**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE
      COMMISSION**


**Washington,
      D.C.
      20549**








**Amendment
      No.
      1**


**to**


**FORM
      10-QSB**





(Mark
                One)**[X]
 QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**For
                the quarterly period
                ended:June 30, 2006**Or****[
  ]
                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                EXCHANGE ACT OF 1934**For
                the transition period from
                ____________ to _____________Commission
                File Number: 000-51450**DEJA
                FOODS, INC.**(Exact
                name of registrant as
                specified in its charter)Nevada
            05-0581183(State
                or other jurisdiction of
                incorporation or organization)
            (I.R.S.
                Employer Identification
                No.)17641
                Vanowen Street, Van Nuys,
                CA
            91406(Address
                of principal executive
                offices)
            (Zip
                Code)(818)
                758-6500(Registrant's
                telephone number,
                including area code)(Former
                name, former address
                and former fiscal year, if changed since last report)16501
                Ventura Boulevard, Suite 601,
                Encino, CA 91436


Indicate
      by check mark whether the
      registrant (1) has filed all reports required to be filed by Section 13 or
      15(d)
      of the Securities Exchange Act of 1934 during the preceding 12 months (or for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days.


Yes
      [   ] No
      [X]





Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act): No [X]





**APPLICABLE
      ONLY TO ISSUERS INVOLVED
      IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:**


Indicate
      by check mark whether the
      registrant has filed all documents and reports required to be filed by Sections
      12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
      distribution of securities under a plan confirmed by a court.


Yes
      [X] No [
  ]





**APPLICABLE
      ONLY TO CORPORATE
      ISSUERS:**


Indicate
      the number of shares
      outstanding of each of the issuer's classes of common stock, as of the latest
      practicable date: 559,028




Transitional
        Small Business Disclosure (Check one): Yes [_] No
        [X]









**EXPLANATORY
        NOTE**
 
 The
        Registrant files this amendment to insert information on the cover page that
        was
        inadvertently omitted previously. The Registrant has not made any other changes
        in this amendment.









**Deja
      Foods,
      Inc.**





**Form
      10-QSB**





**Table
      of
      Contents**







**Page**PART
                I - FINANCIAL INFORMATION
            3Unaudited
                Condensed Consolidated Financial
                Statements
            3Condensed
                Consolidated Balance Sheets
            4-5Condensed
                Consolidated Statements of
                Operations
            `6`Condensed
                Consolidated Statement of  Changes in
                Stockholders’ Deficit
            7Condensed
                Consolidated Statements of Cash
                Flows
            8-9Notes
            10Discussion
                and Analysis or Plan of
                Operation
            16Controls
                and Procedures
            19PART
                II - OTHER INFORMATION
            20Legal
                Proceedings
            20Unregistered
                Sales of Equity
                Securities
            20Submission
                of Matters to a Vote of Security
                Holders
            21Exhibits
            21SIGNATURES
            22





2





**PART
      I - FINANCIAL
      INFORMATION**


**Unaudited
      Condensed Consolidated
      Financial Statements**





The
      accompanying unaudited condensed
      consolidated financial statements have been prepared in accordance with
      generally accepted accounting principles for interim financial reporting and
      pursuant to the rules and regulations of the Securities and Exchange Commission
      ("Commission").  While these statements reflect all normal recurring
      adjustments which are, in the opinion of management, necessary for fair
      presentation of the results of the interim period, they do not include all
      of
      the information and footnotes required by generally accepted accounting
      principles for complete financial statements.  For further information,
      refer to the financial statements and footnotes thereto, which are included
      in
      the Company's Registration Statement on Form SB-2 previously filed with the
      Commission on April 5, 2006, and subsequent amendments made
      thereto.





3




**DEJA
      FOODS,
      INC.**


**CONDENSED
      CONSOLIDATED BALANCE
      SHEET**





ASSETSJune
            
            December
                31,2006
            
            2005(Unaudited)Current
                AssetsCash
                and cash equivalents
            $
            15,798
            $
            109,718Accounts
                receivable, less allowance
                for bad debts
              of
                $76,000
            
            1,322,180
            
            1,353,101Inventories
            
            1,869,281
            
            4,278,131Receivable
                from
                stockholder
            
            -
            
            167,669Receivable
                from
                employees
            
            26,424
            
            22,057Prepaid
                expenses and
                other
            
            258,954
            
            150,357Total
                Current Assets
            
            3,492,637
            
            6,081,033Property
                and Equipment, at
                costFurniture
                and
                fixtures
            
            9,781
            
            38,080Office
                equipment
            
            38,083
            
            127,684Vehicles
            
            216,347
            
            267,180Tenant
                improvements
            
            2,753
            
            7,177266,964
            
            440,121Less
                accumulated
                depreciation
            
            (92,317)
            
            (55,367)Net
                Property and Equipment
            
            174,647
            
            384,754Other
                AssetsFictitious
                name, net of accumulated
                amortization
            
            -
            
            634,675Goodwill
            
            -
            
            669,097Customer
                list, net of accumulated
                amortization
            
            -
            
            65,083Deposits
                and other
            
            36,430
            
            37,582Investment
                in affiliated
                company
            
            -
            
            321,060Total
                Other Assets
            
            36,430
            
            1,727,497Total
                Assets
            $
            3,703,714
            $
            8,193,284








The
      accompanying notes are an
      integral


part
      of these condensed consolidated
      statements




4




**DEJA
      FOODS,
      INC.**


**CONDENSED
      CONSOLIDATED BALANCE
      SHEET**





**(CONTINUED)**








LIABILITIES
      AND STOCKHOLDERS'
      DEFICIT








June
            
            December
                31,2006
            
            2005(Unaudited)Current
                LiabilitiesAccounts
                payable and accrued
                expenses
            $
            4,110,160
            $
            3,638,508Notes
                payable
            
            1,890,132
            
            2,806,515Loan
                payable - affiliated
                company
            
            1,942,013
            
            2,016,882Current
                portion of long-term
                debt
            
            1,476,264
            
            20,014Current
                portion of obligation under
                capital lease
            
            
            39,037
            
            -Total
                Current Liabilities
            
            9,457,606
            
            8,481,919Long-Term
                Debt, net of current
                portion
            
            -
            
            1,414,270Warrant
                Liability
            
            1,053,550
            
            -Stockholders'
                DeficitPreferred
                stock: $.001 par value,
                5,000,000 sharesauthorized,
                none
                issued or outstanding
            
            -
            
            -Common
                stock: $.001 par value,
                10,000,000 sharesauthorized,
                4,433,333 shares issued and outstanding
            
            4,433
            
            4,433Additional
                paid in
                capital
            
            1,072,680
            
            856,415Receivable
                from
                stockholder
            
            (224,919)
            
            -Accumulated
                deficit
            
            (7,659,636)
            
            (2,563,753)Total
                Stockholders' Deficit
            
            (6,807,442)
            
            (1,702,905)Total
                Liabilities and Stockholders' Deficit
            $
            3,703,714
            $
            8,193,284








The
      accompanying notes are an
      integral


part
      of these condensed consolidated
      statements




5




**DEJA
      FOODS,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**





Three
                Months Ended June
                30,
            
            Six
                Months Ended June
                30,2006
            
            2005
            
            2006
            
            2005(Unaudited)
            
            (Unaudited)
            
            (Unaudited)
            
            (Unaudited)Sales
            $
            3,472,258
            $
            2,584,223
            $
            8,165,361
            $
            5,232,587Cost
                of sales
            
            3,510,432
            
            2,319,516
            
            7,908,860
            
            4,643,216Gross
                Profit
                (Loss)
            
