U.S.
        SECURITIES AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
  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 MARCH 31,
                  2007
  OR
  o
              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 333-137210
  DIET
        COFFEE, INC.
 (Exact
        name of registrant as specified in its charter)
  **Delaware**
              **05-0630427**(State
                  or jurisdiction of
                incorporation
                  or organization)
              (IRS
                  Employer Identification No.)
  **16
                  East 40****th****Street, 12th Floor, New York, New York 10016**(Address
                  of Principal Executive Offices)
  Registrant's
        telephone number: (212) 867-1370
  (Former
        name, former address and former fiscal year, if changed since last
        report)
  **16
        East 40th Street, 13th Floor, New York, New York 10016**
 
 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) been subject to such filing requirements for
        the
        past 90 days. Yes x No o .
  Indicate
        by check mark whether the registrant is a shell company (as defined by Rule
        12b-2 of the Exchange Act). Yes o No x
  As
        of May
        18, 2007, the Registrant had 71,513,000 shares of common stock issued and
        outstanding.
  Transitional
        Small Business Disclosure Format (check one): Yes o No x
   
  
 
 __________________Quarterly
                  Report on Form 10-QSB for theQuarterly
                  Period Ended March 31, 2007Table
                  of ContentsPage**PART
                  I. FINANCIAL INFORMATION**Item
                  1. Financial Statements (Unaudited)Condensed
                  Balance Sheet as of March 31, 2007:
              2Condensed
                  Statements of Losses for the Three Months Ended March 31, 2007 and
                  2006 and for the Nine Months Ended March 31, 2007 and for the Period
                  December 19, 2005 (Date of Inception) to March 31, 2006:
              3Condensed
                  Statement of Changes in Deficiency in Stockholders’ Equity for Period
                  December 19, 2005 (Date of Inception) to March 31, 2007:
              4Condensed
                  Statements of Cash Flows for the Nine Months Ended March 31, 2007 and
                  for the Period December 19, 2005 (Date of Inception) toMarch
                  31, 2006:
              5Notes
                  to Condensed Financial Statements March 31, 2007:
              6-10Item
                  2. Management’s Discussion and Analysis of Financial Condition and Results
                  of Operations
              11-14Item
                  3. Controls and Procedures
              15-16**PART
                  II. OTHER INFORMATION**Item
                  1. Legal Proceedings
              17Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              17Item
                  3. Defaults upon Senior Securities
              17Item
                  4. Submission of Matters to a Vote of Security Holders
              17Item
                  5. Other Information
              17Item
                  6. Exhibits
              18SignaturesCERTIFICATION
                  PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002CERTIFICATION
                  PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
 
 **DIET
                  COFFEE, INC.****CONDENSED
                  BALANCE SHEET**
 **(UNAUDITED)**
 March
                  31,
                2007ASSETSCurrent
                  Assets:Cash
              
              $
              12,691Accounts
                  receivable, net of allowance for  chargebacks of $18,000 (Note
                  B)
              
              
              78,914Inventory
              
              
              30,868Prepaid
                  expenses and other receivables
              
              
              35,357Total
                  assets
              
              $
              157,830LIABILITIES
                  AND (DEFICIENCY IN) STOCKHOLDERS' EQUITYCurrent
                  Liabilities:Accounts
                  payable and accrued expense liabilities (Note C)
              
              $
              339,185Customer
                  deposits
              
              
              14,014Total
                  current liabilities
              
              
              353,199COMMITMENTS
                  AND CONTINGENCIES (Note G)(DEFICIENCY
                  IN) STOCKHOLDERS' EQUITY (Note D):Series
                  A Preferred stock, par value $0.001; 10,000,000 authorized; 50,000
                  shares issued and outstanding
              
              
              50Common
                  stock, $0.001 par value; 200,000,000 authorized;
                71,513,000
                  shares issued and outstanding
              
              
              71,513Additional
                  paid in capital
              
              
              743,286Accumulated
                  deficit
              
              
              (1,010,218
              )Total
                  (Deficiency in) Stockholders' Equity
              
              
              (195,369
              )Total
                  liabilities and (deficiency in) stockholders' equity
              
              $
              157,830
  See
        the
        accompanying footnotes to the unaudited condensed financial
        statements
 
 
  2
  **DIET
        COFFEE, INC** .
 **CONDENSED
        STATEMENT OF LOSSES**
 **(UNAUDITED)**
 
 
 Three
                  Months Ended March 31,
              
              
              
              From
                  December 19, 2005 (date of inception)2007
              
              2006
              
              Nine
                  Months Ended March 31,
                2007
              
              to
                    March 31,2006REVENUESSales
              
              $
              347,688
              
              $
              -
              
              $
              $869,095
              
              $
              -Cost
                  of sales
              
              
              99,429
              
              
              14,763
              
              
              230,033
              
              
              14,763Gross
                  profit (loss)
              
              
              248,259
              
              
              (14,763
              )
              
              639,062
              
              
              (14,763
              )OPERATING
                  EXPENSESSelling,
                  general and administrative
              
              
              396,028
              
              
              102,825
              
              
              1,203,958
              
              
              102,825LOSS
                  FROM OPERATIONS
              
              
              (147,769
              )
              
