOR
        THE THREE MONTH PERIOD ENDED JUNE 30**
  **(Expressed
        in United States Dollars)**
 
 **2008**
              
              **2007****REVENUES**
              
              $
              -
              
              $
              19,217**COST
                  OF GOODS SOLD**
              
              
              45,592
              
              
              413,345**GROSS
                  LOSS**
              
              
              (45,592
              )
              
              (394,128
              )**EXPENSES**General
                  and administrative
              
              
              282,292
              
              
              313,582Depreciation
              
              
              33,824
              
              
              -**TOTAL
                  OPERATING EXPENSES**
              
              
              316,116
              
              
              313,582**LOSS
                  FROM OPERATIONS**
              
              
              (361,708
              )
              
              (707,710
              )Financial
              
              
              (1,281,883
              )
              
              (380,620
              )Other
                  income, net
              
              
              1,399
              
              
              -Other
                  expenses
              
              
              -
              
              
              (31,525
              )**LOSS
                  BEFORE TAXES**
              
              
              (1,642,192
              )
              
              (1,119,855
              )Taxes
              
              
              -
              
              
              -**NET
                  LOSS**
              
              $
              (1,642,192
              )
              $
              (1,119,855
              )**FOREIGN
                  CURRENCY TRANSLATION ADJUSTMENT**
              
              
              -
              
              
              (257,518
              )**COMPREHENSIVE
                  LOSS**
              
              $
              (1,642,192
              )
              $
              (1,377,373
              )**LOSS
                  PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND
                  DILUTED**
              
              $
              0.00
              
              $
              0.00**WEIGHTED
                  AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND
                  DILUTED**
              
              
              148,986,955
              
              
              110,958,333
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  5
  **B&D
        FOOD CORP. AND SUBSIDIARY**
  **CONSOLIDATED
        STATEMENTS OF LOSS AND COMPREHENSIVE LOSS**
  **FOR
        THE SIX MONTH PERIOD ENDED JUNE 30**
  **(Expressed
        in United States Dollars)**
 
 **2008**
              
              **2007****REVENUES**
              
              $
              -
              
              $
              75,005**COST
                  OF GOODS SOLD**
              
              
              80,824
              
              
              530,689**GROSS
                  LOSS**
              
              
              (80,824
              )
              
              (455,684
              )**EXPENSES**General
                  and administrative
              
              
              878,215
              
              
              681,363Depreciation
              
              
              68,406
              
              
              -**TOTAL
                  OPERATING EXPENSES**
              
              
              316,116
              
              
              681,363**LOSS
                  FROM OPERATIONS**
              
              
              (1,027,445
              )
              
              (1,137,047
              )Financial
              
              
              (2,228,962
              )
              
              (761,533
              )Other
                  income, net
              
              
              44,037
              
              
              -Other
                  expenses
              
              
              -
              
              
              (39,620
              )**LOSS
                  BEFORE TAXES**
              
              
              (3,212,370
              )
              
              (1,938,200
              )Taxes
              
              
              -
              
              
              -**NET
                  LOSS**
              
              $
              (3,212,370
              )
              $
              (1,938,200
              )**FOREIGN
                  CURRENCY TRANSLATION ADJUSTMENT**
              
              
              -
              
              
              (385,896
              )**COMPREHENSIVE
                  LOSS**
              
              $
              (3,212,370
              )
              $
              (2,324,096
              )**LOSS
                  PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND
                  DILUTED**
              
              $
              0.00
              
              $
              (0.02
              )**WEIGHTED
                  AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND
                  DILUTED**
              
              
              148,986,955
              
              
              107,604,167
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  6
  **B&D
        FOOD CORP. AND SUBSIDIARY**
  **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
  **FOR
        THE SIX MONTH PERIOD ENDED JUNE 30**
  **(Expressed
        in United States Dollars)**
 
 **2008**
              
              **2007****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  loss
              
              $
              (3,212,370
              )
              $
              (1,938,200
              )**Adjustments
                  to reconcile net loss to net cash used in operating
                  activities**Depreciation
              
              
              68,406
              
              
              75,249Interest
                  due to convertible notes and bank debts
              
              
              522,803
              
              
              587,057Change
                  in allowance for severance pay
              
              
              29,254
              
              
              9,973Deferred
                  income taxes
              
              
              -
              
              
              85,619Gain
                  from disposition of property, plant and equipment
              
              
              (50,000
              )
              
              1,692**Changes
                  in operating assets and liabilities:**Accounts
                  receivable
              
              
              2,641
              
              
              (6,715
              )Inventory
              
              
              -
              
              
              16,829Prepaid
                  and sundry assets
              
              
              (132,739
              )
              
              -Other
                  receivables
              
              
              -
              
              
              (94,319
              )Accounts
                  payable
              
              
              83,347
              
              
              39,263Accrued
                  liabilities and other payables
              
              
              881,624
              
              
              242,936**NET
                  CASH USED IN OPERATING ACTIVITIES**
              
              
              (1,807,034
              )
              
              (980,616
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Acquisition
                  of property, plant and equipment, net
              
              
              -
              
              
              (1,506
              )Proceeds
                  from disposal of property, plant and equipment, net
              
              
              50,000
              
              
              -**NET
                  CASH FLOWS PROVIDED (USED IN) BY INVESTING
                  ACTIVITIES**
              
              
              50,000
              
              
              (1,506
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Repayment
                  of bank loans
              