            (38,174)
            
            264,707
            
            256,501
            
            589,371Operating
                ExpensesDepreciation
                and
                amortization
            
            32,531
            
            8,356
            
            63,850
            
            16,231Impairment
                of long-lived
                assets
            
            1,934,075
            
            -
            
            1,934,075
            
            -Selling,
                general and administrative
                expenses
            
            1,375,781
            
            726,372
            
            2,604,100
            
            1,310,848Total
                Operating
                Expenses
            
            3,342,387
            
            734,728
            
            4,602,025
            
            1,327,079Loss
                From
                Operations
            
            (3,380,561)
            
            (470,021)
            
            (4,345,524)
            
            (737,708)Other
                Income
                (Expense)Income
                from unconsolidated
                subsidiary
            
            13,522
            
            9,892
            
            22,506
            
            22,263Interest
 income
            
            4,959
            
            3,477
            
            8,881
            
            6,949Other
                income
            
            (22)
            
            -
            
            123
            
            -Interest
                expense
            
            (532,615)
            
            (112,753)
            
            (781,869)
            
            (218,823)Total
                Other
                Expense
            
            (514,156)
            
            (99,384)
            
            (750,359)
            
            (189,612)Loss
                Before Provision for
                Income Taxes
            
            (3,984,717)
            
            (569,405)
            
            (5,095,883)
            
            (927,320)Provision
                (Benefit) For Income
                Taxes
            
            -
            
            (118,274)
            
            -
            
            (223,452)Net
                Loss
            $
            (3,984,717)
            $
            (451,131)
            $
            (5,095,883)
            $
            (703,868)Net
                Loss Per Basic andDiluted
                Share of Common
                StockWeighted
                Average Number of Common
                SharesOutstanding
            
            4,433,333
            
            4,100,000
            
            4,433,333
            
            4,040,676Net
                Loss Per Share of Common
                Stock
            $
            (.90)
            $
            (.11)
            $
            (1.15)
            $
            (.17)





The
      accompanying notes are an
      integral


part
      of these condensed consolidated
      statements




6






**DEJA
      FOODS,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS
      OF CHANGES IN STOCKHOLDERS' DEFICIT**




Common
                Stock
            
            AdditionalPaid
                In
            
            AccumulatedShares
            
            Amount
            
            Capital
            
            DeficitBalance
                at December 31,
                2004
            3,829,722
            $
            3,830
            $
            252,133
            $
            (225,135)Issuance
                of common stock for
                cash
            258,778
            
            258
            
            258,520
            
            -Issuance
                of common stock
                inexchange
                for repayment
                of debtof
                affiliated
                company
            11,500
            
            12
            
            11,488
            
            -Stock
                based compensation
                expense
            -
            
            -
            
            1,274
            
            -Issuance
                of common stock in
                connectionwith
                acquisition
                of subsidiary
            333,333
            
            333
            
            333,000
            
            -Net
                loss
            -
            
            -
            
            -
            
            (2,338,618)Balance
                at December 31,
                2005
            4,433,333
            
            4,433
            
            856,415
            
            (2,563,753)Compensation
                expense from
                issuanceof
                stock options
                (unaudited)
            -
            
            -
            
            192,357
            
            -Fair
                value adjustment of
                warrants issued inconnection
                with
                convertible debentures (unaudited)
            -
            
            -
            
            23,908
            
            -Net
                loss
                (unaudited)
            -
            
            -
            
            -
            
            (5,095,883)Balance
                at June 30, 2006
                (unaudited)
            4,433,333
            $
            4,433
            $
            $1,072,680
            $
            (7,659,636)







The
      accompanying notes are an
      integral


part
      of these condensed consolidated
      statements




7


**DEJA
        FOODS,
        INC.**
  **CONDENSED
        CONSOLIDATED STATEMENTS
        OF CASH FLOWS**





Six
                Months Ended June
                30,2006
            
            2005(Unaudited)
            
            (Unaudited)Cash
                Flows from Operating
                ActivitiesNet
                loss
            $
            (5,095,883)
            $
            (703,868)Adjustments
                to reconcile net loss to net cashused
                by operating
                activities:Provision
                for
                bad debts
            
            7,528
            
            21,921Depreciation
                and amortization
            
            300,636
            
            52,222Income
                from
                unconsolidated subsidiary
            
            (22,506)
            
            -Stock
                option
                mark to market adjustment
            
            2,086
            
            -Stock
                based
                compensation
            
            190,271
            
            -Deferred
                taxes
            
            -
            
            (224,502)Impairment
                of
                long-term assets
            
            1,934,074
            
            -Changes
                in
                operating assets and liabilities:Accounts
                receivable
            
            23,393
            
            58,321Inventories
            
            2,408,850
            
            (1,066,016)Prepaid
                expenses and other
            
            (140,747)
            
            (55,752)Accounts
                payable and accrued expenses
            
            471,652
            
            881,115Net
                cash provided (used) by operating activities
            
            79,354
            
            (1,036,559)Cash
                Flows from Investing
                Activities(Increase)
                decrease in receivable from stockholder
            
            (57,250)
            
            5,064Increase
                in
                receivable from employees
            
            (4,367)
            
            (642)Payment
                of
                direct costs of M & L acquisition
            
            (10,751)
            
            -Capital
                expenditures
            
            (38,798)
            
            (17,413)(Increase)
                decrease in deposits
            
            1,152
            
            (8,372)Distributions
                from unconsolidated
                subsidiary
            
            13,190
            
            -Net
                cash used by investing activities
            
            (96,824)
            
            (21,363)Cash
                Flows from Financing
                ActivitiesBank
                overdraft
            
            -
            
            (50,322)Debt
                issuance costs
            
            (204,636)
            
            -Net
                proceeds
                from notes payable - bank and warrants
            
            2,515,803
            
            190,051Principal
                payments on notes payable
            
            (2,378,636)
            
            -Net
                proceeds
                from loan payable - affiliated company
            
            131
            
            687,011Principal
                payments on long-term debt
            
            (9,112)
            
            (10,510)Issuance
                of
                common stock
            
            -
            
            258,778Net
                cash (used) provided by financing activities
            
            (76,450)
            
            1,075,008Net
                Increase (Decrease) in
                Cash and Cash Equivalents
            
            (93,920)
            
            17,086Cash
                and Cash Equivalents,
                Beginning of period
            
            109,718
            
            713Cash
                and Cash Equivalents, End
                of period
            $
            15,798
            $
            17,799**SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION**Cash
                paid during the period
                for:Interest
            $
            571,309
            $
            287,886





The
      accompanying notes are an
      integral


part
      of these condensed consolidated
      statements




8




**DEJA
      FOODS,
      INC.**


CONDENSED **CONSOLIDATED
      STATEMENTS OF CASH FLOWS**





**(CONTINUED)**





Six
                Months Ended June
                30,2006
            
            2005(Unaudited)
            
            (Unaudited)**SUPPLEMENTAL
                DISCLOSURES OF NON-CASH****INVESTING
                AND
                FINANCING ACTIVITIES**Issuance
                of common stock for
                repayment of loanpayable-affiliated
                company
            $
            -
            $
            11,500Retirement
                of loan
                payable-affiliated company throughissuance
                of
                convertible debentures
            
            75,000Fair
                value adjustment of
                warrants related to convertible debentures
            
            23,908Furniture
                and fixtures
                acquired in connection withobligation
                under capital lease
            
            39,037




The
      accompanying notes are an
      integral


part
      of these condensed consolidated
      statements


9




**Deja
      Foods, Inc**


**Notes
      to Condensed Consolidated Financial Statements**


(Unaudited)





**Note
      1 - Basis of presentation**





Deja
      Foods, Inc. (the "Company") was incorporated in Nevada on August 7,
      2003 primarily to distribute food products to retailers, food banks,
      distributors, and government institutions on a wholesale level. The Company
      grants credit to its customers in the aforementioned areas of the food industry.
      These customers are located across several regions of the United States of
      America. The Company performs periodic credit evaluations of its customers
      and
      requires no collateral. The interim condensed consolidated financial statements
      included herein, presented in accordance with United States generally accepted
      accounting principles and stated in US dollars, have been prepared by the
      Company, without audit, pursuant to the rules and regulations of the Securities
      and Exchange Commission (SEC).  Certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with generally accepted accounting principles have been condensed or omitted
      pursuant to such rules and regulations, although the Company believes that
      the
      disclosures are adequate to make the information presented not
      misleading.