              (117,588
              )
              
              (564,896
              )
              
              (117,588
              )OTHER
                  INCOME (EXPENSE)Interest
                  income
              
              
              800
              
              
              -
              
              
              1,864
              
              
              -Net
                  loss before provision for income taxes
              
              
              (146,969
              )
              
              (117,588
              )
              
              (563,032
              )
              
              (117,588
              )Income
                  taxes (Note E)
              
              
              -
              
              
              -
              
              
              -
              
              
              -NET
                  LOSS
              
              $
              (146,969
              )
              $
              (117,588
              )
              $
              (563,032
              )
              $
              (117,588
              )Net
                  loss per common share (basic and fully diluted)
              
              $
              (0.00
              )
              $
              (0.01
              )
              $
              (0.01
              )
              $
              (0.01
              )Weighted
                  average of common shares outstanding (basic and fully
                  diluted)
              
              
              71,513,000
              
              
              17,313,889
              
              
              71,183,394
              
              
              15,128,641See
                  the accompanying footnotes to the unaudited condensed financial
                  statements
  
 3
 **DIET
                  COFFEE, INC****CONDENSED
                  STATEMENT OF (DEFICIENCY IN) STOCKHOLDER'S EQUITY**
 **From
        December 19, 2005 (date of inception) to March 31, 2007**
  Series
                  A-
                Preferred
                  stock
              
              
              Common
                  stockShares
              
              
              Amount
              
              
              Shares
              
              
              Amount
              
              
              Common
                Stock
                to
                  be Issued
              
              
              Subscriptions
                Receivable
              
              
              Additional
                Paid-In-
                Capital
              
              
              Accumulated
                Deficit
              
              
              TotalBalance-December
                  19, 2005
              
              
              -
              
              $
              -
              
              
              
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Common
                  stock issued
                to
                  founders
              
              
              -
              
              
              -
              
              
              67,750,000
              
              
              67,750
              
              
              -
              
              
              (67,750
              )
              
              -
              
              
              -
              
              
              -Series
                  A preferred stock
                issued
                  to founders
              
              
              50,000
              
              
              50
              
              
              -
              
              
              -
              
              
              -
              
              
              (50,000
              )
              
              49,950
              
              
              -
              
              
              -Subscription
                  received
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              117,750
              
              
              -
              
              
              -
              
              
              117,750Sale
                  of common stock
                (to
                  be issued)
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              640,599
              
              
              -
              
              
              -
              
              
              -
              
              
              640,599Net
                  Loss (Restated)
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (447,186)
              
              
              (447,186)Balance-June
                  30, 2006 (Restated)
              
              
              50,000
              
              $
              50
              
              
              67,750,000
              
              $
              67,750
              
              $
              640,599
              
              $
              -
              
              $
              49,950
              
              $
              (447,186)
              
              $
              311,163Sale
                  and issuance of common stock
              
              
              -
              
              
              -
              
              
              3,763,000
              
              
              3,763
              
              
              (640,599)
              
              
              -
              
              
              693,336
              
              
              -
              
              
              56,500Net
                  Loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (563,032)
              
              
              (563,032)Balance-March
                  31, 2007
              
              
              50,000
              
              $
              50
              
              
              71,513,000
              
              $
              71,513
              
              $
              -
              
              $
              -
              
              $
              743,286
              
              $
              (1,010,218)
              
              $
              (195,369)
  See
                  the accompanying footnotes to the unaudited condensed financial
                  statements
 
 
 
 4
  
 **DIET
        COFFEE, INC.**
 **CONDENSED
        STATEMENTS OF CASH FLOWS**
 **(UNAUDITED)**
 
 
 Nine
                  Months Ended March 31, 2007
              
              From
                  December 19, 2005 (date of inception) to
                March
                  31, 2006Net
                  cash used in operating activities
              
              $
              (372,210
              )
              $
              (107,338
              )Net
                  cash used in investing activities
              
              
              -
              
              
              -Net
                  cash provided by financing activities
              
              
              56,500
              
              
              107,500Net
                  (decrease) increase in cash
              
              
              (315,710
              )
              
              162Cash
                  and cash equivalents at beginning of period
              
              
              328,401
              
              
              -Cash
                  and cash equivalents at end of period
              
              $
              12,691
              
              $
              162See
                  the accompanying footnotes to the unaudited condensed financial
                  statements
 
 
 5
 
 
 
 **DIET
        COFFEE, INC.**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007**
 **(Unaudited)**
 
 **NOTE
        A - SUMMARY OF ACCOUNTING POLICIES**
 
 A
        summary
        of the significant accounting policies applied in the preparation of the
        accompanying financial statements follows.
 
 Business
        and Basis of Presentation
 
 Diet
        Coffee, Inc. (“Company”) was organized on December 19, 2005 under the state laws
        of Delaware with an original name of “The Diet Coffee Company”. On March 1,
        2006, the Company changed its name to the current existing name. Diet Coffee
        is
        engaged in the retailing and marketing of an all natural, high energy fat
        burning specialty coffee that helps individuals lose weight.
 
