**UNITED      STATESSECURITIES AND EXCHANGE      COMMISSION**

**FORM      10-QSB**

**[X] QUARTERLY REPORT UNDER SECTION 13 OR      15(D) OF THE SECURITIESEXCHANGE ACT OF 1934**

**FOR      THE QUARTERLY PERIOD ENDED: September 30,      2006**

**[      ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE      SECURITIESEXCHANGE ACT OF 1934**

**Diamond      Ranch Foods, Ltd.**

**APPLICABLE      ONLY TO CORPORATE ISSUERS**

**Transitional      Small Business Disclosure Format (check one).      Yes ____ No X**

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**    DIAMOND        RANCH FOODS,        LTD.**

**BALANCE        SHEETS**

**(Unaudited)**

|                                                                              | (Unaudited)                                                                                                                                                                                                              |                                                                                                                                                                                                                                 |
|-----------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                              | September                    30,                                                                                                                                                                                         | March                    31,                                                                                                                                                                                                         |
| ASSETS:                                                                           |                                                     2006 |                                                       2006 |
| Current                    Assets:                                                |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Inventory                                                                         | 362,121                                                                                                                                                                                                                  | 169,827                                                                                                                                                                                                                              |
| Prepaid                    Expenses                                               | 110,000                                                                                                                                                                                                                  | 140,000                                                                                                                                                                                                                              |
| Accounts                    Receivable - Net                                      | 1,376,433                                                                                                                                                                                                                | 1,654,394                                                                                                                                                                                                                            |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Total                    Current Assets                                           | 1,848,554                                                                                                                                                                                                                | 1,964,221                                                                                                                                                                                                                            |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Fixed                    Assets - Net                                             | 253,566                                                                                                                                                                                                                  | 308,669                                                                                                                                                                                                                              |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Other                    Assets:                                                  |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Cash                    Exchange                                                  | -                                                                                                                                                                                                                        | 6,500                                                                                                                                                                                                                                |
| Deposits                                                                          | 11,800                                                                                                                                                                                                                   | 11,800                                                                                                                                                                                                                               |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Total                    Other Assets                                             | 11,800                                                                                                                                                                                                                   | 18,300                                                                                                                                                                                                                               |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Total                    Assets                                                   | 2,113,920                                                                                                                                                                                                                | 2,291,190                                                                                                                                                                                                                            |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| LIABILITIES                    & STOCKHOLDERS' EQUITY                         |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Current                    Liabilities:                                           |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Bank                    Overdraft                                                 | 36,607                                                                                                                                                                                                                   | 211,915                                                                                                                                                                                                                              |
| Accounts                    Payable and Accrued Expenses                          | 813,866                                                                                                                                                                                                                  | 1,518,979                                                                                                                                                                                                                            |
| Factoring                    Line of Credit                                       | 1,076,170                                                                                                                                                                                                                | 1,406,645                                                                                                                                                                                                                            |
| Exchange                    Note                                                  | -                                                                                                                                                                                                                        | 240,000                                                                                                                                                                                                                              |
| Notes                    Payable Brooks Provisions                                | 51,757                                                                                                                                                                                                                   | 107,303                                                                                                                                                                                                                              |
| Capital                    Lease Obligation                                       | 10,182                                                                                                                                                                                                                   | 9,958                                                                                                                                                                                                                                |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Total                    Current Liabilities                                      | 1,988,582                                                                                                                                                                                                                | 3,494,800                                                                                                                                                                                                                            |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Non-current                    Liabilities:                                       |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Capital                    Lease Obligation                                       | 13,052                                                                                                                                                                                                                   | 18,228                                                                                                                                                                                                                               |
| Shareholder                    Loans                                              | 1,651,000                                                                                                                                                                                                                | 971,000                                                                                                                                                                                                                              |
| Interest                    Payable                                               | 86,417                                                                                                                                                                                                                   | 58,925                                                                                                                                                                                                                               |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Total                    Long Term Liabilities                                    | 1,750,469                                                                                                                                                                                                                | 1,048,153                                                                                                                                                                                                                            |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| TOTAL                    LIABILITIES                                              | 3,739,051                                                                                                                                                                                                                | 4,542,953                                                                                                                                                                                                                            |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| STOCKHOLDERS'                    EQUITY (DEFICIT)                                 |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Preferred                    Stock, par value $.0001, 20,000,000 shares           |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Authorized,                    0 shares issued at Sept 30 and March 31, 2006 | -                                                                                                                                                                                                                        | -                                                                                                                                                                                                                                    |
| Common                    Stock, par value $.0001, 500,000,000 shares             |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Authorized,                    63,646,150 and 57,696,150 shares issued at         |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Sept                    30 and March 31, 2006                                     | 6,365                                                                                                                                                                                                                    | 5,769                                                                                                                                                                                                                                |
| Additional                    Paid-In Capital                                     | 1,697,039                                                                                                                                                                                                                | 1,116,634                                                                                                                                                                                                                            |
| Subordinated                    Debt                                              | 408,779                                                                                                                                                                                                                  | 492,100                                                                                                                                                                                                                              |
| Retained                    Earnings (Deficit)                                    | (3,737,314)                                                                                                                                                                                                              | (3,866,266)                                                                                                                                                                                                                          |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Total                    Stockholders' Deficit                                    | (1,625,131)                                                                                                                                                                                                              | (2,251,763)                                                                                                                                                                                                                          |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
|                                                                              |                                                                                                                                                                                                                     |                                                                                                                                                                                                                                 |
| Total                    Liabilities and Stockholders' Deficit                    | 2,113,920                                                                                                                                                                                                                | 2,291,190                                                                                                                                                                                                                            |