These
      statements reflect all adjustments, consisting of normal recurring adjustments,
      which, in the opinion of management, are necessary for fair presentation of
      the
      information contained therein.  It is suggested that these consolidated
      interim financial statements be read in conjunction with the financial
      statements of the Company for the year ended December 31, 2005 and notes thereto
      included in the Company's SB-2 Registrations statement.  The Company
      follows the same accounting policies in the preparation of interim reports.
      The
      consolidated financial statements include the accounts of Deja Foods, Inc.,
      and
      its wholly owned subsidiary M & L Wholesale Foods, LLC. All inter
      company transactions and balances have been eliminated in consolidation.
 The preparation of the Company's consolidated financial statements in
      conformity with U.S. generally accepted accounting principles requires the
      Company's 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. Actual results could differ
      from those estimates. The accompanying consolidated financial statements have
      been prepared on a going concern basis, which contemplates the realization
      of
      assets and the satisfaction of liabilities in the normal course of business.
      The
      consolidated financial statements do not include any adjustments relating to
      the
      recoverability and classification of recorded asset amounts or the amount and
      classification of liabilities that might be necessary should the Company be
      unable to continue as a going concern. The Company's continuation as a going
      concern is dependent upon its ability to generate sufficient cash flow to meet
      its obligations on a timely basis, to obtain additional financing and become
      profitable. These interim financial statements give effect for the August 14,
      2006 filing of a voluntary petition under chapter 11 of the US Bankruptcy Court
      by the Company.





The results
      for the six months ended June 30, 2006 are not necessarily indicative of
      the expected results for the full 2006 fiscal year or any future
      period.





**Note
      2 - History and organization of the company**





Deja
      Foods, Inc. (the "Company") was incorporated in Nevada on August 7,
      2003 primarily to distribute food products to retailers, food banks,
      distributors, and government institutions on a wholesale level.  As
      indicated in Note 10, on August 14, 2006 the registrant and its subsidiary
      filed
      voluntary petitions under Chapter 11 of the US Bankruptcy Code, filed in the
      US
      Bankruptcy Court for the Central District of California, San Fernando Valley
      Division, bankruptcy case numbers SV 06-11351-KT and SV 06-11352-KT,
      respectively.  The Company and its subsidiary have been managing their
      affairs as debtors in possession.





**Note
      3 - Property and Equipment and other long-lived assets**





Property
      and
      equipment was written down to estimated recoverable value at June 30, 2006.
       Accordingly, included in operating expense in the accompanying statements
      of operations is $250,992 related to this write down for the period ended June
      30, 2006.





Intangible
      assets, which consisted of fictitious name, goodwill and customer list, were
      written off in entirety at June 30, 2006.  Accordingly, included in
      operating expense in the accompanying statements of operations is $1,352,706
      related to this write down for the period ended June 30, 2006.




An
      investment of $330,376 in a related party (Deja Plus High-Yield Fund, LLC)
      was
      considered fully impaired and written off as of June, 30, 2006.  Total
      impairment expense of $1,934,074 has been recognized for the six months ended
      June 30, 2006.




Depreciation
      and amortization expenses totaled $63,850 and $16,231 for the six months ended
      June 30, 2006 and 2005 and $32,531 and $8,356 for the three months ended
      June 30, 2006 and 2005, respectively.




10




**Deja
        Foods, Inc**
  **Notes
        to Condensed Consolidated Financial Statements**
 (Unaudited)





**Note
      4 - Debt and interest
      expense**





In
      April 2006, the Company obtained a new revolving line ("the Line") of
      credit facility allowing the Company to borrow up to $5 million based on
      90% of eligible accounts receivable and 60% of eligible inventory. The term
      of
      the Line was for three years. The interest rate is 3% per annum above the prime
      rate. The initial funding was approximately $2.5 million. Proceeds from the
      initial funding were partially used to retire the existing Notes Payable with
      the exception of the Demand Note and the Note Payable to former owner of
      M & L. The initial funding included a $500,000 over advance to be
      repaid within six months.





The lender
      also received a common stock purchase warrant entitling it to purchase up to
      1,053,550 shares of the Company's common stock for $0.001 per share. In
      addition, the Company was obligated under a Registration Rights Agreement to
      file a registration statement with the Securities and Exchange Commission
      covering the shares of common stock issuable upon exercise of the warrant.
      The
      warrant allowed settlement in unregistered shares of the Company's common
      stock.





The exercise
      of the warrant by the holder could have been made either by physical settlement
      (cash), or net settlement (a net number of shares are received based on the
      excess of the fair market value of the stock over the exercise price) or a
      combination of the two methods.





The number
      of shares purchasable and the exercise price were subject to certain adjustments
      for dilutive transactions and for recapitalizations of the Company's
      stock.





The warrant
      has been valued at $1,053,550. Since the Company may be liable for rescission
      payments in connection with the note and related warrant, a potential for cash
      settlement exists whereby, at the option of the holder, the warrant would be
      redeemed by the Company for a payment of cash to the holder. Therefore, in
      accordance with the provisions of EITF 00-19 the value of the warrant has
      been reflected as a liability and debt discount on the Company's balance sheet.
      The debt discount is netted against the related note payable on the balance
      sheet and is being amortized to interest expense over the term of the note
      payable using the effective interest method. This valuation was based on
      expected volatility of 38%, risk-free interest rate of 4.817%, expected dividend
      yield of 0% and expected term of 6 years





In August
      2006, the Company was in default of its senior secured debt.  Accordingly
      the debt became immediately due and payable.  Prepaid loan fees of $116,071
      were charged to expense in the period ended June 30, 2006 as a result of the
      acceleration of this debt.




11




**Deja
        Foods, Inc**
  **Notes
        to Condensed Consolidated Financial Statements**
 (Unaudited)





The Company
      defaulted on the two notes payable to the former owner of M & L
      (one on June 25, 2006 and one on July 10, 2006) because it hadn't made
      certain required payments. The default provisions of the notes state the entire
      unpaid note balance and accrued, unpaid interest may be declared immediately
      due
      and the interest rate increased to 12% per annum. In July 2006 the Company
      was declared in default on one of the two notes, with a principal balance of
      approximately $173,000.  Interest expense in the accompanying statements of
      operations includes $19,031 for the six-month period ended June 30, 2006 related
      to these notes.





The Company
      did not make interest payments due May 1, June 1 or July 1, 2006
      on the loan payable to its affiliated company or convertible debenture holders.
      There is no acceleration feature in either of these obligations for non-payment
      of interest.





The payment
      defaults on the notes payable to former owner of M & L, loan
      payable to affiliated company and convertible debenture holders have caused
      a
      technical default on the April 2006 line of credit. Accordingly, the lender
      had the right to declare the entire principal balance due in full, foreclose
      on
      the Company's assets and increase the interest rate by 1.5% per month. However,
      the lender did not exercise his rights on this payment default.