 The
        accompanying unaudited condensed financial statements have been prepared
        in
        accordance with accounting principles generally accepted in the United States
        of
        America for interim financial information and with the instructions to Form
        10-QSB. Accordingly, they do not include all of the information and footnotes
        required by generally accepted accounting principles for complete financial
        statements.
  In
        the
        opinion of management, all adjustments (consisting of normal recurring accruals)
        considered necessary for a fair presentation have been included. Accordingly,
        the results from operations for the nine-month period ended March 31, 2007
        are
        not necessarily indicative of the results that may be expected for the year
        ending June 30, 2007. The unaudited condensed financial statements should
        be
        read in conjunction with the June 30, 2006 audited financial statements and
        footnotes thereto.
 
 By March
        31, 2007, the Company was no longer in the development stage.
 
 Inventories
        / Cost of Goods Sold
 
 The
        Company has adopted a policy to record inventory at the lower of cost or
        market
        determined by the first-in-first-out method. The elements of cost that comprise
        inventory and cost good sold are FOB shipping point costs, freight and
        destination charges, customs and importation fees and taxes, customer broker
        fees (if any) and other related costs. The Company provides inventory allowances
        based on estimates of obsolete inventories. Inventories consist of finished
        products available for sale to distributors and customers. At March 31, 2007,
        Finished Goods inventory was $30,868.
 
 Advertising
 
 The
        Company follows SOP 93-7 whereby charging the costs of advertising to expenses
        as incurred. The Company charged to operations $357,994 and $24,250 as
        advertising costs for the nine months ended March 31, 2007 and for
        the period from December 19, 2005 (date of inception) to March
        31, 2006, respectively.
  Stock
        Based Compensation
 
 In
        December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based
        Compensation-Transition and Disclosure-an amendment of SFAS 123.” This statement
        amended SFAS 123, “Accounting for Stock-Based Compensation,” to provide
        alternative methods of transition for a voluntary charge to the fair value
        based
        method of accounting for stock-based employee compensation. In addition,
        this
        statement amended the disclosure requirements of SFAS No. 123 to require
        prominent disclosures in both annual and interim financial statements about
        the
        method of accounting for stock-based employee compensation and the effect
        of the
        method used on reported results. Effective for the period ended June 30,
        2006
        the Company has adopted SFAS 123 (R) which supersedes APB Opinion No. 25,
        “Accounting for Stock Issued to Employees” and eliminates the intrinsic value
        method that was provided in SFAS 123 for accounting of stock-based compensation
        to employees. The Company made no employee stock-based compensation grants
        before March 31, 2007 and therefore has no unrecognized stock compensation
        related liabilities or expense unvested or vested prior to the nine months
        ended March 31, 2007.
 
 6
 Loss
        per Share
 
 The
        Company follows Statement of Financial Accounting Standards No. 128 (“SFAS No.
        128”) “Earnings per Share”. Basic and diluted earnings (loss) per share amounts
        are computed based on net income (loss) divided by the weighted average number
        of common shares outstanding. The assumed exercise of warrants into 3,763,000
        common shares in 2006 was not included in the computation of diluted loss
        per
        share because the assumed exercise would be anti-dilutive for the period
        presented.
 
 New
        Accounting Pronouncements
 
 In
        July
        2006, the FASB issued Interpretation No. 48 (FIN 48). “ *Accounting
        for uncertainty in Income Taxes”.* FIN 48
        clarifies the accounting for Income Taxes by prescribing the minimum recognition
        threshold a tax position is required to meet before being recognized in the
        financial statements. It also provides guidance on derecognition, measurement,
        classification, interest and penalties, accounting in interim periods,
        disclosure and transition and clearly scopes income taxes out of SFAS 5,
        “ *Accounting
        for Contingencies”.* FIN
        48 is
        effective for fiscal years beginning after December 15, 2006. We have not
        yet
        evaluated the impact of adopting FIN 48 on our consolidated financial position,
        results of operations and cash flows.
 
 In
        September 2006, the FASB issued SFAS 157, Fair Value Measurements, which
        defines fair value, establishes a framework for measuring fair value in
        generally accepted accounting principles (“GAAP”), and expands disclosures about
        fair value measurements. The Company will be required to adopt SFAS 157
        effective for the fiscal year beginning January 1, 2008. The requirements
        of SFAS 157 will be applied prospectively except for certain derivative
        instruments that would be adjusted through the opening balance of retained
        earnings in the period of adoption. The Company is currently evaluating the
        impact of the adoption of SFAS 157 on the Company’s consolidated financial
        statements and the management believes that the adoption of SFAS 157 will
        not
        have a significant impact on its consolidated results of operations or financial
        position.
 