              
              314,257
              
              
              (31,382
              )Proceeds
                  from long term debt
              
              
              151,261
              
              
              -Proceeds
                  from convertible debentures
              
              
              1,290,000
              
              
              690,000Receipt
                  of loans from related party
              
              
              -
              
              
              83,111Proceeds
                  from the issuance of common stock
              
              
              -
              
              
              325,000**NET
                  CASH FLOWS PROVIDED BY FINANCING ACTIVITIES**
              
              
              1,755,518
              
              
              1,066,729**EFFECT
                  OF FOREIGN CURRENCY TRANSLATION**
              
              
              -
              
              
              18,826**NET
                  INCREASE IN CASH AND CASH EQUIVALENTS**
              
              
              (1,516
              )
              
              103,433**CASH
                  AND CASH EQUIVALENTS, BEGINNING OF PERIOD**
              
              
              3,175
              
              
              2,968**CASH
                  AND CASH EQUIVALENTS, END OF PERIOD**
              
              $
              1,659
              
              $
              106,401
  7
  **B&D
        FOOD CORP. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
  **June
        30 , 2008 and 2007**
  **(Expressed
        in United States Dollars)**
  **1.**
              **NATURE
                  OF OPERATIONS AND BUSINESS
                  COMBINATION**
  B&D
        Food Corp. (“B&D” or “the Company”) is a US corporation that concentrates in
        acquiring, organizing, developing and upgrading companies in the food industry,
        and more specifically in the coffee industry. Currently the Company's operates
        through its subsidiary in Brazil.
  The
        Company was incorporated on August 24, 1994 under the laws of the state of
        Delaware. Until October 2004, the principal business activity of the Company
        was
        ownership, management, and sale of residential real estate. This activity
        was
        carried on through the wholly owned subsidiary Rickets Enterprises
        International, Inc. In October 2004, the Company sold all of its remaining
        revenue producing assets and in December 2004 ceased all its active operations.
  On
        July
        11, 2005, the Company entered into a Share Purchase Agreement (the “Agreement”)
        with BDFC Brasil Alimentos LTDA., a company formed pursuant to the laws of
        Brazil (“BDFC”) and the stockholders of BDFC (the “BDFC stockholders”) dated as
        July 8, 2005. Pursuant to the Agreement, the Company acquired effectively
        100%
        of the outstanding equity stock of BDFC from the BDFC stockholders. As
        consideration for the acquisition of BDFC, the Company agreed to issue
        95,344,688 shares of the Company’s common stock to the BDFC stockholders. As
        additional consideration, the company issued an 8% convertible promissory
        note,
        in the amount of $10,000,000 to the BDFC stockholders in consideration for
        the
        entire preferred stock of BDFC. The note is payable (principal plus accumulated
        interest) on July 8, 2008 and may be converted, at the option of the holder,
        at
        any time, prior to or at the time of repayment by the Company, to the Company’s
        common stock at the rate of $0.20 per share. At the date of the agreement,
        BDFC
        stockholders were also the controlling shareholder of the Company.
  BDFC
        was
        originally incorporated under the name Eastco Corporation do Brasil Ltda
        (“Eastco), under the laws of Brazil on June 2, 1995. In May 2004, the name
        of
        Eastco was changed to Eastco de Alimentos Ltda., as registered with the Junta
        Comercial de Sao Paolo (Commercial Council) and on June 28, 2005 the name
        was
        changed to BDFC Brasil Alimentos Ltda. BDFC has been in the coffee manufacturing
        business since 1997. The Company manufactures and purchases coffee grains,
        toasted and milled coffee, soluble coffee and related products, for sale,
        import
        and export.
  On
        November 1, 2000, due to adverse financial conditions, BDFC filed a Judicial
        Creditor’s Agreement called “Concordata Preventiva”. This agreement consolidates
        the Company’s debts and postpones all obligations to suppliers and banks for a
        period of time. The creditor’s agreement under “Concordata Preventiva” provided
        for payment in two installments, the first installment of 40% to be paid
        in one
        year and the remaining 60% to be paid in two years. BDFC made the full payments
        of $144,000 and $216,000 on October 30, 2001 and November 25, 2002,
        respectively. On March 8, 2005, BDFC paid an additional $15,562 as required
        by
        the courts. To generate sufficient cash flows, in January 21, 2003 management
        leased its manufacturing facility and equipment to Comercio e Industrias
        Brasileiras Coimbre S/A (“Coimbra”), an unrelated party. Rents received from the
        lease were used by BDFC to pay its debts.
  8
  **B&D
        FOOD CORP. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
  **June
        30 , 2008 and 2007**
  **(Expressed
        in United States Dollars)**
  **2.**
              **GOING
                  CONCERN**
  The
        Company's consolidated financial statements are presented on a going concern
        basis, which contemplates the realization of assets and satisfaction of
        liabilities in the normal course of business. The Company has raised capital
        and
        financing to cover all of its losses from operations since inception but
        the
        Company's ability to continue as a going concern is contingent upon its ability
        to attain and sustain profitable operations and to generate sufficient capital
        and financing from external investors and lendors. For the six months ended
        June
        30, 2008 the Company experienced a net loss of $3,212,370 (June 30, 2007
        -
        $1,938,200) and has a working capital deficiency of $22,113,983 (December
        31,
        2007 - $19,850,050). In addition, the Company has defaulted on certain bank
        loans as further described in note 9.
  In
        the
        opinion of the management, the anticipated growth of operations, the funds
        raised during 2007 and the first and second quarter of 2008, and the contacts
        with potential new investors in the future, will permit the Company to continue
        as a going concern in the coming year, until such time that the Company obtains
        profitable operations.
  In
        the
        event the Company does not reach significant operations, it may become necessary
        to sell the land and building that the Company operates from.
  The
        accompanying consolidated financial statements do not include any adjustments
        to
        reflect the possible future effects on the recoverability and classification
        of
        assets or the amounts and classification of liabilities that may result from
        the
        possible inability of the Company to continue as a going concern.
  **3.**
              **BASIS
                  OF PRESENTATION**
  The
        accompanying consolidated financial statements have been prepared in accordance
        with accounting principles generally accepted in the United States of America
        and include the accounts of the Company and its effectively 100% owned
        subsidiary, BDFC Brazil Alimentos LTDA.
  Brazilian
        company’s law required Brazilian corporations to have more than one stockholder.
        B&D Foods Corporation holds effectively 100% of the shares and the minority
        interest is held in trust for B&D Food Corporation by a related party in
        order to comply with local regulations.
  All
        significant inter-company accounts and transactions are eliminated on
        consolidation.
  9
  **B&D
        FOOD CORP. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
  **June
        30 , 2008 and 2007**
  **(Expressed
        in United States Dollars)**
  **4.**
              **INVENTORY**
  Inventory
        costs include the cost of material, labor and manufacturing overhead. The
        following is a summary of inventories by component:
 