**Note
      5 - Stockholders' equity**





Stock
      Split





In
      November 2004, the Company approved a 3.550972 for one forward stock split
      of the issued and outstanding common shares. All share information and per
      share
      data have been retroactively restated for all periods presented to reflect
      the
      stock split.





Common
      Stock





In January,
      February and March 2005, 11,500 shares of common stock were issued in
      exchange for the repayment of affiliated company debt of $11,500. In addition,
      258,778 shares were sold in connection with the Company's private placement
      of
      its securities for $1.00 per share.





In
      December 2005, 333,333 shares of common stock were issued as partial
      payment of the acquisition price of M & L. These shares were
      valued at $1.00 per share based on the price of shares recently sold by the
      Company to other unrelated parties.





2005
      Stock Option Plan





In
      January 2005, the Company adopted a stock option plan (the "2005 Stock
      Option Plan" or the "Plan"), which provides for the grant of both incentive
      stock options and non-statutory options. A total of 250,000 shares have been
      reserved for issuance under the 2005 Stock Option Plan.





In
      January 2006 the Plan was amended to increase the total number of shares
      reserved for issuance to 350,000. In February and March 2006, the plan was
      amended again to increase the total to 500,000 and then 1,000,000 shares,
      respectively.





No
      options have been issued in accordance
      with the plan during the six months ended June 30, 2006.





**Note
      6 - Commitments and
      contingencies**


Lease
      Arrangements





All leases
      described below were terminated at the time of filing for Bankruptcy under
      Chapter 11.





The Company
      leased its corporate headquarters under a long-term leasing arrangement, which
      was due to in August 2009.





In
      November 2005 the Company entered into a lease for office space in New York
      City. The lease became effective when the space was ready for occupancy in
      February 2006. The lease was to expire in January 2011.





The Company
      also leased vehicles and certain office equipment under operating leases that
      were terminated.





The Company
      subleased a portion of its headquarters location to a company controlled by
      a
      member of the Company's Board of Directors.




12




**Deja
      Foods, Inc**


**Notes
        to Condensed Consolidated Financial Statements**
 (Unaudited)


**7.
       Related Party Transactions**





Revolving
      Credit Agreement





In 2003,
      a
      revolving credit agreement for up to $250,000 was entered into between the
      Company and the Company's President. The agreement calls for interest at 10%
      per
      annum payable upon demand. The Company and its President verbally agreed that
      this agreement will be in effect for advances made from the President to the
      Company as well as from the Company to its President. Interest expense includes
      $3,396 for the year ended December 31, 2004 related to this agreement.
      Interest income includes $13,475 and $1,811 for the years ended
      December 31, 2005 and 2004, respectively, pursuant to this agreement.
 In addition, for the six months ended June 30, 2006 interest income in the
      amount of $8,727 was accrued.





Loan
      Agreement





In 2004,
      the
      Company's President, David Fox, formed and became Manager of Deja Plus. Deja
      Plus agreed to provide loans of up to the total available funds of Deja Plus
      to
      the Company. The Company agreed to pay a fee to Deja Plus equal to the greater
      of (i) 12% per annum of the funds available from the Fund to the Company or
      (ii) 25% of the gross profits from the purchase and resale of food products
      by the Company generated utilizing the funds from the Fund.





As Fund
      Manager, Mr. Fox had exclusive control over the business of the Fund. The
      Manager's duties included dealing with Members; responsibility for tax,
      accounting and legal matters; performing internal reviews of the Fund's
      investments and loans; evaluating funds advanced under the agreement with the
      Company; determining how and when to invest the Fund's capital, and determining
      the course of action to take if the Fund's loans are in default.





Notwithstanding
      the above, the Manager
      could not impair the Fund's ability to carry on or change the nature of the
      Fund's business. It is stated in the Fund's operating agreement that the primary
      purpose of the Fund was to fund the bulk purchase of food products of the
      Company. The Manager may only complete the duties as explicitly stated in the
      Fund operating agreement.





As part
      of
      the agreement it was agreed that the food products purchased by the Company
      will
      be funded by Deja Plus if Deja Plus has sufficient cash to fund each purchase.
      If Deja Plus does not have sufficient cash, the Company can elect to purchase
      the food products with its own funds or those of third parties. Deja Plus's
      Private Placement Memorandum states that the only business activity is to fund
      the inventory purchases of Deja Foods, Inc.





The Company
      owes Deja Plus $1,942,013 under this agreement at June 30, 2006. This
      amount is reflected as Loan payable-affiliated company in the accompanying
      consolidated balance sheet. Interest expense includes $120,322 and $155,096
      related to this agreement for the 6 months ended June 30, 2006 and 2005,
      respectively.





Entities
      controlled by Larry Kosmont, a member of the Company's board of directors,
      are
      holders of $380,000 of the 10% convertible debentures the Company has issued.
      These entities have also received 218,500 warrants to purchase the Company's
      common stock for $1.50 per share through November 30, 2007. The debentures
      are convertible into the Company's common stock at $1 per share through
      November 30, 2007.





The Company
      leased its Denver, PA office space from the company owned by the father of
      the
      former owner of M & L, and current Deja Foods officer/director, on
      a one year lease which automatically renews for one year from year to year
       This lease has been terminated





Interest
      expense in the accompanying statements of operations includes $19,000 for the
      period ended June 30, 2006 related to a convertible debenture (note 4) holder
      who was an officer of the Company.





**10.
       Subsequent Events**





Voluntary
      Bankruptcy Petition





Realization
      of the assets and payment of the liabilities reflected in the accompanying
      statements of financial position are dependent upon the among other things,
      management of the Company submitting a plan of reorganization to the Court,
      the
      Court approving the Plan and the cooperation of the creditors of the
      Company.




13




**Deja
      Foods, Inc**


**Notes
        to Condensed Consolidated Financial Statements**
 (Unaudited)





On October
      4, 2007 the registrant appeared in the United States Bankruptcy Court to present
      combined disclosure statements of Deja Foods, Inc. and M&L Wholesale Foods
      describing their Chapter 11 plan of reorganization.  This joint
      reorganization plan under which creditors of the Debtors will receive free
      trading stock in two reorganized and recapitalized companies in exchange for
      their debt was approved by the court.  The companies currently have no
      assets of any appreciable value and creditors would receive nothing in the
      event
      of a liquidation of the Debtors.  Under the Plan upon confirmation, the
      reorganized debtors will acquire intellectual property, operating capital,
      an
      operating business and other assets of value.





Convertible
      Debentures





During
      the
      fourth quarter of 2006, holders of $535,000 in convertible debentures, with
      related warrants for 296,000 shares of common stock, rescinded their debenture
      agreements.  Consistent with the manner in which the original transaction
      was recorded, the effect of these recessions will be to reduce the debenture
      liability with a corresponding increase in the loan payable to Deja Plus High
      Yield Income Fund, LLC.





The
      following pro forma balance sheet is presented below in order to show the effect
      as of June 30, 2006 of the August 14 bankruptcy petition in which the secured
      lender took possession of the collateral.  This pro forma information is
      not necessarily indicative of how the actual transaction will be recorded in
      the
      third quarter of 2006, nor is it necessarily all inclusive.