 In
        September 2006, the FASB issued its Statement of Financial Accounting Standards
        158 “Employers’  Accounting
        for Defined Benefit Pension and Other Postretirement Plans”. This Statement
        improves financial reporting by requiring an employer to recognize the
        overfunded or underfunded status of a defined benefit postretirement plan
        (other
        than a multiemployer plan) as an asset or liability in its statement of
        financial position and to recognize changes in that funded status in the
        year in
        which the changes occur through comprehensive income of a business entity
        or
        changes in unrestricted net assets of a not-for-profit organization. This
        Statement also improves financial reporting by requiring an employer to measure
        the funded status of a plan as of the date of its year-end statement of
        financial position, with limited exceptions. The effective date for an employer
        with publicly traded equity securities is as of the end of the fiscal year
        ending after December 15, 2006. The Company does not expect the adoption
        of this
        standard will have a material impact on its financial position, operations
        or
        cash flows
 
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose
        to measure many financial instruments, and certain other items, at fair value.
        SFAS 159 applies to reporting periods beginning after November 15, 2007.
        The
        adoption of SFAS 159 is not expected to have a material impact on the Company’s
        financial condition or results of operations.
  7
 
 
 **NOTE B
        - ACCOUNTS RECEIVABLE**
  Accounts
        receivable consisted of the following at March 31, 2007:
  March
                  31,
                2007Accounts
                  receivable
              
              $
              96,914Less:
                  allowance for chargebacks
              
              
              (18,000
              )Accounts
                  receivable, net
              
              $
              78,914
 
 Included
        in accounts receivable at March 31, 2007 is a $47,898 credit card holdback
        by a
        merchant bank that processes payment due for product sales. The merchant
        bank
        holdback account is based on the dollar amount of sales and is designed to
        allow
        the Company to receive the credit card holdback cash, including interest
        for the
        Company, after customer refunds and chargebacks are cleared.
  **NOTE C
        - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**
 
 Accounts
        payable and accrued liabilities at March 31, 2007 are as follows:
  December
                  31, 2006Accounts
                  payable
              
              $
              123,030Accrued
                  professional Fees
              
              
              143,000Accrued
                  payroll and payroll taxes
              
              
              63,695Other
                  accrued liabilities
              
              
              9,460Total
              
              $
              339,185
  **NOTE D
        - CAPITAL STOCK**
 
 Series
        A - Preferred stock
 
 The
        Company has authorized 10,000,000 shares of Preferred stock, par value $0.001,
        within the limitations and restrictions stated in the Certificate of
        Incorporation of the Company.
 
 The
        Company designated and issued of 50,000 shares of Series A - Preferred stock;
        non convertible. Each share of the Series A- Preferred stock is entitled
        to
        10,000 votes on all matters submitted to the stockholders of the Company.
        The
        holders of the Series A-Preferred stock are not granted any preference upon
        the
        liquidation, dissolution or winding up of the business of the
        Company.
 
 Common
        stock
 
 The
        Company has authorized 200,000,000 shares of Common stock, par value
        $0.001, of which 71,513,000 shares are issued and
        outstanding.




8
 
 Warrants
 
 The
        Company issued 3,763,000 warrants to purchase Common stock at a purchase
        price
        of $0.50 per share expiring two years from the date of their issuance in
        2006.
 
 **NOTE E
        - INCOME TAXES**
 
 The
        Company has adopted Financial Accounting Standards No. 109, which requires
        the
        recognition of deferred tax liabilities and assets for the expected future
        tax
        consequences of events that have been included in the financial statement
        or tax
        returns.
 
 Under
        this method, deferred tax liabilities and assets are determined based on
        the
        difference between financial statements and tax basis of assets and liabilities
        using enacted tax rates in effect for the year in which the differences are
        expected to reverse. Temporary differences between taxable income reported
        for
        financial reporting purposes and income tax purposes are insignificant. 
Management estimates that at March 31, 2007, the Company has available for
        federal income tax purposes a net operating loss carry forward of approximately
        $1,010,000, expiring in the year 2023, that may be used to offset future
        taxable
        income. Due to significant changes in the Company's ownership, the future
        use of
        its existing net operating losses may be limited.
 
 The
        Company has provided a valuation reserve against the full amount of the net
        operating loss benefit, since in the opinion of management based upon the
        earnings history of the Company, it is more likely than not that the benefits
        will not be realized. Components of deferred tax assets as of March 31, 2007
        are
        as follows:
 
 Non
        current:
 March
                  31, 2007Net
                  operating loss carry forward
              
              $
              303,000Valuation
                  allowance
              
              
              (303,000)Net
                  deferred tax asset
              
              
              -
  
 **NOTE F
        - STOCK OPTIONS AND WARRANTS**
  The
        following table summarizes the changes in warrants outstanding and the related
        prices for the shares of the Company's common stock issued to shareholders
        at
        March 31, 2007.
 