 **June 30,**
                **2008**
              
              **December 31,**
                **2007**Packaging
              
              $
              135,247
              
              $
              122,247Dissolvable
                  coffee
              
              
              18,665
              
              
              16,871Material
                  for resale
              
              
              4,956
              
              
              4,479Fuel
                  and lubricants
              
              
              6,781
              
              
              6,129Less
                  provision for obsolescence
              
              
              (165,649
              )
              
              (149,726
              )$
              -
              
              $
              -
  **5.**
              **PROPERTY,
                  PLANT AND EQUIPMENT**
  The
        components of property, plant and equipment were as follows:
 
 **June 30,**
                **2008**
              
              **December 31,**
                **2007**Land
                  and building
              
              $
              2,046,689
              
              $
              1,955,167Computers,
                  furniture and machinery
              
              
              1,162,133
              
              
              1,337,034Motor
                  vehicles
              
              
              21,932
              
              
              24,6873,230,754
              
              
              3,316,888Accumulated
                  depreciation
              
              
              (1,579,437
              )
              
              (1,597,165
              )Net
                  book value
              
              $
              1,651,317
              
              $
              1,719,723
  10


**B&D
            FOOD CORP. AND SUBSIDIARY**
  **NOTES
            TO THE CONSOLIDATED FINANCIAL STATEMENTS**
  **June
            30 , 2008 and 2007**
  **(Expressed
            in United States Dollars)**
  **6.**
                **BANK
                    LOANS**
 
 **June 30,**
                  **2008**
                
                **December 31,**
                  **2007**UCS
                    Fomento Comercial S.A.
                
                $
                1,102,086
                
                $
                857,790Unibanco
                
                
                533,208
                
                
                468,969Banco
                    Real
                
                
                33,364
                
                
                30,156Other
                    bank overdrafts
                
                
                26,171
                
                
                23,661$
                1,694,829
                
                $
                1,380,576
  The
          Company has outstanding and defaulted various demand loans from various
          financial institutions in Brazil. The average interest rate on these loans
          is
          the Brazilian monthly interest reference rate, derived by averaging the
          variations in 30-day CD yield rates among the top financial institutions
          in the
          Brazil ("TR"), plus 0.5%. All loans are unsecured and are due on demand.
          A
          corporate stockholder has guaranteed one of the loans in the amount of
          $533,208.
          The Company is currently attempting to renegotiate the terms with the banks.
          Included in bank loans is a loan to a financial institution, which is owned
          by
          the controlling shareholder, in the amount of $$1,102,086 (December 31,
          2006 -
          $857,790).
  **7.**
                **ACCOUNTS
                    PAYABLE**
 
 **June 30,**
                  **2008**
                
                **December 31,**
                  **2007**Trade
                    payable (*)
                
                $
                1,375,634
                
                $
                1,226,864Less
                    judicial deposits
                
                
                (680,597
                )
                
                (615,174
                )$
                695,037
                
                $
                611,690
  (*)
          The
          judicial deposit represent payments made mainly in 2001 and 2002 under
          the
          Judicial Creditors Agreement (see also note 1).
  11
 **B&D
              FOOD CORP. AND SUBSIDIARY**
  **NOTES
              TO THE CONSOLIDATED FINANCIAL STATEMENTS**
  **June
              30 , 2008 and 2007**
  **(Expressed
              in United States Dollars)**
 **8.**
                **ACCRUED
                    LIABILITIES AND OTHER
                    PAYABLES**
 
 **June 30,**
                  **2008**
                
                **December 31,**
                  **2007**Brazilian
                    taxes payable other than income tax
                
                $
                2,974,969
                
                $
                2,437,611Employees
                    and related institutions
                
                
                2,147,105
                
                
                1,739,384Provision
                    for contingencies
                
                
                472,822
                
                
                427,372Amounts
                    payable to stockholders of the Company, unsecured, non interest
                    bearing
                    and payable on demand
                
                
                14,904
                
                
                152,384Other
                    accrued liabilities
                
                
                470,195
                
                
                441,620$
                6,079,995
                
                $
                5,198,371
  Included
          in employees and related institutions is $1,253,241 (December 31, 2007
          -
          $1,002,138) in accrued management fees which are payable to a corporate
          shareholder.
  Until
          June 2006, BDFC’s debt to the Brazilian tax authority was subject to the Refis
          II Program, which, in Brazil, affords a company an opportunity to pay taxes
          in
          instalments over a 180 month (15 year) period. Due to a delay in July’s payment
          BDFC lost its eligibility to participate in the Refis II Program and is
          now in
          the process of negotiating a payment plan in respect of the debt with the
          tax
          authority, totalling $1,295,576. Until there is a final agreement with
          the tax
          authorities there can be no certainty of the outcome. Management’s estimate of
          the tax liability has been classified as current liabilities and is included
          in
          other payables.
  **9.**
                **LONG-TERM
                    DEBT**
 
 **June 30,**
                  **2008**
                
                **December 31,**
                  **2007**Mortgage,
                    payable in blended monthly installments of $31,330, bearing interest
                    at
                    the rate of TR, due March 2008. The mortgage is secured by the
                    property
                    disclosed in note 5. The Company has defaulted on its payments
                    and is
                    currently attempting to renegotiate the terms with the
                    bank.
                