Pro
      Forma Condensed Consolidated Balance
      Sheet





June
      30, 2006





Pro
                FormaAs
                Reported
            
            Adjustments
            
            
            Pro
                  FormaASSETSCurrent
                Assets
            $
            3,492,637
            $
            (3,191,461)
            1,
                2
            $
            301,176Property
                and Equipment, net
            
            174,647
            
            (19,647)
            3
            
            155,000Other
                Assets
            
            36,430
            
            -
            
            
            36,430Total
                Assets
            $
            3,703,714
            $
            (3,211,108)
            
            $
            492,606LIABILITIES
                AND STOCKHOLDERS' DEFICITCurrent
                Liabilities
            $
            9,457,606
            $
            (3,211,108)
            1,
                2, 3
            $
            6,246,498Warrant
                Liability
            
            1,053,550
            
            -
            
            
            1,053,55010,511,156
            
            (3,211,108)
            
            
            7,300,048Stockholders'
                Deficit
            
            (6,807,442)
            
            -
            
            
            (6,807,442)$
            3,703,714
            $
            (3,211,108)
            
            $
            492,606





1: 
Transfer
                of receivables to secured lender
            
            1,322,1802: 
Transfer
                inventory to secured lenders
            
            1,869,2813: 
Transfer
                fixed assets to secured lender
            
            19,647




14




**Changes
      in and Disagreements with
      Accountants**





On
      August 30, 2006 Mayer Hoffman McCann
      P.C. resigned as the Company’s principal certifying accountants.  None of
      the reports of Mayer Hoffman McCann P.C. on the financial statements of the
      Registrant contained any adverse opinion or disclaimer of opinion, or was
      qualified or modified as to uncertainty, audit scope or accounting principles,
      except as follows:  Mayer Hoffman McCann P.C.’s report on our financial
      statements as of and for the year ended December 31, 2005 contained a separate
      paragraph, stating that:





The
      accompanying consolidated financial
      statements have been prepared assuming the Company will continue as a going
      concern. As shown in the consolidated financial statements, the Company incurred
      a net loss of $2,338,618 and $403,726 during the years ended December 31,
      2005 and 2004, respectively. The Company also had negative working capital
      of
      $2,400,886 as of December 31, 2005. As discussed in Note 1 to the
      consolidated financial statements, the Company's significant operating losses
      and negative working capital raise substantial doubt about its ability to
      continue as a going concern. Management's plans in regard to these matters
      are
      also discussed in Note 1. The consolidated financial statements do not
      include any adjustments that might result from the outcome of this
      uncertainty.





During
      the Registrant’s two most recent
      fiscal years and during any subsequent interim periods preceding the date of
      termination, there were no disagreements with Mayer Hoffman McCann P.C. on
      any
      matter of accounting principles or practices, financial statement disclosure,
      or
      auditing scope or procedure, which disagreement(s), if not resolved to Mayer
      Hoffman McCann P.C. satisfaction, would have caused them to refer to the subject
      matter of the disagreement(s) in connection with their report; and there were
      no
      "reportable events" as defined in Item 304 (a)(1)(v) of the Securities and
      Exchange Commission's Regulation S-K.





As
      of September 19, 2007, the Registrant
      has engaged Grobstein, Horwath & Company LLP, 15233 Ventura Boulevard,
      Sherman Oaks, California 91403-2201, as its independent registered public
      accounting firm commencing September 19, 2007, for the year ended December
      31,
      2006.  During the most recent two years through September 19, 2007 (the
      date of engagement), neither the Registrant nor anyone engaged on its behalf
      has
      consulted with Grobstein, Horwath, & Company LLP regarding: (i) either the
      application of accounting principles to a specified transaction, either
      completed or proposed; or the type of audit opinion that might be rendered
      on
      the Registrant's financial statements; or (ii) any matter that was either the
      subject of a disagreement (as defined in Item 304(a)(1)(v) of Regulation
      S-K).





A
      Form 8-K has been filed with the
      Commission regarding this matter.




15




**Management's
      Discussion and
      Analysis or Plan of Operations**








Forward-Looking
      Statements





This
      Quarterly Report contains forward-looking statements about our business,
      financial condition and prospects that reflect management's assumptions and
      beliefs based on information currently available.  We can give no assurance
      that the expectations indicated by such forward-looking statements will be
      realized.  If any of our management's assumptions should prove incorrect,
      or if any of the risks and uncertainties underlying such expectations should
      materialize, Deja Foods, Inc actual results may differ materially from those
      indicated by the forward-looking statements.





The key
      factors that are not within our control and that may have a direct bearing
      on
      operating results include, but are not limited to, acceptance of our services,
      our ability to expand our customer base,  management’s ability to raise
      capital in the future, the retention of key employees and changes in the
      regulation of our industry.





There
      may be other risks and circumstances
      that management may be unable to predict.  When used in this Quarterly
      Report, words such as,
 "believes,"  "expects,"
      "intends,"  "plans,"  "anticipates," "estimates" and
      similar expressions are intended to identify forward-looking statements,
      although there may be certain forward-looking statements not accompanied by
      such
      expressions.





**Overview**





We are
      a
      nationwide food distributor that offers food products in bulk quantities for
      sale to price sensitive, high volume purchasers such as prisons, mental health
      facilities and governmental agencies, which we refer to as the "institutional"
      part of our business. We also sell our food products in bulk directly and
      through distributors to deep discount food stores ranging from small independent
      retailers to chain discount stores, such as Dollar Tree, 99 Cents Stores and
      Big
      Lots. We refer to our sales to discount food stores as the "retail" part of
      our
      business.





Often,
      we
      obtain the food products we sell to our institutional and retail customers
      from
      manufacturers who contact us regularly when they experience over production,
      cancelled orders or label changes. These manufacturers regard our distribution
      systems as an efficient way to liquidate their inventory without using their
      own
      sales networks. In overstock situations, these manufacturers are willing to
      deeply discount their prices to us because our distribution channels do not
      compete with their customary sales channels. We make these "opportunity"
      purchases from a number of multinational food manufacturers, including Con
      Agra,
      Del Monte, National Frozen Foods and Cool Brands.





We also
      arrange for "continuity" purchases of food products on a regular and ongoing
      basis from specific manufacturers which we sell to our retail and institutional
      customers. Many of our food products, which we obtain regularly from domestic
      and overseas manufacturers, are manufactured for us under our own "Deja FoodsTM"
      label.





From our
      inception in August 2003 through June 30, 2006 we experienced rapid growth
      in sales, marketing, development of a system of rented warehouse capacity and
      distribution channels situated strategically for geographic coverage, and we
      created a corporate infrastructure. We believed the need to build a corporate
      structure to ensure adequate personnel to perform the accounting, sales and
      marketing and distribution functions and to establish a warehouse capacity
      based
      upon our specific product inventory requirements was critical to our long term
      success. We also believed our pallet by pallet warehousing methodology would
      minimize storage costs and financial commitments as we only rent warehouse
      space
      at the time of the actual storage requirement. These corporate level efforts,
      while developing sales growth in our institutional and retail business, severely
      impacted our operating margins and cash flow and our overall results during
      2005
      and the six months ended June 30, 2006.


.


The report
      of our independent registered public accounting firm on our financial statements
      as of December 31, 2005 and for the years ended December 31, 2005 and
      2004 contained an explanatory paragraph expressing substantial doubt about
      our
      ability to continue as a going concern based upon our net losses and negative
      working capital. Our continuation as a going concern was dependent upon our
      ability to generate sufficient cash flow to meet our obligations in a timely
      manner, to obtain additional financing as needed and become profitable. Our
      continued existence was dependent upon our ability to achieve our operating
      plan
      which included: (1) Strategic moves to place greater emphasis on returning
      to higher margin business. Specifically ,utilizing capital resources to take
      advantage of close out opportunities rather than a concentration on the
      continuity business, (2) full integration of the Deja Foods' food service
      operations with the sales and distribution operations of M & L
      Wholesale Foods in the Northeastern part of the United States, thus improving
      efficiencies in sales, marketing and logistics, (3) continuing to build
      customer base through improved distribution capabilities, and (4) issuing
      additional equity or debt securities as appropriate. During the six months
      ended
      June 30, 2006 we did not issue any additional securities.





