UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington
D.C. 20549





FORM
10-Q




(Mark
One)




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





For
the quarterly period ended December 31, 2009





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





For
the transition period from _________________ to _________________





Commission
File No.: 333-137210





ZEVOTEK,
INC.


(Exact
name of registrant as specified in its charter)





Delaware
                  
                  05-0630427(State or other jurisdiction of
                    incorporation or organization)
                  
                  (I.R.S. Employer
                    Identification No.)





134
Cedar Street


Nutley,
NJ 07110


(Address of principal
executive offices)





Issuer’s
telephone number:   (201) 394-8684


Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.   Yes   x  No  
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes 
 ̈
  No  o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filter 
       ̈
                      
                      Accelerated filter 
       ̈Non-accelerated filter 
       ̈
                      (Do not check if a smaller reporting company)
                      Smaller reporting company
      x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.  Yes   o   No  
x





APPLICABLE
ONLY TO CORPORATE ISSUERS


As of
February 16, 2010, 2,168,557,653 shares of our common stock were
outstanding.





Transitional
Small Business Disclosure Format:    Yes    ̈  No  
x


Quarterly
Report on Form 10-Q for the


Quarterly
Period Ended December 31, 2009





Table of
Contents





PagePART
      I. FINANCIAL INFORMATION
                    
                    
                    3Item
      1. Financial Statements
                    
                    
                    3Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                    
                    
                    17Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                    
                    
                    22Item
      4  Controls and Procedures
                    
                    
                    23PART
      II. OTHER INFORMATION
                    
                    
                    23Item
      1. Legal Proceedings
                    
                    
                    23Item
      1A Risk Factor
                    
                    
                    23Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                    
                    
                    23Item
      3. Defaults upon Senior Securities
                    
                    
                    23Item
      4. Submission of matters to a vote of security holders
                    
                    
                    23Item
      5. Other information
                    
                    
                    24Item
      6. Exhibits
                    
                    
                    24CERTIFICATION
      PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002CERTIFICATION
      PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002




2




PART 1:
            FINANCIAL
      INFORMATION





ITEM
1 – FINANCIAL STATEMENTS




ZEVOTEK,
INC.
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 
 December
      31,
                    
                    
                    June
      30,2009
                    
                    
                    2009(unaudited)ASSETSCurrent
      assets:Cash
                    
                    $
                    122,000
                    
                    
                    $
                    —Accounts
      receivable
                    
                    
                    6,485
                    
                    
                    
                    —Inventory
                    
                    
                    28,520
                    
                    
                    
                    —Prepayments
      and other current assets
                    
                    
                    47,694
                    
                    
                    
                    17,000Total
      current assets
                    
                    
                    204,698
                    
                    
                    
                    17,000Other
      assets:Security
      deposit
                    
                    
                    5,000
                    
                    
                    
                    —Licensing
      agreement
                    
                    
                    40,000
                    
                    
                    
                    40,000Total
      assets
                    
                    $
                    249,698
                    
                    
                    $
                    57,000LIABILITIES
      AND DEFICIENCY IN STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                    
                    $
                    818,399
                    
                    
                    $
                    1,232,271Advances
      payable
                    
                    
                    352,056
                    
                    
                    
                    44,000Convertible
      notes payable and demand notes (net of debt discount of $41,398 and
      $166,595 as of December 31, 2009 and June 30, 2009,
      respectively)
                    
                    
                    110,692
                    
                    
                    
                    134,139Customer
      deposits
                    
                    
                    24,351
                    
                    
                    
                    24,351Total
      current liabilities
                    
                    
                    1,305,498
                    
                    
                    
                    1,434,761Long
      term portion of convertible notes payable (net of debt discount of
      $147,151 and $167,232 as of December 31, 2009 and June 30, 2009,
      respectively)
                    
                    
                    101,095
                    
                    
                    
                    39,664Deficiency
      in stockholders' equity:Series
      A Preferred stock, $0.00001 par value; 10,000,000 shares authorized;
      50,000 shares issued and outstanding as of December 31, 2009 and June 30,
      2009.
                    