 Warrants
                  Outstanding
              
              
              
              
              
              Warrants
                  ExercisableExercise
                  Prices
              
              
              Number
                Outstanding
              
              
              Weighted
                Average
                Remaining
                Contractual
                  Life
                (years)
              
              
              Weighted
                Average
                Exercise
                Price
              
              
              Number
                Exercisable
              
              
              Weighted
                Average
                Exercise
                Price$
                  0.50
              
              
              3,763,000
              
              
              1.32
              
              $
              0.50
              
              
              3,763,000
              
              $
              0.50
  Transactions
        involving the Company's warrant issuance are summarized as follows:
  
 9
 
 Number
                  of Shares
              
              
              Weighted
                  Average
                Price
                  Per ShareOutstanding
                  at December 19, 2005 (date of inception)
              
              
              -
              
              $
              -Granted
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -Canceled
                  or expired
              
              
              -
              
              
              -Outstanding
                  at June 30, 2006 (Restated)
              
              
              -
              
              $
              -Granted
              
              
              3,763,000
              
              $
              0.50Exercised
              
              
              -
              
              
              -Canceled
                  or expired
              
              
              -
              
              
              -Outstanding
                  at March 31, 2007
              
              
              3,763,000
              
              $
              0.50
 
 There
        are
        no outstanding options as of March 31, 2007.
  **NOTE G
        - COMMITMENTS AND CONTINGENCIES**
 
 The
        Company has an employment agreement with the Company’s President and Chief
        Executive Officer as well as with the Company's Secretary. In addition to
        salary
        and benefit provisions, the agreement includes defined commitments should
        the
        employee terminate the employment with or without cause. As of March 31,
        2007,
        the Company owes $57,168 in deferred salaries that were incurred in
        accordance with employment agreements with management.
 
 **NOTE H
        - CONCENTRATIONS**
 
 Purchases
        from the Company's four major suppliers were $210,742 or 91.6% and $0
        and 0.0% of total purchases for the nine months ended March 31, 2007 and
        for the
        period December 19, 2005 (date of inception) to March 31, 2006,
        respectively.
  **NOTE I
        - GOING CONCERN MATTERS**
  The
        accompanying 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. As shown in the accompanying unaudited condensed
        financial statements, as of March 31, 2007, the Company incurred losses of
        $563,032. The Company’s used $372,210 cash to fund the current loss. These
        factors among others may indicate that the Company will be unable to continue
        as
        a going concern for a reasonable period of time.
  The
        Company is actively pursuing additional equity financing through discussions
        with investment bankers and private investors. There can be no assurance
        the
        Company will be successful in its effort to secure additional equity financing.
  If
        operations and cash flows continue to improve through these efforts, management
        believes that the Company can continue to operate. However, no assurance
        can be
        given that management's actions will result in profitable operations or the
        resolution of its liquidity problems.
 
 The
        Company's existence is dependent upon management's ability to develop profitable
        operations and resolve its liquidity problems. Management anticipates the
        Company will attain profitable status and improve its liquidity through the
        continued developing, marketing and selling of its services and additional
        equity investment in the Company. The accompanying financial statements do
        not
        include any adjustments that might result should the Company be unable to
        continue as a going concern.
  
 10
  **ITEM
        2. MANAGEMENT’S DISCUSSION AND ANALYSIS**
  Statements
        in this Item 2 “Management’s Discussion and Analysis of Financial Condition and
        Results of Operations” and elsewhere in this document are statements which are
        not historical or current fact and constitute “forward-looking statements”
within the meaning of such term in Section 27A of the Securities Act of 1933
        and
        Section 21E of the Securities Exchange Act of 1934. Such forward-looking
        statements involve known and unknown risks, uncertainties and other factors
        that
        could cause the actual financial or operating results of the Company to be
        materially different from the historical results or from any future results
        expressed or implied by such forward-looking statements. Such forward looking
        statements are based on our best estimates of future results, performance
        or
        achievements, based on current conditions and the most recent results of
        the
        Company. In addition to statements which explicitly describe such risks and
        uncertainties, readers are urged to consider statements labeled with the
        terms
“may”, “will”, “potential”, “opportunity”, “believes”, “belief”, “expects”,
“intends”, “estimates”, “anticipates” or “plans” to be uncertain and
        forward-looking. The forward-looking statements contained herein are also
        subject generally to other risks and uncertainties that are described from
        time
        to time in the Company’s reports and registration statements filed with the
        Securities and Exchange Commission.
 
 Overview
 
 We
        are
        engaged in the direct marketing and distribution of all natural, high energy
        specialty beverages that help individuals suppress their appetites and reach
        weight loss goals. We plan to focus our efforts on establishing retail markets
        through the sale of our products by airing television and radio commercials
        and
        infomercials, print advertising and distributing to retail venues including
        supermarkets, specialty food stores and other mass retail venues. Since our
        inception on December 19, 2005, we launched our Slim Coffee product line
        that
        feature coffee beverages infused with specially formulated dietary supplements.
        We advertised a uniquely designed version of our Slim Coffee product through
        airings of our television infomercial and placements of Internet and magazine
        advertisements. Our net sales for the nine months ended March 31, 2007 and
        for the period from December 19, 2005 (date of inception) to March 31, 2006,
        respectively, were generated primarily by customer responding to our
        advertisements and placing their orders with us through our www.slimcoffee.com
        website or calling one of our toll-free telephone numbers
 
 **RESULTS
        OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 AND THE
        NINE
        MONTHS ENDED MARCH 31, 2007 AND FOR THE PERIOD FROM DECEMBER 19, 2005 (DATE
        OF
        INCEPTION) TO MARCH 31, 2006**
  Revenue
  Our
        revenue was $347,688 for the three months ended March 31, 2007 versus our
        revenue of $0 for the three months ended March 31, 2006, an increase of
        $347,688. Our revenue was $869,095 for the nine months ended March 31, 2007
        versus revenue of $0 for the period from December 19, 2005 (date of inception)
        to March 31, 2006, an increase of $869,095. Revenue increased as a result
        of our
        commencing product sales in April 2006.
 