                $
                1,089,235
                
                $
                980,114Various
                    unsecured term loans at TR plus 0.2%.
                
                
                308,417
                
                
                266,2771,397,652
                
                
                1,246,391Less
                    current portion
                
                
                (1,397,652
                )
                
                (1,213,938
                )$
                -
                
                $
                32,453
  Approximate
          principal repayments required by the loans are comprised as
          follows:
  2008
                
                $
                1,397,6522009
                
                
                -$
                1,397,652
  12
  **10.**
                **CONVERTIBLE
                    DEBENTURES AND PROMISSORY
                    NOTES**
  Composed
          of:
  **June 30,**
                  **2008**
                
                **December 31,**
                  **2007**Convertible
                    debentures - parent company
                
                $
                10,775,556
                
                $
                10,377,778Convertible
                    debentures - other
                
                
                2,954,139
                
                
                1,755,691Promissory
                    notes
                
                
                579,139
                
                
                362,562$
                14,308,834
                
                $
                12,496,031
  The
          convertible debentures and promissory notes are unsecured and mature and
          become
          due as follows:
  **June 30,**
                  **2008**
                
                **December 31,**
                  **2007**Current,
                    due in 2008
                
                
                11,915,714
                
                
                11,472,557Amount
                    due in 2009
                
                
                968,699
                
                
                732,863Amount
                    due in 2010
                
                
                101,333
                
                
                -Amount
                    due in 2011
                
                
                300,555
                
                
                290,611Amount
                    due in 2013
                
                
                1,022,533
                
                
                -$
                14,308,834
                
                $
                12,496,031
  During
          January 2008, the Company issued unsecured convertible promissory notes
          to an
          unrelated individual in the principal amount of $190,000. The notes bear
          annual
          interest at 13% and mature after one year. At any time after the first
          six
          months, the holder has the right to convert the principal and interest
          due into
          fully paid and non-assessable shares of the Company’s common stock, par value
          $.001 per share. The number of shares of common stock to be issued upon
          such
          conversion shall be equal to the quotient obtained by dividing the entire
          principal amount plus accrued interest (if any) by 0.10.
  During
          February 2008, the Company issued an unsecured promissory note to to an
          unrelated individual in the principal amount of $700,000. The note is unsecured,
          bears annual interest at 8% and matures after one year.
  During
          May 2008, the Company issued two unsecured promissory notes to to unrelated
          individuals in the principal amount of $400,000 and $300,000, bearing interest
          at annual rates of 8% and 10% respectively and maturing after five and
          two years
          respectively.
  **11.**
                **SUBSEQUENT
                    EVENTS**
  During
            July and August 2008, the Company issued various unsecured promissory
            notes to
            to unrelated individuals in the principal amount of $200,000, bearing
            interest
            at annual rates of 8% and maturing in one year.
  13
 **ITEM2.**
                    **MANAGEMENT’S
                        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                        OF
                        OPERATIONS**
  **INFORMATION
          REGARDING FORWARD LOOKING STATEMENTS**
  The
          following discussion should be read in conjunction with the financial statements
          and notes thereto set forth in Item 1 of this Report. In addition to historical
          information, this discussion and analysis contains forward-looking statements
          that relate to future events and expectations and, as such, constitute
          forward-looking statements. Forward-looking statements include those containing
          such words as "anticipates", "believes", "estimates", "expects", "hopes",
          "targets", "should", “will", "will likely result", "forecast", "outlook",
          "projects" or similar expressions. Such forward-looking statements involve
          known
          and unknown risks, uncertainties and other factors that may cause actual
          results, performance or achievements of the Company to be materially different
          from those expressed or implied in the forward-looking statements.
  **OVERVIEW**
  The
          Company (formerly REII Incorporated) is a holding company, which focuses
          on
          acquiring, organizing, and developing companies in the food industry, and
          more
          specifically in the coffee industry. The Company’s management plans to integrate
          manufacturing and distribution operations in order to achieve maximum return
          on
          capital.
  In
          2005,
          the Company obtained a manufacturing arm by acquiring BDFC which owns and
          operates a coffee manufacturing plant. BDFC has the ability to manufacture
          and
          pack roasted and ground coffee, instant coffee and several mixtures of
          coffee
          and tea like cappuccino and others. Currently, the Company is focusing
          on
          selling its coffee products in South America and Eastern Europe. In addition,
          the Company is looking to acquire a strong marketing capability in the
          United
          States.
  **FINANCIAL
          CONDITION AND LIQUIDITY**
  Unless
          otherwise specified, all figures are as at the Balance Sheet Date.
  The
          Company’s total assetsas at June 30, 2008, as reflected in the consolidated
          balance sheet, totaled $1,807,476 compared to $1,747,300 as at December
          31,
          2007.
  The
          Company’s consolidated deficit in working capital amounted to $22,113,983 and
          the consolidated quick ratio was 0.01%.
  The
          Company’s consolidated long-term financing is mainly based on convertible
          promissory notes in the aggregate amount of $14,308,834 issued to third
          parties,
          $10,775,556 of which is held by Livorno. The other consolidated long term
          financing consists of (i) long term bank loans in the aggregate amount
          of $- and
          (ii) allowance for severance pay in the aggregate amount of $173,837.
  The
          Company’s short-term indebtedness was approximately $6,063,025, including demand
          loans in the aggregate amount of $1,694,829 (short term) and $1,397,652
          (Long
          Term Loans - Due within one year), which are payable in monthly installments
          until December 2008.
  The
          shareholders’ deficit as at June 30, 2008 totaled $22,542,706 compared to a
          shareholders’ deficit of $19,330,336 as at December 31, 2007. The increase in
          shareholders’ deficiency is derived primarily from losses during the six month
          period in the aggregate amount of $3,212,370.
  One
          of
          the Company’s shareholders provided a personal guarantee to two banks in Brazil
          in connection with loans received from those banks by BDFC. As at June
          30, 2008,
          the outstanding balance of such guaranteed loans totaled $533,208. The
          Company
          accrues a guarantee fee payable to the shareholder for providing the guarantee,
          in the amount of $21,250 per quarter.
  The
          Company will need to obtain additional debt or equity financing in the
          near term
          in order to have sufficient working capital to execute its business plan
          or
          continue as a going concern. The Company is in the process of seeking such
          financing; however, there is no assurance that it will be able to obtain
          such
          financing on satisfactory terms or at all.
  14
  **SIX
          MONTHS ENDED JUNE 30, 2008 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
          2007**
  Net
          Income (Loss)
  The
          Company’s consolidated net loss for the second quarter of 2008 amounted to
          $3,212,370, compared to a consolidated net loss of $1,938,200 for the second
          quarter of the previous year.
  The
          net
          loss for the second quarter of 2008 increased in comparison to the second
          quarter of the previous year mainly due to the Company not engaging in
          sales
          activities and the high interest related to the increased convertible and
          promissory notes.
  Revenue
  The
          Company was not in operations and therefore did not generate any revenue
          for the
          six months ended June 30, 2008, compared to $75,005 for the first quarter
          of the
          previous year.
  The
          revenue from coffee production through the second quarter of 2008 was Nil
          in
          light of the Company’s management strategy to make sales through a targeted
          marketing arm to be acquired in the near future. The Company’s operations are
          suspended at this moment due to changes in the structure of its operations,
          including the refurbishment of its factory in Brazil, which is expected
          to be
          completed by the third quarter of 2008.
  Cost
          of
          Revenues
  As
          with
          the Company’s revenues in the second quarter of 2008, the cost of revenues was
          minimal.
  General
          and Administrative Expenses
  The
          consolidated general and administrative expenses for the second quarter
          of 2008
          amounted to $878,215, compared to consolidated general and administrative
          expenses of $681,363 for the second quarter of the previous year.
  The
          increase in general and administrative expenses was attributable primarily
          to
          the additional professional services and traveling expenses of the management
          of
          the Company in connection with the suspension of the Company’s operations
          incurred in the third quarter of the previous year.]
  Financial
          Expenses
  The
          consolidated financial expenses for the second quarter of 2008 amounted
          to
          $2,228,962, compared to consolidated financial expenses of $761,533 for
          the
          first quarter of the previous year.
  The
          increase in financial expenses through the second quarter of 2008 results
          from
          interest and financing charges related to the convertible notes incurred
          over
          the past 12 months.
 