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**                                                                                                         DIAMOND RANCH FOODS,      LTD                                                                                                   STATEMENTS OF      OPERATIONS**

|                                              | For                the three months ended |       |   | For                the six months ended |       |
|---------------------------------------------------|-------------------------------------------|------------|--------|-----------------------------------------|------------|
|                                              | Sept.                30                   |       |   | Sept.                30                 |       |
|                                              | 2006                                      | 2005       |   | 2006                                    | 2005       |
|                                              |                                      |       |   |                                    |       |
| Revenues                                          | 2,889,508                                 | 3,228,745  |   | 5,636,955                               | 6,787,101  |
| Cost                of Goods Sold                 | 2,266,294                                 | 2,701,388  |   | 4,405,476                               | 5,762,620  |
|                                              |                                      |       |   |                                    |       |
| Gross                Profit                       | 623,214                                   | 527,357    |   | 1,231,479                               | 1,024,481  |
|                                              |                                      |       |   |                                    |       |
| Expenses:                                         |                                      |       |   |                                    |       |
| Payroll                                           | 217,280                                   | 265,540    |   | 375,100                                 | 549,965    |
| Factoring                Fee                      | 85,296                                    | 86,492     |   | 163,800                                 | 161,840    |
| Rent                Expense                       | 65,693                                    | 45,144     |   | 123,007                                 | 96,587     |
| Depreciation                & Amort.          | 22,918                                    | 21,901     |   | 42,918                                  | 43,802     |
| General                & Admin.               | 128,111                                   | 133,496    |   | 222,986                                 | 285,351    |
| Sales                Commission                   | 65,235                                    | 83,226     |   | 137,786                                 | 158,484    |
|                                              |                                      |       |   |                                    |       |
| Total                Expenses                     | 584,533                                   | 635,799    |   | 1,065,597                               | 1,296,029  |
|                                              |                                      |       |   |                                    |       |
|                                              |                                      |       |   |                                    |       |
| Operating                Income (Loss)            | 38,681                                    | (108,442)  |   | 165,882                                 | (271,548)  |
| Interest                Expense                   | (18,409)                                  | (12,672)   |   | (36,910)                                | (27,686)   |
|                                              |                                      |       |   |                                    |       |
|                                              |                                      |       |   |                                    |       |
| Net                Income (Loss)                  | 20,272                                    | (121,114)  |   | 128,972                                 | (299,234)  |
|                                              |                                      |       |   |                                    |       |
|                                              |                                      |       |   |                                    |       |
| Basic                & diluted loss per share | -                                         | -          |   | -                                       | (0.01)     |
|                                              |                                      |       |   |                                    |       |
|                                              |                                      |       |   |                                    |       |
| Weighted                Avg. Shares Outstanding   | 59,430,765                                | 56,689,300 |   | 59,138,456                              | 56,691,617 |