 We
        are
        currently focusing on generating revenue by selling our products directly
        to
        consumers through their responses to our internet and television advertising.
        We
        are advertising our products that have indicated encouraging levels of consumer
        acceptance. We plan to test market other products under the Slim Coffee line
        and
        other products lines. Our direct response sales operation requires that we
        use
        cash to purchase, up to two weeks in advance, advertising to run our television
        infomercials and other media and to  purchase,
        up to eight weeks in advance, products that we sell. We are currently seeking
        funding that we plan to use for our direct response sales operation and we
        expect our ability to generate revenues will depend primarily on obtaining
        funds.
  
 11
  Gross
        Profit **
  Our
        gross
        profit was $248,259 for the three months ended March 31, 2007 versus our
        gross
        loss of $14,763 for the three months ended March 31, 2006, a increase of
        $263,022. Our gross profit was $639,062 for the nine months ended March 31,
        2007
        versus our gross loss of $14,763 for the period from December 19, 2005 (date
        of
        inception) to March 31, 2006, a increase of $653,825.
  Our
        gross
        profit percentage for quarter ended March 31, 2007 was 71.4%, as compared
        to
        0.0% for the quarter ended March 31, 2006. Our gross profit percentage for
        nine
        months ended March 31, 2007 was 73.5%, as compared to 0.0% for the period
        from
        December 19, 2005 (date of inception) to March 31, 2006. Our gross profit
        percentages for the three and nine month periods ended March 31, 2007 resulted
        from commencing our direct response sales of Slim Coffee products.
  Operating
        expenses
  Our
        operating expenses were $396,028 for the three months ended March 31, 2007
        versus operating expenses of $102,825 for the three months ended March 31,
        2006,
        a increase of $293,203 or 285.2%. Our operating expenses were $1,203,958
        for the
        nine months ended March 31, 2007 versus operating expenses of $102,825 for
        the
        period from December 19, 2005 (date of inception) to March 31, 2006, a increase
        of $1,101,133 or 1070.9%.
 
 For
        the
        three and nine months ended March 31, 2007, operating expenses were 113.9%
        and
        138.5%, respectively, of net sales. The decrease in the percentage is primarily
        attributable to our fixed costs in the three months ended March 31, 2007
        being a
        relatively lower percentage of sales than for the nine months ended March
        31,
        2007. We are seeking further improvements in the percentage by increasing
        revenues through expanded and more refined sales and marketing
        programs.
 
 Net
        Loss
  Our
        net
        loss was $146,969 for the three months ended March 31, 2007 versus a net
        loss of
        $117,588 for the three months ended March 31, 2006, an increase of $29,381
        or
        25%. Our net loss was $563,032 for the nine months ended March 31, 2007 versus
        a
        net loss of $117,588 for the period from December 19, 2005 (date of inception)
        to March 31, 2006, an increase of $445,444 or 378.8%.
 
 We
        recently began operating our business, including efforts to market and sell
        our
        products, and revenues generated were not sufficient to cover our operating
        costs. We are continuing our efforts to market and sell our products in order
        to
        generate a higher sales volume and unless and until such time as we generate
        substantially higher sales volume, we will continue realize net
        losses.
 
 Our
        net
        loss per common share was ($0.00) (basic and diluted) for the three months
        ended
        March 31, 2007 as compared to our ($0.01) (basic and diluted) net loss per
        common share for the three months ended March 31, 2006. Our net loss per
        common
        share was ($0.01) (basic and diluted) for the nine months ended March 31,
        2007 as compared to our ($0.01) net loss per common share (basic and diluted)
        for the period from December 19, 2005 (date of inception) to March 31, 2006.
  The
        weighted average number of outstanding shares was 71,513,000 (basic and
        diluted) for the three-month period ended March 31, 2007 as compared to
        17,313,889 (basic and diluted) for the three-month period ended March 31,
        2006.
        The weighted average number of outstanding shares was 71,183,394 (basic and
        diluted) for the nine months ended March 31, 2007 as compared to 15,128,641
        (basic and diluted) for the period from December 19, 2005 (date of inception)
        to
        March 31, 2006. For the three and nine months ended March 31, 2007, common
        stock
        equivalents derived from shares issuable in conversion of warrants are not
        considered in the calculation of the weighted average number of common shares
        outstanding because they would be anti-dilutive, thereby decreasing the net
        loss
        per share. For the periods ended March 31, 2006, no warrants were
        outstanding.
  
 12
 
 **Liquidity
        and Capital Resources**
 
 Overview
 
 As
        of
        March 31, 2007, we had a working capital deficit and negative net worth of
        $195,369. As of June 30, 2006, we had $311,163 in working capital and net
        worth
        of $311,163. Our cash position at March 31, 2007 was $12,691 as compared
        to
        $328,401 as of June 30, 2006.
 