 ***Inflation*** ****
 
 Our
          results of operations have not been affected by inflation and management
          does
          not expect that inflation risk would cause material impact on its operations
          in
          the future.
 
 ***Seasonality***
 
 Our
          results of operations are not materially affected by seasonality and we
          do not
          expect seasonality to cause any material impact on our operations in the
          near
          future.
 
 15
  ***Critical
          Accounting Policies***
  The
          preparation of financial statements in conformity with accounting principles
          generally accepted in the United States requires our management to make
          assumptions, estimates and judgments that affect the amounts reported in
          the
          financial statements, including the notes thereto, and related disclosures
          of
          commitments and contingencies, if any. We consider our critical accounting
          policies to be those that require the more significant judgments and estimates
          in the preparation of financial statements, including the
          following:
 
 ***Principles
          of Consolidation*** —The
          consolidated financial statements include the accounts of the Company,
          it's
          wholly owned subsidiary BDFC
          Brazil Alimentos LTDA (“BDFC”) .
          All
          material intercompany accounts, transactions and profits have been eliminated
          in
          consolidation.
  ***Use
          of Estimates*** —The
          preparation of financial statements in conformity with accounting principles
          generally accepted in the United States of America requires management
          to make
          estimates and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of
          the financial statements and the reported amounts of revenues and expenses
          during the reporting period. Significant estimates include accrued warranty
          costs, as well as revenue and costs recorded under the percentage-of-completion
          method. Actual results could differ from those estimates.
  ***Cash
          Equivalents*** —The
          Company classifies any highly liquid investments purchased with a maturity
          of
          three months or less as cash equivalents.
  ***Accounts
          Receivable*** —Accounts
          receivable are carried at original invoice amount less an estimate for
          doubtful
          receivables based on a review of all outstanding amounts at year end. Management
          determines the allowance for doubtful accounts by using historical experience
          applied to an aging of accounts. Trade receivables are written off when
          deemed
          uncollectible. Recoveries of trade receivables previously written off are
          recorded when received.
  ***Property
          and Equipment*** —Property
          and equipment are recorded at cost, less accumulated depreciation. Depreciation
          is provided for using straight-line methods over the estimated useful lives
          of
          the respective assets, usually five years.
  ***Revenue
          Recognition*** —Substantially
          all of the Company’s revenues are on contracts recognized using the
          percentage-of-completion method, measured by the ratio of costs incurred
          to date
          to estimated total costs for each contract. Contract costs include all
          direct
          material and labor costs and those indirect costs related to contract
          performance, such as supplies and travels. General and administrative costs
          are
          charged to expense as incurred. Losses on contracts are recorded in full
          as they
          are identified.
  ***Share-Based
          Payments*** —The
          Company adopted Statement of Financial Accounting Standards No 123(R),
          “Share-Based Payments” (“SFAS No. 123R”) effective January 1, 2006. SFAS No.
          123R amends existing accounting pronouncements for share-based payment
          transactions in which an enterprise receives employee and certain non-employee
          services in exchange for (a) equity instruments of the enterprise or (b)
          liabilities that are based on the fair value of the enterprise’s equity
          instruments or that may be settled by the issuance of such equity instruments.
          SFAS No.123R generally requires such transactions be accounted for using
          a
          fair-value-based method. The Company has never issued any stock options
          to any
          employees.
  ***Income
          Taxes*** —Deferred
          income tax assets and liabilities are recognized for the estimated future
          tax
          consequences attributable to differences between the financial statement
          carrying amounts of existing assets and liabilities and their respective
          income
          tax bases. Deferred income tax assets and liabilities are measured using
          enacted
          tax rates in effect for the year in which those temporary differences are
          expected to be recovered or settled. A valuation allowance is established
          against deferred tax assets if it is more likely than not that all, or
          some
          portion, of such assets will not be realized.
  16
  Effective
          January 1, 2007, we adopted Financial Accounting Standard Board (FASB)
          Interpretation No. 48 (FIN 48), *Accounting
          for Uncertainty in Income Taxes—an interpretation of FASB Statement
          No. 109* , *Accounting
          for Income Taxes* .
          FIN 48 prescribes a comprehensive model for how companies should recognize,
          measure, present, and disclose in their financial statements uncertain
          tax
          positions taken or expected to be taken on a tax return. Under FIN 48, tax
          positions are initially recognized in the financial statements when it
          is more
          likely than not the position will be sustained upon examination by the
          tax
          authorities. Such tax positions are initially and subsequently measured
          as the
          largest amount of tax benefit that is greater than 50% likely of being
          realized