On August
      14, 2006, we filed a voluntary bankruptcy petition with the U.S. Bankruptcy
      Court. Subsequently, on October 4, 2007 we appeared in the United States
      Bankruptcy Court to present combined disclosure statements of Deja Foods, Inc.
      and M&L Wholesale Foods describing our Chapter 11 plan of reorganization.
 This joint reorganization plan under which creditors of the Debtors will
      receive free trading stock in two reorganized and recapitalized companies in
      exchange for their debt was approved by the court. Upon plan confirmation,
      reorganization debtors will acquire valuable intellectual property (related
      to
      Buckaroos Stores and exclusive rights to develop license and/or franchise
      additional Buckaroos Stores),  operating capital (royalty fees on original
      Buckaroos Stores,) and an operating business (100% interest in a fully stocked
      operating flagship store).  The reorganized M&L Wholesale Foods will
      receive a $150,000 cash infusion from Deja Foods to resume their institutional
      business.




16




**Management's
      Discussion**





Three
      and Six Months Ended June 30,
      2006 Compared to the Three and Six Months Ended June 30, 2005





Sales
      Revenue and Cost of
      Sales





Net sales
      continued to increase during the three months and six months ended June 30,
      2006
      compared to those during the three months and six months ended June 30, 2005.
      Net sales increased by 34.4% and 56.0% for the three months and six months
      ended
      June 30, 2006 compared to the three months and six months ended June 30, 2005
      respectively. However, our cost of goods sold increased faster than sales.
      For
      the three months and six months ended June 30, 2006, cost of goods sold
      experienced a growth of 51.4% and 70.3% compared to the respective period in
      2005. This increase in cost of goods sold is attributed to several
      factors:





(1)


Lack
      of sufficient capital to take full
      advantage of opportunity purchases presented. Our negative working capital
      and
      our cumulative losses inhibited cash flow which severely restricted our ability
      to take advantage of the level of opportunity purchases needed for continued
      growth in higher margin products.





(2)


The
      closing of our warehouse sites in
      Garland, Texas and Savannah, Georgia and moving unsold product from these sites.
      We often sold product from these warehouses at cost or below in order to avoid
      the cost of relocating the inventory to our remaining warehouse
      sites





(3)


Increase
      in freight costs due to the rising
      price of fuel.





(4)


Increase
      in storage costs. Excess inventory
      resulted in slower inventory turns and higher storage charges.





Our
      gross profit percentage has experienced
      a significant decrease on a downward slope since December 31, 2004 for the
      reasons indicated above (the impact of closing two warehouses impacted gross
      profit for the six months ended June 30, 2006). We have reviewed our product
      lines (closeouts and continuity) and sales categories (opportunity and retail)
      and have identified this mix changed from an even split between institutional
      and retail sales for the year ended December 31, 2005 to a status that has
      retail sales approaching 60% of sales for the six months ended June 30, 2006.
      There has also been a shift to lower margin continuity sales for the three
      months ended June 30, 2006 of 41% of net sales versus 38% for the three months
      ended June 30, 2005. As indicated in the table below, we experienced
      insignificant decreases in operating results for the three and six months ended
      June 30, 2006 compared to the same periods in 2005.  This is a result of
      the mix of business, rapid growth in operating costs including the cost of
      products.





The
      table below depicts sales and gross
      profit comparative data for the three months and six months ended June 30,
      2006 and 2005 .:





**Three
                Months
                Ended**
              **June
                30,
                2006**
            **Three
                Months
                Ended**
              **June
                30,
                2005**
            **Six
                Months
                Ended**
              **June
                30,
                2006**
            **Six
                Months
                Ended**
              **June
                30,
                2005****(unaudited)**
            **(unaudited)**
            **(unaudited)**
            **(unaudited)**Net
                Sales
            $3,472,258
            $2,584,223
            $8,165,361
            $5,232,587Cost
                of Sales
            $3,510,432
            $2,319,516
            $7,908,860
            $4,643,216Gross
                Profit
            $(38,174)
            $264,708
            $256,501
            $589,371Gross
                Profit %
            (1.1)%
            10.2%
            3.1%
            11.3%





**Selling,
      General and Administrative
      Expenses**





As indicated
      below, SG & A increased as a percentage of sales for the three months
      ended June 30, 2006 compared to the three months ended June 30, 2005 due mainly
      to the three factors described above: (1) building a long term employee
      base for sales and corporate office operations, along with related office
      expenses and marketing efforts (2) and legal and professional fees related
      to registering our common stock, and recording  accelerated compensation
      expenses ($178,900) related to employee stock options due to the bankruptcy
      filing (3) selling expenses for the six months ended June 30, 2006 of $516,882
      were 3 times higher than selling expenses for the 6 months ended June 30, 2005.
      This significant increase was due to the increase of employee sales personnel..
      Legal and professional fees related to the registration process were
      approximately $175,000 for the six months ended June 30, 2006 . Legal and
      professional fees not related to the registration process were approximately
      $280,000 compared to $171,000 during the six months ended June 30, 2005, an
      increase of approximately $109,000, due primarily to increases in directors'
      fees, investor relations expenses and accounting fees. Demurrage was
      approximately $98,400, during the six months ended June 30, 2006 compared to
      $0
      expended in the six months ended June 30, 2005, and represents finance charges
      on our imported products for time periods we were unable to take possession
      due
      to lack of available funds.





17





**Three
                Months
                Ended**
              **June
                30,
                2006**
            **Three
                Months
                Ended**
              **June
                30,
                2005**
            **Six
                Months
                Ended**
              **June 30,
                2006**
            **Six
                Months
                Ended**
              **June
                30, ,
                2005****(unaudited)**
            **(unaudited)**
            **(unaudited)**
            **(unaudited)**Selling
                Expense
            $197,108
            $88,419
            $516,882
            $156,474General &
                Administrative Expense
            $1,178,673
            $637,953
            $2,087,218
            $1,154,374Total
            $1,375,781
            $726,372
            $2,604,100
            $1,310,848Selling,
                General &
                Administrative Expense as a % of Sales
            39.6%
            28.1%
            31.9%
            25.1%




Since
      we ceased operations on August 14,
      2006 concurrent with the bankruptcy filing we determined that the entire
      intangible asset balance should be written off as there were insufficient
      projected future cash flows to justify maintaining the balance forward.
  In addition, we wrote down property and equipment to estimated
      disposal value and the investment in our affiliated company. The total of these
      adjustments of $1,934,074 was recorded as impairment expense and included in
      operating expenses.





Liquidity
      and Capital
      Resources




As of June
      30, 2006 we experienced a decrease in accounts receivable of approximately
      $31,000 over accounts receivable as of June 30, 2005. Inventory decreased by
      approximately $2,408,850 for the six months ended June 30, 2006 compared to
      the
      six months ended June 30, 2005. Due to the lack of working capital the 34.4%
      increase in sales growth resulted in a 13% increase in accounts payable and
      a
      lengthening of our days payable outstanding ratio.