                    
                    1
                    
                    
                    
                    1Series
      B Preferred stock, $0.00001 par value; 1,000,000 shares authorized;
      1,000,000 shares issued and outstanding as of December 31, 2009 and June
      30, 2009
                    
                    
                    10
                    
                    
                    
                    10Common
      stock, $0.00001 par value, 5,000,000,000 shares authorized; 1,838,739,471
      and 176,092,373 shares issued and outstanding as of December 31, 2009 and
      June 30, 2009, respectively
                    
                    
                    18,388
                    
                    
                    
                    1,761Common
      stock to be issued
                    
                    
                    —
                    
                    
                    
                    30Treasury
      stock, 40,000 shares as of December 31, 2009 and June 30,
    2009
                    
                    
                    —
                    
                    
                    
                    —Additional
      paid in capital
                    
                    
                    3,590,626
                    
                    
                    
                    2,726,796Accumulated
      deficit
                    
                    
                    (4,765,920
                    )
                    
                    
                    (4,146,023
                    )Total
      deficiency in stockholders' equity
                    
                    
                    (1,156,895
                    )
                    
                    
                    (1,417,425
                    )Total
      liabilities and deficiency in stockholders' equity
                    
                    $
                    249,698
                    
                    
                    $
                    57,000
 
 The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
  3
 
 ZEVOTEK,
INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 
 Three
      Months Ended December 31,
                                  
                                  
                                  Six
      Months Ended December 31,2009
                                  
                                  
                                  2008
                                  
                                  
                                  2009
                                  
                                  
                                  2008REVENUES:Sales
                                  
                                  $
                                  5,077
                                  
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  5,077
                                  
                                  
                                  $
                                  —Cost
      of sales
                                  
                                  
                                  1,521
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  1,521
                                  
                                  
                                  
                                  —Gross
      profit
                                  
                                  
                                  3,556
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  3,556
                                  
                                  
                                  
                                  —OPERATING
      EXPENSES:Selling
                                  
                                  
                                  86,571
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  86,571
                                  
                                  
                                  
                                  3,800General
      and administrative
                                  
                                  
                                  121,246
                                  
                                  
                                  
                                  159,164
                                  
                                  
                                  
                                  323,031
                                  
                                  
                                  
                                  316,266Total
      operating expense
                                  
                                  
                                  207,817
                                  
                                  
                                  
                                  159,164
                                  
                                  
                                  
                                  409,602
                                  
                                  
                                  
                                  320,066Loss
      from operations
                                  
                                  
                                  (204,261
                                  )
                                  
                                  
                                  (159,164
                                  )
                                  
                                  
                                  (406,046
                                  )
                                  
                                  
                                  (320,066
                                  )OTHER
      (EXPENSE):Interest,
      net
                                  
                                  
                                  (10,827
                                  )
                                  
                                  
                                  (11,734
                                  )
                                  
                                  
                                  (24,572
                                  )
                                  
                                  
                                  (23,124
                                  )Amortization
                                  
                                  
                                  (110,548
                                  )
                                  
                                  (48,233
                                  )
                                  
                                  
                                  (189,279
                                  )
                                  
                                  (86,143
                                  )Total
      other expense
                                  
                                  
                                  (121,375
                                  )
                                  
                                  
                                  (59,967
                                  )
                                  
                                  
                                  (213,851
                                  )
                                  
                                  
                                  (109,267
                                  )Net
      loss before provision for income taxes
                                  
                                  
                                  (325,636
                                  )
                                  
                                  
                                  (219,131
                                  )
                                  
                                  
                                  (619,897
                                  )
                                  
                                  
                                  (429,333
                                  )Income
      taxes
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —NET
      LOSS
                                  
                                  $
                                  (325,636
                                  )
                                  
                                  $
                                  (219,131
                                  )
                                  
                                  $
                                  (619,897
                                  )
                                  
                                  $
                                  (429,333
                                  )Net
      loss per common share, basic and fully diluted
                                  
                                  $
                                  (0.00
                                  )
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  (0.00
                                  )
                                  
                                  $
                                  (0.03
                                  )Weighted
      average number of common shares outstanding, basic and fully
      diluted
                                  
                                  
                                  670,885,307
                                  
                                  
                                  