          upon ultimate settlement with the tax authority assuming full knowledge
          of the
          position and all relevant facts.
  ***Impairment
          of Long-Lived Assets*** —The
          Company adopts SFAS No. 144 "Accounting for the Impairment or Disposal
          of
          Long-Lived Assets". The Company periodically evaluates long-lived assets
          for
          impairment whenever events or changes in circumstances indicate that the
          carrying value of an asset may not be recoverable. If the estimated future
          cash
          flows (undiscounted and without interest charges) from the use of an asset
          were
          less than the carrying value, a write-down would be recorded to reduce
          the
          related asset to its estimated fair value.
  The
          assumptions used by management in determining the future cash flows are
          critical. In the event these expected cash flows are not realized, future
          impairment losses may be recorded. Management has determined that no impairments
          of long-lived assets currently exist.
  ***Issuance
          of Shares by Subsidiaries—*** Sales
          of
          stock by a subsidiary is accounted for in accordance with Staff Accounting
          Bulletin Topic 5H, “Accounting for Sales of Stock by a Subsidiary.” The Company
          has adopted the capital transaction method to account for subsidiary stock
          sales. Accordingly, increases and decreases in the Company’s share of its
          subsidiary’s net equity resulting from subsidiary stock transactions are
          recorded on the Consolidated Balance Sheets and Consolidated Statements
          of
          Stockholders’ Equity as increases or decreases to Additional paid-in
          capital.
  ***Concentrations
          of Credit Risk*** —Financial
          instruments that subject the Company to credit risk consist primarily of
          accounts receivable, which are concentrated in a small number of customers
          in
          the Chinese governments. The Company performs ongoing credit evaluations
          of its
          customers. To date, there has been no bad debt incurred.
  ***Statement
          of Cash Flows*** —In
          accordance with SFAS No. 95, "Statement of Cash Flows", cash flows from
          the
          Company's operations are based upon the local currencies. As a result,
          amounts
          related to assets and liabilities reported on the statement of cash flows
          will
          not necessarily agree with changes in the corresponding balances on the
          balance
          sheet.
  ***Comprehensive
          Income*** —Comprehensive
          income includes accumulated foreign currency translation gains and losses.
          The
          Company has reported the components of comprehensive income on its statements
          of
          stockholders’ equity.
 
 ***Fair
          Value of Financial Instruments*** —
The
          carrying amounts of cash and cash equivalents, accounts receivable, deposits
          and
          accounts payable approximate their fair value because of the short maturity
          of
          those instruments.
 
 ***New
          Accounting Pronouncements***
 
 In
          September 2006, the FASB issued Statement of Financial Accounting Standards
          No. 157, *Fair
          Value Measurements* ,
          (SFAS 157). SFAS 157 defines fair value, establishes a framework for
          measuring fair value in generally accepted accounting principles and expands
          disclosures about fair value measurements. FAS 157 is effective for
          financial statements issued for fiscal years beginning after November 15,
          2007 and interim periods within those fiscal years. In February 2008, FASB
          issued Staff Position 157-2, *Effective
          Date of FASB Statement No. 157* ,
          (FSP
          157-2) which delays the effective date of SFAS 157 for nonfinancial assets
          and nonfinancial liabilities, except for items that are recognized or disclosed
          at fair value in the financial statements on a recurring basis.
  17
  In
          February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
          No.
          159, " *The
          Fair Value Option for Financial Assets and Financial Liabilities - Including
          an
          Amendment of FASB Statement No. 115* ".
          This
          statement permits entities to choose to measure many financial instruments
          and
          certain other items at fair value. Most of the provisions of SFAS No. 159
          apply
          only to entities that elect the fair value option. However, the amendment
          to
          SFAS No. 115 " *Accounting
          for Certain Investments in Debt and Equity Securities* "
          applies
          to all entities with available-for-sale and trading securities. SFAS No.
          159 is
          effective as of the beginning of an entity's first fiscal year that begins
          after
          November 15, 2007.
  In
          June
          2007, the FASB ratified Emerging Issue Task Force (“EITF”) Issue No. EITF 06-11 *Accounting
          for the Income Tax Benefits of Dividends on Share-Based Payment
          Awards* (“EITF
          06-11”). EITF 06-11 provides that tax benefits associated with dividends on
          share-based payment awards be recorded as a component of additional paid-in
          capital. EITF 06-11 is effective, on a prospective basis, for fiscal years
          beginning after December 15, 2007.
  In
          June
          2007, the FASB issued EITF Issue No. 07-03, *Accounting
          for Non-Refundable Advance Payments for Goods or Services to Be Used in
          Future
          Research and Development Activities* (“EITF
          07-03”). EITF 07-03 provides guidance on whether non-refundable advance payments
          for goods that will be used or services that will be performed in future
          research and development activities should be accounted for as research
          and
          development costs or deferred and capitalized until the goods have been
          delivered or the related services have been rendered. EITF 07-03 is effective
          for fiscal years beginning after December 15, 2007.
 