The cost
      and
      availability of capital resources continued to be a limiting factor to our
      growth and profitability during the six months ended June 30, 2006. In order
      to
      finance this growth, we  aggressively pursued a strategy designed to ensure
      adequate capital resources for the long term. This strategy was a continuation
      of our objectives enumerated at the end of 2004. The strategic and tactical
      objectives that we pursued included the following: (1) obtain adequate
      working capital as we believed our business model was working but funding growth
      during our early stages was critical to the success of this model,
      (2) significantly reducing short term debt, (3) eliminating any
      potential conflicts of interest with the Fund, (4) increasing our bank line
      of credit and borrowing base that reflected our accounts receivable and
      inventory level requirements, and (5) completing acquisitions that
      profitably supported our growth objectives. We also sought a means of equity
      financing that we could do on terms which we believed to be fair, reasonable
      and
      would help us achieve our stated goals. We were not successful with our
      endeavors and as a result we entered bankruptcy proceedings on August 14,
      2006.





During
       the six months ended  June 30, 2006 and subsequently we attempted to
      accomplish the following prior to our bankruptcy filing:





(1)


In
      November 2005 through
      January 2006, , we sold $1,153,500 face amount of convertible subordinated
      debentures and intended to offer up to a total of $5,000,000 of debentures.
      We
      sold the debentures in units, each Unit consisting of a $10,000 Debenture and
      5,000 warrants. The warrants were exercisable to purchase our common stock
      based
      upon a purchase price of $1.50 per share at any time up until November 30,
      2007. The debentures, issued in $10,000 denominations, were convertible into
      our
      common stock based upon a purchase price of $1.00 per share at any time up
      until
      November 30, 2007. The debentures were to pay interest until conversion or
      maturity on November 30, 2007 at the rate of 10% per annum, payable
      monthly. The debentures were unsecured and are subordinated to all of our
      secured debt, including our lines of credit. We believed, that had we sold
      the
      maximum $5,000,000 offering, this debenture financing would have provided us
      adequate working capital, enabled us to finance our M & L Wholesale
      Foods acquisition, repay the bridge loan due March 31, 2006 and fully or
      partially replace the Deja Plus High Yield Income Fund debt with debt that
      would
      have had a lower cost of funds to us.





(2)


Recognizing
      we were unable to raise an
      adequate level of working capital, we continued our endeavors to obtain a long
      term revolving credit facility to meet our sales growth objectives and reduce
      short term debt including the Neptune loan. We also recognized that we had
      to
      take active internal steps to reduce our negative working capital situation.
      During the six months ended June 30, 2006 we reduced our warehousing operations
      in Texas and Georgia in order to eliminate operating and overhead expenses,
      focused our M & L subsidiary operations on higher margin business,
      initiated longer payment terms with our vendors, and extended our note with
      M & T Bank for an additional 90 days. On March 28, 2006 we
      signed a commitment letter with the Laurus Master Fund, Ltd. for a three year
      revolving credit facility with an interest rate of prime plus 3% subject to
      a
      floor of 10%. The facility had a maximum availability of up to $5,000,000 based
      upon accounts receivable at an advance rate of 90% of eligible accounts and
      an
      advance rate of 60% of eligible inventory capped at $2,500,000. The credit
      facility closed on April 21, 2006 and we were funded in the approximate
      amount of $2,500,000 on April 25, 2006. Included in the initial funding was
      an over formula advance of $500,000 that was required to be repaid within six
      months. We utilized these funds as indicated above including repaying Neptune
      Company Asset Holdings, M & T Bank and Celtic Capital Corporation.
      Laurus Master Fund, Ltd. received a common stock purchase warrant for the
      purchase of up to 1,053,550 shares of our common stock for $0.001 per share
      as
      additional consideration for the credit facility. The warrant was valued at
      $1,053,550. and reflected as a liability and debt discount on our balance sheet.
      The debt discount was netted against the line of credit facility on the balance
      sheet and amortized to interest expense initially over the three year term
      of
      the line of credit facility using the effective interest method. We did not
      believe use of the Laurus Master Fund, Ltd. for working capital was in conflict
      with the Deja Plus High Yield Income Fund as we were only required to use the
      Deja Plus High Yield Income Fund subject to the Fund having additional funds
      available and as of March 31, 2006 we had used all funds available for
      lending to us from the Fund and received no further funding from the Fund
      through the six months ended June 30, 2006.




18




(3)


Subsequent
      to our funding by Laurus Master
      Fund, Ltd., our negative working capital position combined with the need to
      continue to pay down our accounts payable vendors and additional operational
      losses resulted in us not making required payments due on  loans described
      below:





(a)


Note
      payable to former owner of
      M & L Wholesale Foods-as of July 10, 2006, for non-payment of
      interest, we were in default on a note with a balance of approximately $333,000,
      with a stated maturity date of February 2007. Payments of interest only at
      the rate of 6% per annum were payable monthly. The default provisions of the
      note stated the holder could declare the entire unpaid balance of the note
      and
      all accrued unpaid interest immediately due. Additionally, the default interest
      rate was 12% per annum. The holder has not issued a notice of
      default.





(b)


Note
      payable to former owner of
      M & L Wholesale Foods-as of June 25, 2006, for non-payment of
      principal, we were in default on a note with a balance of approximately
      $173,000, with a stated maturity date of February 2007. Principal of
      $10,000 was payable semi-monthly and interest at the rate of 9% per annum was
      payable monthly. The default provisions of the note stated the holder could
      declare the entire unpaid balance of the note and all accrued unpaid interest
      immediately due. Additionally, the default interest rate was 12% per annum.
      On
      July 17, 2006, the holder issued a notice of default. Without limiting
      their rights or remedies, the holder stated in the notice of default a desire
      to
      seek an amicable solution.





(c)


Loan
      payable to Deja Plus High Yield Income
      Fund-we did not make interest payments due May 1, June 1 and
      July 1, 2006. The loan has an approximate balance of $1,942,000 as of June
      30, 2006 and runs through March 2009. Monthly interest is currently
      approximately $20,000. There is no accelerating feature if payments are not
      made.





(d)


Convertible
      debenture notes payable-we did
      not make interest payments due May 1, June 1 and July 1, 2006.
      The notes have a balance of $1,153,500 and are due November 30, 2007.
      Monthly payments are currently approximately $9,600, consisting of interest
      only
      at the rate of 10% per annum. There is no accelerating feature if payments
      aren't made.





These
      payment defaults  also caused a technical default on our line of credit
      with Laurus Master Funds, Ltd. The line of credit expires in April 2009 and
      bears interest at 3% per annum above the prime rate and had a balance of
      approximately $2,438,000 as of June 30, 2006. When we defaulted, the lender
      had
      the right to demand repayment of the loan in full, the ability to foreclose
      upon
      our assets and to increase the interest rate by 1.5% per month. Resolution
      of
      our default with Laurus Master Funds is addressed in our Plan of Reorganization
      submitted to the US Bankruptcy Court and approved on October 4,
      2007.





Working
      Capital





Net working
      capital is an important measure of our ability to finance our operations. While
      our net working capital at, December 31, 2005 and June 30, 2006 was
      negative; we believed that when other factors were considered, including our
      investment in and the use of the Deja Plus High Yield Fund, our asset based
      line
      of credit with Laurus Master Fund, Ltd. and our accounts receivable turnover,
      we
      had a minimum essential level of capital available to meet our needs. As
      indicated in our description of subsequent events and our filings in US
      Bankruptcy Court we did not have the necessary level of working capital to
      sustain operations during the period following June 30, 2007 and subsequently
      filed for bankruptcy on August 14, 2006.





We
      do not have any off-balance sheet
      arrangements.





**Controls
      and
      Procedures**





We have
      established a set of disclosure controls and procedures designed to ensure
      that
      information required to be disclosed by us in our reports filed under the
      Securities Exchange Act, is recorded, processed, summarized and reported within
      the time periods specified by the SEC's rules and forms.  Disclosure
      controls have also designed with the objective of ensuring that this information
      is accumulated and communicated to our management, including our chief executive
      officer and chief financial officer, as appropriate, to allow timely decisions
      regarding required disclosure.  We believe our disclosure controls and
      internal controls are effective for the six months ended June 30,
      2006.