----

**                                                                                               DIAMOND RANCH FOODS,        LTD                                                                                              STATEMENTS OF CASH        FLOWS**

|                                                                                   |                                                                                                                                                                                                                                                                                                                                |
|----------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                   |  For                the six months ended September 30                                                                                                                                                                                                                                                                     |
|                                                                                   | 2006                                                                                                                                                                                                                                                                                                                           | 2005 |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                   |                                                                                                                                                                                                                                                                                                                           |   |
| Net                Profit (Loss)                                                       | $128,972                                                                                                                                                                                                                                                                                                                       | ($299,234) |
| Adjustments                to reconcile net loss to net cash                           |                                                                                                                                                                                                                                                                                                                           |   |
| Provided                by operating activities                                        |                                                                                                                                                                                                                                                                                                                           |   |
| Depreciation                and Amortization                                           | 42,918                                                                                                                                                                                                                                                                                                                         | 43,802 |
| Stock                issued                                                            |                                                                                                                                                                                                                                                                                                                           | 12,750 |
| (Increase)                Decrease in Inventory                                        | (192,294)                                                                                                                                                                                                                                                                                                                      | (17,116) |
| (Increase)                Decrease in Accounts Receivable                              | 277,961                                                                                                                                                                                                                                                                                                                        | (409,775) |
| (Increase)                Decrease in Deposits and Prepaids                            | 36,500                                                                                                                                                                                                                                                                                                                         | - |
| (Decrease)                Increase in Accounts Payable and Accrued Expenses            | (880,421)                                                                                                                                                                                                                                                                                                                      | 28,895 |
| (Decrease)                Increase in Interest Payable                                 | 27,492                                                                                                                                                                                                                                                                                                                         | 18,069 |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| Net                Cash Used in Operating Activities                                   | (558,872)                                                                                                                                                                                                                                                                                                                      | (624,589) |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                   |                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| Purchase                of Equipment/Sale                                              | 12,167                                                                                                                                                                                                                                                                                                                         | (5,568) |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| Net                Cash Used in Investing Activities                                   | 12,167                                                                                                                                                                                                                                                                                                                         | (5,568) |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                   |                                                                                                                                                                                                                                                                                                                           |   |
| Payments                on Capital Lease Obligation                                    | (4,953)                                                                                                                                                                                                                                                                                                                        | (4,407) |
| Factoring                Payable                                                       | (330,475)                                                                                                                                                                                                                                                                                                                      | 160,044 |
| Shareholder                and Related Party Loans                                     | 680,000                                                                                                                                                                                                                                                                                                                        | 470,500 |
| Payments                on Notes Payable                                               | (378,867)                                                                                                                                                                                                                                                                                                                      | - |
| Stock                Issued in Exchange for Cash                                       | 581,000                                                                                                                                                                                                                                                                                                                        | - |
| Bank                Overdraft                                                          | -                                                                                                                                                                                                                                                                                                                              | 4,020 |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| Net                Cash Provided by Financing Activities                               | 546,705                                                                                                                                                                                                                                                                                                                        | 630,157 |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| Net                (Decrease) Increase in Cash and Cash Equivalents                    | -                                                                                                                                                                                                                                                                                                                              | - |
| Cash                and Cash Equivalents at Beginning of Period                        | -                                                                                                                                                                                                                                                                                                                              | - |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| Cash                and Cash Equivalents at End of Period                              | $                                                   -           | $                                                   - |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| SUPPLEMENTAL                DISCLOSURE OF CASH FLOW INFORMATION:                       |                                                                                                                                                                                                                                                                                                                           |   |
| Cash                paid during the year for:                                          |                                                                                                                                                                                                                                                                                                                           |   |
| Interest                                                                               | $                                                           9,418                                       |  $                                                                - |
|                                                                                   |                                                                                                                                                                                                                                                                                                                           |   |
| SUPPLEMENTAL                DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |                                                                                                                                                                                                                                                                                                                           |   |
| Stock                issued in asset acquisition agreement                             | $                                                                  - | $                                                   - |
| Stock                issued for services                                               | $                                                                  - | $                                                                  - |