 For
        the
        nine months ended March 31, 2007, we generated a net cash flow deficit from
        operating activities of $372,210 consisting primarily of a net loss of $563,032,
        adjusted primarily for total non-cash additions to net loss of $40,401 and
        decreases in inventory of $30,868, accounts receivable of $115,868, prepayment
        and other receivables of $35,357 offset by increases in accounts payable
        and
        accrued expenses of $318,685 and customer deposits of $13,829. Our accounts
        receivable is comprised primarily of funds held aside by the credit card
        processor we use for processing customer payments of direct response sales.
        A
        substantial amount of cash from orders placed by customers and sales has
        been
        held back by the credit card merchant banks to establish rolling reserves
        for
        the customer payment processing they do for us.
 
 There
        were no investing activities during the nine months ended March 31, 2007
        and we
        expect capital expenditures to continue to be nominal for the year ending
        June 30, 2007.
 
 Cash
        provided by financing activities for the nine months ended March 31, 2007
        totaled $56,500 consisting of proceeds from sales of our common stock and
        warrants that was used to fund operations.
 
 Financings
  As
        of
        March 31, 2007, we have raised an aggregate of $814,849 in initial financing
        through the issuance 50,000 Series A preferred stock and 67,750,000 of common
        stock to founders and 3,763,000 shares issued in a private offering of common
        stock and warrants totaling $50,000, $67,750 and $697,099,
        respectively
  
 13
 
 We
        temporarily reduced cash required for operating costs by decreasing purchases
        of
        media and products, reducing
        the number staff and consultants and deferring management salaries. We are
        continuing to manage our liabilities while we seek additional funding that
        we
        plan to use for our direct response sales operation. We have recently registered
        13,925,500 shares of our outstanding common stock and 3,763,000 common shares
        underlying outstanding warrants. In addition, we have listed our company on
        the National Association of Securities Dealers over-the-counter bulletin
        board
        market. Management believes that these steps are improving our ability to
        raise
        funds from a financing transaction.
 
 Our
        ability to achieve and sustain profitability is dependent on several factors,
        including but not limited to our ability to generate liquidity from operations
        and satisfy our ongoing operating costs on a timely basis.  We still
        need additional investments in order to continue operations to cash flow
        break
        even. Additional investments are being sought, but we cannot guarantee that
        we
        will be able to obtain such investments. Financing transactions may include
        the
        issuance of equity or debt securities, obtaining credit facilities, or other
        financing mechanisms. However, the trading price of our common stock and
        the limited volume and trading history of our stock makes it more
        difficult to obtain financing through the issuance of equity or debt
        securities. Even if we are able to raise the funds required, it is possible
        that
        we could incur unexpected costs and expenses, fail to collect significant
        amounts owed to us, or experience unexpected cash requirements that would
        force
        us to seek alternative financing. Further, if we issue additional equity
        or debt
        securities, stockholders may experience additional dilution or the new equity
        securities may have rights, preferences or privileges senior to those of
        existing holders of our common stock. If additional financing is not available
        or is not available on acceptable terms, we will have to curtail our operations
        again, attempt to further restructure financial obligations and/or seek a
        strategic merger, acquisition or a sale of assets.
 
 The
        independent auditor's report on the Company's June 30, 2006 financial statements
        states that the Company's recurring losses raise substantial doubts about
        the
        Company's ability to continue as a going concern.
 
 The
        effect of inflation on our revenue and operating results was not significant.
        Our operations are located in North America and there are no seasonal aspects
        that would have a material effect on our financial condition or results of
        operations.
 
 **Trends,
        Risks and Uncertainties**
  We
        have
        sought to identify what we believe to be the most significant risks to our
        business, but we cannot predict whether, or to what extent, any of such risks
        may be realized nor can we guarantee that we have identified all possible
        risks
        that might arise. Investors should carefully consider all of such risk factors
        before making an investment decision with respect to our Common
        Stock.
  **OFF
        BALANCE SHEET ARRANGEMENTS**
 
 The
        Company does not maintain off-balance sheet arrangements nor does it participate
        in non-exchange traded contracts requiring fair value accounting
        treatment.
 
 14
 
 
 
 **ITEM
        3. CONTROLS AND PROCEDURES**
  **Evaluation
        of Disclosure Controls and Procedures**
 
 As
        of
        March 31, 2007, our management carried out an evaluation, under the supervision
        of our Chief Executive Officer, of the effectiveness of the design and operation
        of our system of disclosure controls and procedures pursuant to Rule 13a-15(d)
        and 15d-15(d) promulgated under the Exchange Act.  Based on this
        evaluation, our Chief Executive Officer concluded that our controls and
        procedures were not effective in ensuring that information required to be
        disclosed by us in our periodic reports is recorded, processed, summarized
        and
        reported, within the time periods specified for each report and that such
        information is accumulated and communicated to our management, including
        our
        principal executive and principal financial officer, or persons performing
        similar functions, as appropriate to allow timely decisions regarding required
        disclosure.
  Except
        as set forth below, there was no change in our
        internal controls over financial reporting that has materially affected,
        or is
        reasonably likely to materially affect, our internal control over financial
        reporting during the quarter covered by this Report.
  It
        should
        be noted that any system of controls, however well designed and operated,
        can
        provide only reasonable, and not absolute, assurance that the objectives
        of the
        system will be met. In addition, the design of any control system is based
        in
        part upon certain assumptions about the likelihood of future
        events.
 