We do not
      expect that our disclosure controls or internal controls over financial
      reporting will prevent all errors or all instances of fraud.  A control
      system, no matter how well designed and operated, can provide only reasonable,
      not absolute, assurance that the control system's objectives will be met.
 Further, the design of a control system must reflect the fact that there
      are resource constraints, and the benefits of controls must be considered
      relative to their costs.  Management is required to apply its judgment in
      evaluating the cost-benefit relationship of possible controls and procedures.
      Because of the inherent limitations in all control systems, no evaluation of
      controls can provide absolute assurance that all control issues and instances
      of
      fraud, if any, within our company have been detected.  These inherent
      limitations include the realities that judgments in decision-making can be
      faulty, and that breakdowns can occur because of simple error or mistake.
 Because of the inherent limitation of a cost-effective control system,
      misstatements due to error or fraud may occur and not be detected. We did not
      implement any changes in control during the six month period ending June 30,
      2006.




19




**PART
      II - OTHER
      INFORMATION**





**Legal
      Proceedings**





No
      Director, officer, significant employee,
      or consultant of Deja Foods, Inc. has been convicted in a criminal proceeding,
      exclusive of traffic violations.





No
      Director, officer, significant employee,
      or consultant of Deja Foods, Inc. has been permanently or temporarily enjoined,
      barred, suspended, or otherwise limited from involvement in any type of
      business, securities or banking activities.





No
      Director, officer, significant employee
      or consultant of Deja Foods, Inc. has been convicted of violating a federal
      or
      state securities or commodities law.





On August
      14, 2006 Deja Foods, Inc filed a voluntary petition under Chapter 11 of the
      US
      Bankruptcy Code, filed in the US Bankruptcy Court for the Central District
      of
      California, San Fernando Valley Division, bankruptcy case number SV
      06-11351-KT.  The registrant has been managing its affairs as a debtor in
      possession.





On October
      4, 2007 the registrant appeared in the United States Bankruptcy Court to present
      combined disclosure statements of Deja Foods, Inc. and M&L Wholesale Foods
      describing their Chapter 11 plan of reorganization.  This joint
      reorganization plan under which creditors of the Debtors will receive free
      trading stock in two reorganized and recapitalized companies in exchange for
      their debt was approved by the Court.  The companies currently have no
      assets of any appreciable value and creditors would receive nothing in the
      event
      of a liquidation of the Debtors.  Under the Plan upon confirmation, the
      reorganized debtors will acquire intellectual property, operating capital,
      an
      operating business and other assets of value.





**Unregistered
      Sales of Equity
      Securities**





In the
      last
      three years, we have issued the following shares of our unregistered securities:





(i)  In
      August 2003 we issued 1,000,000 shares for $1,000 cash to our founder and
      Chief Executive Officer, David Fox, and in November 2004 we split the
      shares on the basis of 3.550972 shares for each share outstanding. All 1,000,000
      shares were valued at $.001 per share and issued for cash, pursuant to the
      exemption provided by Section 4(2) of the Securities Act of 1933, as
      amended (the "1933 Act"). Subsequently, Mr. Fox gifted 10,000 shares to
      three individuals.




(ii)  In
      November 2004 and January 2005 we issued 59,028 shares, including the three
      individuals who received shares directly from Mr. Fox, all of whom were our
      employees, directors, consultants or family members or friends of Mr. Fox
      for cash ($240) or services ($25,000) valued at $.01 to $1.00 per share and
      pursuant to the exemption provided by Section 4(2) of the 1933 Act:




(iii)  Between
      December 2004 and March 2005, we issued a total of 500,000 shares, for
      $401,000 cash and $99,000 for repayment of loan payable—affiliated company, to
      the following investors at $1.00 per share.





(iv)  Between
      November 2005 and January 2006 we exchanged 10% convertible
      subordinated debentures to the following persons in the face amounts indicated
      below for the face amounts of membership interests set forth below. Each
      investor also received one warrant for each $2.00 face amount of debentures
      purchased. All of the investors listed below exchanged their interests (at
      their
      cost) in the Deja Plus High Yield Income Fund for debentures, except
      Mr. Mann who purchased $20,000 of debentures for cash. The debentures pay
      interest at the rate of 10% per annum.




Each
      warrant is exercisable to purchase one
      share of our common stock until November 30, 2007 for $1.50 per share.




An
      additional 10% of warrants were issued
      for investor purchases over $250,000 face amount of debentures; 15% for
      purchases over $375,000 and 20% for purchases over $500,000.




(v)  In
      December 2005 we issued 333,333 shares of our common stock to Myron
      Stoltzfus, Sr. in connection with our acquisition of M & L
      Wholesale Foods, LLC.




(vi)  In
      April 2006, we issued a common stock purchase warrant to Laurus Master
      Fund, Ltd. for the purchase of up to 1,053,550 shares of our common stock as
      additional consideration for a credit facility they provided us for up to
      $5,000,000. The warrant has an exercise price of $0.001 per share with no
      expiration date.




We relied
      upon the exemption provided by Rule 506 of Regulation D and/or
      Section 4(2) of the 1933 Act in connection with the sales in
      section (iii), (iv) and (vi), above. All of such individuals were friends
      or business associates of our Chief Executive Officer and were known by him
      to
      be accredited investors as defined in Rule 501 and suitable to make such an
      investment. All such investors executed a subscription agreement confirming
      that
      they were accredited investors. All shares issued contained a restrictive legend
      and the holders confirmed they were acquiring the shares for investment and
      without an intent to distribute the shares.




20




**Submission
      of
      Matters to a Vote of Security Holders**





None





**Exhibits
      and
      Reports on Form 8-K**





**Exhibit
                Number**
            **Name
                and/or Identification of
                Exhibit**2
            Plan
                of Purchase, Sale, Reorganization, arrangement, liquidation or
                successiona.
 voluntary
                petition
                for bankruptcy (2)(4)3
            Articles
                of Incorporation & By-Lawsa.
 Articles
                of
                Incorporation , as amended (1)b.
  Bylaws
                (5)Departure
                of Directors or Principal Officers (2)
                (4)16
            Letter
                on change in certifying accountant
                  (3)31*
            Rule
                13a-14(a)/15d-14(a) Certification32*
            Certification
                under Section 906 of the Sarbanes-Oxley Act (18 U S C
                Section 1350)





Notes:





1.


Incorporated
      by reference to the
      Registration Statement on Form SB-2, as amended, previously filed with the
      SEC
      on April 11, 2005.








**Date
                of  8-K**
            **Items
                Disclosed on Form
                8-K**(2)
  August
                21, 2006
            Items
                1.03, and
                 5.02(3)
                September 28, 2007
            Items
                4.01(4)
  October
                9, 2007
            Items
                1.03 and
                5.02





21




**SIGNATURES**








In
      accordance
      with the Exchange Act of 1934, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.








**DEJA
      FOODS,
      INC.**








Signature
            Title
            DateDavid
                Fox/s/
                David
                Fox
            Chief
                Executive
                Officer,
            March
                4,
                2008


President
                and
                Director/s/
                David
                Fox
            Secretary,
                Treasurer
            March
                  4,
                  2008David
                Fox
            and
                Director/s/
                Barry S.
                Baer
            Chief
                Financial
                Officer
            March
                  4,
                  2008Barry
                S. Baer
            Principal
                Accounting
                Officer





22