----

**(UNAUDITED)**

**NOTE 1 - NATURE OF OPERATIONS AND GOING        CONCERN**

**Organization      and Basis of Presentation**

**Nature      of Business**

----

**DIAMOND      RANCH FOODS, LTD.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER      30,      2006**

** (UNAUDITED)                                                                                                                                               **

**(Continued)**

**NOTE      2 - SUMMARY OF ACCOUNTING POLICIES**

**Use      of Estimates**

**Cash      and Cash Equivalents**

**Concentration      of Credit Risk**

**Fixed      Assets**

|                                  |     |                       |                     | Accumulated  |     |
|---------------------------------------|----------|----------------------------|--------------------------|--------------|----------|
|                                  | Cost     | Method                     | Life                     | Depreciation | Net      |
|                                  |     |                       |                     |         |     |
| Leasehold                Improvements | $269,906 | Strait                Line | 10                Years  | $110,766     | $159,140 |
| Equipment                             | 303,176  | Strait                Line | 3-5                Years | 208,750      | 94,426   |
|                                  |     |                       |                     |         |     |
|                                  | $573,082 |                       |                     | $319,516     | $253,566 |

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**                                                                                                                               DIAMOND RANCH FOODS,      LTD                                                                                                 NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS                                                                                                                                 SEPTEMBER 30,      2006**

**Earnings      per Share**

**Income      Taxes**

**Comprehensive      Income**

**Inventory**

**Advertising**

**Recent      Accounting Pronouncements**

----

**DIAMOND      RANCH FOODS, LTDNOTES TO CONSOLIDATED FINANCIAL      STATEMENTSSEPTEMBER 30, 2006 **

**NOTE      3 - INCOME TAXES**

|                                | 2006     |
|-------------------------------------|----------|
|                                |     |
| Net                Operating Losses | 110,000  |
| Depreciation                        | 42,918   |
| Valuation                Allowance  | -152,918 |
|                                | 0        |

|                                                                                                                                                                         Provision                (Benefit) at US                Statutory Rate                    |                                                                 (240,000)                 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                         Depreciation                                                                                                                                                                  |                                                    (38,000)                |
|                                                                                                                                                                         Increase                (Decrease) in Valuation Allowance                                                                                                                                     |                                                                    278,000 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | -                                                                                                                                                                                                                                                                                                                                         |

**NOTE      4 - OPERATING LEASE COMMITMENTS**

Rent expense      was $40,932 for the six months ended      September 30, 2006.

**NOTE      5 - CAPITAL LEASE COMMITMENTS**

|                                                                                                                                                                                                                                 |                                                                                  Year | Lease                Payment |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|
|                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                         |
|                                                                                                                                                                                                                                 | 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $4,980                       |
|                                                                                                                                                                                                                                 | 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 10,881                       |
|                                                                                                                                                                                                                                 | 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 7,346                        |
|                                                                                                                                                                                                                                 | 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | -                            |
|                                                                                                                                                                                                                                 | 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | -                            |
|                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                         |
|                                        | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $23,401                      |

----

**DIAMOND        RANCH FOODS, LTDNOTES TO CONSOLIDATED FINANCIAL        STATEMENTSSEPTEMBER 30,        2006**

**NOTE      6 - NOTES PAYABLE**

**Factoring      Line of Credit**

**NOTE      7 – LOANS PAYABLE**

**NOTE      8 - MERGER**

| Assets:                                     | $                -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|---------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Liabilities:                                | $                -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Equity:                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Common                Stock                 | 2,569                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Paid-In                Capital              | 5,333                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Retained                Deficit             | -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Total                Stockholders Equity    | $                -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Total                Liabilities and Equity | $                                                                                                - |