 In
          December 2007, the FASB issued SFAS 141R, “ *Business
          Combinations - Revised 2007* ,”
which
          replaces FASB Statement No. 141, “ *Business
          Combinations* .”
SFAS
          141R ** establishes
          principles and requirements intending to improve the relevance, representational
          faithfulness, and comparability of information that a reporting entity
          provides
          in its financial reports about a business combination and its effects.
          This is
          accomplished through requiring the acquirer to recognize assets acquired
          and
          liabilities assumed arising from contractual contingencies as of the acquisition
          date, measured at their acquisition-date fair values. This includes contractual
          contingencies only if it is more likely than not that they meet the definition
          of an asset of a liability in FASB Concepts Statement No. 6, “ *Elements
          of Financial Statements* - *a
          replacement of FASB Concepts Statement No. 3.* ” ** This
          statement also requires the acquirer to recognized goodwill as of the
          acquisition date, measured as a residual. However, this statement improves
          the
          way in which an acquirer’s obligations to make payments conditioned on the
          outcome of future events are recognized and measured, which in turn improves
          the
          measure of goodwill. This statement also defines a bargain purchases as
          a
          business combination in which the total acquisition-date fair value of
          the
          consideration transferred plus any noncontrolling interest in the acquiree,
          and
          it requires the acquirer to recognize that excess in earnings as a gain
          attributable to the acquirer. This therefore improves the representational
          faithfulness and completeness of the information provided about both the
          acquirer’s earnings during the period in which it makes a bargain purchase and
          the measures of the assets acquired in the bargain purchase.
  In
          December 2007, the FASB issued SFAS No. 160, “ *Noncontrolling
          Interests in Consolidated Financial Stateme0147nts - an amendment of ARB
          No.
          51,* ” ** which
          establishes accounting and reporting standards to improve the relevance,
          comparability, and transparency of financial information in its consolidated
          financial statements. This is accomplished by requiring all entities, except
          not-for-profit organizations, that prepare consolidated financial statements
          to
          (a) clearly identify, label, and present ownership interests in subsidiaries
          held by parties other than the parent in the consolidated statement of
          financial
          position within equity, but separate from the parent’s equity, (b) clearly
          identify and present both the parent’s and the noncontrolling interest’s
          attributable consolidated net income on the face of the consolidated statement
          of income, (c) consistently account for changes in parent’s ownership interest
          while the parent retains it controlling financial interest in subsidiary
          and for
          all transactions that are economically similar to be accounted for similarly,
          (d) measure of any gain, loss or retained noncontrolling equity at fair
          value
          after a subsidiary is deconsolidated, and (e) provide sufficient disclosures
          that clearly identify and distinguish between the interests of the parent
          and
          the interests of the noncontrolling owners. This Statement also clarifies
          that a
          noncontrolling interest in a subsidiary is an ownership interest in the
          consolidated entity that should be reported as equity in the consolidated
          financial statements. SFAS No. 160 is effective for fiscal years, and interim
          periods on or after December 15, 2008. The Company does not expect the
          adoption
          of this pronouncement to have a material impact on its financial
          statements.
  18
  In
          March
          2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
          Instruments and Hedging Activities.” SFAS No. 161 is intended to
          improve financial reporting about derivative instruments and hedging activities
          by requiring enhanced disclosures to enable investors to better understand
          their
          effects on an entity’s financial position, financial performance, and cash
          flows. SFAS No. 161 is effective for financial statements issued for
          fiscal years and interim periods beginning after November 15, 2008. The
          Company believes that the adoption of SFAS No. 161 will not have a
          material impact on its consolidated financial statements.
 
 ***Off-Balance
          Sheet Arrangements***
 
 We
          do not
          have any off-balance arrangements.
 
 MARKET
          RISK AND CONTINGENT LIABILITIES
 
 BDFC
          primarily operates in Brazil, making it susceptible to changes in the economic,
          political, and social conditions in Brazil. Brazil has experienced political,
          economic, and social uncertainty in recent years, including an economic
          crisis
          characterized by exchange rate instability and Brazilian Real devaluation,
          increased inflation, high domestic interest rates, negative economic growth,
          reduced consumer purchasing power and high unemployment. Under its current
          leadership, the Brazilian government has been pursuing economic stabilization
          policies, including the encouragement of foreign trade and investment and
          an
          exchange rate policy of free market flotation. In the last year, there
          was an
          improvement in the Brazilian economic environment. Nevertheless, no assurance
          can be given that the Brazilian government will continue to pursue these
          policies, that these policies will be successful if pursued or that these
          policies will not be significantly altered. In case of a decline in the
          Brazilian economy, political or social problems or a reversal of Brazil's
          foreign investment policy it is likely that any such change will have an
          adverse
          effect on BDFC's results of operations and financial condition. Additionally,
          inflation in Brazil may lead to higher wages and salaries for employees
          and
          increases in the cost of raw materials, which would adversely affect BDFC's
          profitability.
 