 **Deficiencies
        and Corrective Actions Relating to Our Internal Controls over Financial
        Reporting and Disclosure Controls and Procedures**
  During
        the course of the preparation of our March 31, 2007 financial statements,
        we
        identified certain material weaknesses relating to our internal controls
        and
        procedures within the areas of revenue recognition and inventory accounting.
        Some of these internal control deficiencies may also constitute deficiencies
        in
        our disclosure controls.
 
 In
        order
        to review the financial condition and prepare the financial disclosures in
        this
        document, the Company’s personnel have done detailed validation work with
        respect to all consolidated balance sheet account balances to substantiate
        the
        financial information that is contained in this Form 10-QSB. Additional analysis
        was performed on consolidated loss statement amounts and compared to prior
        period (both year over year and consecutive period) amounts for reasonableness.
        Management is in the process of implementing a more effective system of
        controls, procedures and other changes in the areas of revenue recognition
        and
        inventory accounting to insure that information required to be disclosed
        in this
        quarterly report on Form 10-QSB has been recorded, processed, summarized
        and
        reported accurately. Our management acknowledges the existence of this problem,
        and has developed procedures to address them to the extent possible given
        limitations in financial and manpower resources. Our internal controls depend
        on
        an effective integration of our records with the activity reporting systems
        of
        certain third party service providers, including our fulfillment service
        providers and our credit card processors. When we engage a new fulfillment
        service provider or credit card processor, as we did during the nine months
        ended March 31, 2007, we need to integrate our records with their activity
        reporting systems. Among the changes being implemented are:
 
 Revenue
        Recognition
 ·
              Criteria
                  and procedures established to reconcile invoicing and shipping
                  records
 
 ·
              Criteria
                  and procedures established to reconcile direct response sales activity
                  records
 
 ·
              Control
                  function established to review and monitor compliance to new
                  procedures
 
 ·
              Improved
                  document control and file check out
                  procedures
 
 Inventory
        Accounting
 ·
              Document
                  control system established and monitored for
                  compliance
 
 ·
              Cut
                  off procedures formalized and consistently
                  applied
 
 ·
              Purchasing
                  procedures have been formalized and implementation has
                  begun
   
 15
 
 Our
        officer has been working with the Board of Directors to address the improvements
        regarding deficiencies in the disclosure controls and procedures. We are
        currently engaged in the implementation of new internal control procedures.
        Management expects that new associated procedures, once implemented, will
        correct the deficiencies and will result in disclosure controls and procedures
        pursuant to Rule 13a-14 of the Exchange Act, which will timely alert the
        Chief
        Executive Officer and Chief Financial Officer to material information relating
        to our company required to be included in our Exchange Act filings.
 
  
 16
 
 
 
 **PART
        II - OTHER INFORMATION**
  **Item
        1. Legal Proceedings.**
  From
        time
        to time, we may become involved in various lawsuits and legal proceedings,
        which
        arise in the ordinary course of business. However, litigation is subject
        to
        inherent uncertainties, and an adverse result in these or other matters may
        arise from time to time that may harm business. Except as disclosed below
        we are
        currently not aware of any such legal proceedings or claims that will have,
        individually or in the aggregate, a material adverse affect on business,
        financial condition or operating results.
  On
        March
        26, 2007, the Company received a letter from the U.S. Federal Trade
        Commission (“FTC”) whereby the Company was informed that the FTC is conducting
        an investigation into advertising claims made for the Company’s weight loss
        product known as “Slim Coffee”. The purpose of the investigation is to determine
        whether the Company, in connection with its sales of Slim Coffee, has engaged
        in
        unfair or deceptive acts or practices and false advertising. The Company
        intends
        to cooperate fully with the investigation being made by the FTC. It is not
        possible at this time to reasonably assess the outcome of the FTC investigation
        or its impact on the Company
   **Item
        2. Unregistered Sales of Equity Securities and Use of
        Proceeds.**
  None.
   **Item
        3. Defaults upon Senior Securities.**
  None.
   **Item
        4. Submission of Matters to a Vote of Security Holders.**
  None.
   **Item
        5. Other Information.**
  None.
   
 17
 
 
 **Item
        6. Exhibits and Reports on Form 8-K**
  
 
 
 Exhibits
  31.1
              Certification
                  of the Chief Executive Officer and Chief Financial Officer of Diet
                  Coffee,
                  Inc. pursuant to Exchange Act Rule 15d-14(a)32.1
              Certification
                  of the Chief Executive Officer and Chief Financial Officer of Diet
                  Coffee, Inc. pursuant to 18 U.S.C.
                  1350
 
 **SIGNATURES**
  In
        accordance with requirements of the Exchange Act, the registrant caused this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
  Diet
                  Coffee, Inc.Date:
                  May 21, 2007
              
              /s/ David
                  StocknoffChief
                  Executive Officer (Principal Executive Officer) and Chief Financial
                  Officer (Principal Financial and Accounting
                  Officer)
 
  18