----

**DIAMOND      RANCH FOODS, LTDNOTES TO CONSOLIDATED FINANCIAL      STATEMENTSSEPTEMBER 30,      2006**

**NOTE      9 - STOCK TRANSACTIONS**

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**ITEM      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF      OPERATIONS**

**SALES**

**COST      OF SALES AND GROSS PROFIT**

 annual sales. The intangible asset created      by this acquisition      had been written off in the third quarter ended December 31, 2004 as is      reflected in our Statement of Operations for the fiscal year ended March 31,      2005. These customers have continued their patronage with our company through      the quarter ended September 30, 2006 and have increased their order sizes to      include additional items we offer. Increases in revenue can also be attributed      to existing clients, who are responsible for managing multiple hotel and      restaurant chains, introducing our products to additional locations. Our second      largest client, who is responsible for approximately 3.1% of our gross sales,      manages almost 20 separate accounts that are current users of our products.      

**EXPENSES**

**LIQUIDITY      AND CAPITAL RESOURCES**

----

**PLAN      OF OPERATION**

      to increase sales using commission-based salesmen. We are able to satisfy our      cash requirements, material commitments, and applicable filing fees anticipated      under our obligations of the Exchange Act. For our company to continue as a      fully-reporting entity, we estimate our annual accounting and filing fees to      be      $35,000, and our legal fees to be $15,000, which will also be satisfied by      existing operations. Management is committed to supplement any cash shortfall,      or relinquish their salaries, or a portion thereof, if cash flow from operations      does not cover our cash requirements. Certain shareholders of the Company have      also committed to meet our operating expenses if needed.

**SALES      AND COLLECTION PROCEDURES**

 Typically, we'd have to wait 30-45 days      to receive payment on invoices for      products that have already been delivered, not accounting for late-payers.      Because we offer our customers payment terms, there is a minimal time period      that must elapse prior to our reimbursement by the factoring company. We have      a      sizeable customer base, we don't rely on any few customers to sustain      operations, and our clientele does have favorable reputations in the industry,      but we still elect not to be dependent on timely payments for our receivables      since these funds need to be recycled for our next-day fresh product purchases.      Working with an invoice factoring company eliminates the threat of non-payment,      cash shortfalls, and enables an increased focus on revenue generation than      bill      collection.

**ACQUISITIONS**

----

**TRENDS**

 is a continuing and upwards trend. We      substantiate the same      claims through our own customers' purchasing trends which are evidenced by      our      increased revenues. The marketplace also indicates that poultry consumption      is      rising steadily. In order to maximize this trend, we are expanding our      pre-cooked poultry offerings to all food providers, as well as those without      full-service cooking establishments. Aside from the lack of a cooking facility,      many purveyors seek pre-cooked poultry for safety reasons since these products      offer a significantly low safety risk at causing bacterial cross-contamination.      We offer pre-cooked items currently, and feel that making the investment to      market these products under own branded name will increase our revenue due      to      heightened product awareness and our reputation for quality-conscious production      methods.

**Off-Balance      Sheet Arrangements**

**ITEM      3. CONTROLS AND PROCEDURES**

**PART      II - OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS**

**ITEM      2. CHANGE IN SECURITIES AND USE OF PROCEEDS**

**ITEM      3. DEFAULTS UPON SENIOR SECURITIES**

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

**ITEM      5. OTHER INFORMATION**

**ITEM      6. EXHIBITS AND REPORTS ON FORM 10QSB**

**Exhibits**

**Number      Description**

**Reports        on Form 8-K**

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**                                                                                                                                   SIGNATURES**

**Diamond      Ranch Foods, Ltd. **

**Louis Vucci, Jr., President and      Director**

**William DeMarzo, Chief Financial Officer**