 Risks
          inherent in foreign operations include nationalization, war, terrorism,
          and
          other political risks and risks of increases in foreign taxes or changes
          in U.S.
          tax treatment of foreign taxes paid and the imposition of foreign government
          royalties and fees.
 
 BDFC
          is
          liable for various claims arising in the ordinary course of business. The
          Company has made appropriate provision for those claims. The Company’s
          management believes that the provisions recorded in the accounts are adequate
          to
          cover the anticipated losses (if any) arising from those claims.
 
 19
 
 ITEM
          3.  CONTROLS AND PROCEDURES
  a)
                Evaluation
                    of Disclosure Controls and Procedures. As at March 31, 2008,
                    the Company’s
                    management carried out an evaluation, under the supervision of
                    the
                    Company’s Chief Executive Officer and Chief Financial Officer, of the
                    effectiveness of the design and operation of the Company’s system of
                    disclosure controls and procedures pursuant to the Securities
                    and Exchange
                    Act, Rule 13a-15(d) and 15d-15(d) under the Exchange Act. Based
                    upon that
                    evaluation, the Chief Executive Officer and Chief Financial Officer
                    concluded that the Company’s disclosure controls and procedures were not
                    effective, as of the date of their evaluation, for the purposes
                    of
                    recording, processing, summarizing and timely reporting material
                    information required to be disclosed in reports filed by the
                    Company under
                    the Securities Exchange Act of 1934 in that they failed to result
                    in the
                    timely reporting of material financial information. The Company
                    intends to
                    implement new controls and procedures in the third quarter of
                    2008 that
                    will be designed to process, summarize and timely report all
                    material
                    information, including financial, on a going forward
                    basis.b)
                Changes
                    in internal controls. There were no changes in the Company’s internal
                    controls over financial reporting, that occurred during the period
                    covered
                    by this report that have materially affected, or are reasonably
                    likely to
                    materially affect, the Company’s internal control over financial
                    reporting.
  20


PART
      II.   OTHER INFORMATION




ITEM 1.   LEGAL
      PROCEEDINGS




As
      at
      June 30, 2008, the Company was not a party to any litigation of any kind.




BDFC
      is
      involved in several proceedings, which arose out of the ordinary course of
      business. BDFC terminated approximately 100 employees between 2001 and 2004.
      Approximately 65% of those employees have filed severance claims with the
      Brazilian labor courts. Most of these claims range in value from approximately
      $500 to $10,000 per claim. Based on the judicial agreement and judgments
      rendered, BDFC is required to pay an aggregate amount of $102,000, of which
      it
      has already paid approximately $50,000. BDFC intends to dispute or is in the
      process of negotiating a settlement for the remaining claims for severance
      pay.
      In addition, a former plant manager and director of BDFC made various claims
      against BDFC. BDFC disputed the verdict given by a higher labor court in Brazil
      and appealed to the Brazilian supreme labor court. BDFC recorded a provision
      for
      the claim in the full amount of the expected verdict by the supreme labor court
      totaling approximately $197,960.




As
        at
        June 30, 2008, BDFC owed an aggregate of $1,960,490,10 to the Secretaria
        da
        Fazenda Nacional (the Brazilian tax authority) for overdue taxes. Until June
        2006, $1,120,376 of this debt was subject to the Refis II Program, which,
        in
        Brazil, affords a company an opportunity to pay taxes in installments over
        a 180
        month (15 year) period. Due to a delay in July’s payment BDFC lost its
        eligibility to participate in the Refis II Program and is now in the process
        of
        negotiating a payment plan in respect of the debt with the tax authority.
        BDFC
        also owes to Instituto Nacional de Seguro Social an aggregate of
        $1,911,961.




ITEM
      1A.
      RISK FACTORS.





As
      a
      small business company, we are not required to provide the information required
      by this item.





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




In
      June
      2008, the Company issued 5,000,000 shares of Common Stock to an investor in
      connection with an investment in the Company. The Company is using the funds
      received from this investment to refurbish BDFC’s factory in Brazil and to
      establish new trading operations in Ethiopia with initial activity expected
      to
      commence by the end of 2008.




ITEM 3.   DEFAULTS
      UPON SENIOR SECURITIES.




The
      Company has not defaulted on any senior securities.




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




Not
      applicable.




ITEM 5.   OTHER
      INFORMATION




Not
      applicable.





ITEM 6.   EXHIBITS
      AND REPORTS ON FORM 8-K




Reports
      on Form 8-K




1.
            Entry
                into a Material Definitive Agreement, January 28,
                2008





21





EXHIBITS




Number
            
            Title10.1
            
            Entry
                into a Material Definitive Agreement, June 1, 200831.1
            
            Certification
                by Daniel Ollech, Chief Executive Officer, Pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 200231.2
            
            Certification
                by Daniel Ollech, Chief Financial Officer, Pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 200232.1
            
            Certification
                by Daniel Ollech, Chief Executive Officer, Pursuant to 18 U.S.C.
                Section 1350, as Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 200232.1
            
            Certification
                by Daniel Ollech, Chief Financial Officer, Pursuant to 18 U.S.C.
                Section 1350, as Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002


22





SIGNATURES




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, as amended, the Registrant has duly caused this Report to be signed on
      its
      behalf by the undersigned, thereunto duly authorized, in New York, New York,
      on
      the 13th day of August 2008.




B
                & D FOOD, CORP.By:
            /s/
                Daniel OllechDaniel
              OllechChief
              Executive Officer


23