                                  15,540,950
                                  
                                  
                                  
                                  500,533,096
                                  
                                  
                                  
                                  12,525,678
 
 The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
  4
 
 ZEVOTEK,
INC.
 CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
 For
the Period from June 30, 2008 to December 31, 2009
 (UNAUDITED)
 
 Preferred
      stock
                            
                            
                            
                            
                            
                            
                            
                            
                            Common
                            
                            
                            
                            
                            
                            
                            
                            
                            AdditionalSeries
      A
                            
                            
                            Series
      B
                            
                            
                            Common
      stock
                            
                            
                            Stock
      To
                            
                            
                            Treasury
      stock
                            
                            
                            Paid
      in
                            
                            
                            AccumulatedShares
                            
                            
                            Amount
                            
                            
                            Shares
                            
                            
                            Amount
                            
                            
                            Shares
                            
                            
                            Amount
                            
                            
                            Be
      Issued
                            
                            
                            Shares
                            
                            
                            Amount
                            
                            
                            Capital
                            
                            
                            Deficit
                            
                            
                            TotalBalance,
      June 30, 2008
                            
                            
                            50,000
                            
                            
                            $
                            1
                            
                            
                            
                            1,000,000
                            
                            
                            $
                            10
                            
                            
                            
                            3,784,920
                            
                            
                            $
                            38
                            
                            
                            $
                            —
                            
                            
                            
                            —
                            
                            
                            $
                            —
                            
                            
                            $
                            2,013,381
                            
                            
                            $
                            (3,324,225
                            )
                            
                            $
                            (1,310,795
                            )Common
      stock issued for services rendered
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            23,057,514
                            
                            
                            
                            231
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            188,992
                            
                            
                            
                            —
                            
                            
                            
                            189,223Common
      stock issued for previously incurred debt
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,553,939
                            
                            
                            
                            15
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            6,135
                            
                            
                            
                            —
                            
                            
                            
                            6,150Common
      stock issued for licensing agreement
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            50,000,000
                            
                            
                            
                            500
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            39,500
                            
                            
                            
                            —
                            
                            
                            
                            40,000Conversion
      of debt and accrued interest for common stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            97,696,000
                            
                            
                            
                            977
                            
                            
                            
                            30
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            20,939
                            
                            
                            
                            —
                            
                            
                            
                            21,946Common
      stock issued and held in treasury
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            40,000
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —Fair
      value of Beneficial conversion feature
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            457,849
                            
                            
                            
                            —
                            
                            
                            
                            457,849Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (821,798
                            )
                            
                            
                            (821,798
                            )BALANCE,
      June 30, 2009
                            
                            
                            50,000
                            
                            
                            $
                            1
                            
                            
                            
                            1,000,000
                            
                            
                            $
                            10
                            
                            
                            
                            176,092,373
                            
                            
                            $
                            1,761
                            
                            
                            $
                            30
                            
                            
                            
                            40,000
                            
                            
                            $
                            —
                            
                            
                            $
                            2,726,796
                            
                            
                            $
                            (4,146,023
                            )
                            
                            $
                            (1,417,425
                            )Common
      stock issued for services rendered
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            100,529,798
                            
                            
                            
                            1,006
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            182,960
                            
                            
                            
                            —
                            
                            
                            
                            183,966Common
      stock issued for accrued expenses
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            30,000,000
                            
                            
                            
                            300
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            489,449
                            
                            
                            
                            —
                            
                            
                            
                            489,749Conversion
      of debt and accrued interest for common stock
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            1,525,117,300
                            
                            
                            
                            15,251
                            
                            
                            
                            (30
                            )
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            136,991
                            
                            
                            
                            —
                            
                            
                            
                            152,212Common
      stock issued for officer’s compensation
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            7,000,000
                            
                            
                            
                            70
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            10,430
                            
                            
                            
                            —
                            
                            
                            
                            10,500Fair
      value of Beneficial conversion feature
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            44,000
                            
                            
                            
                            —
                            
                            
                            
                            44,000Net
      loss
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            (619,897
                            )
                            
                            
                            (619,897
                            )BALANCE,
      December 31, 2009
                            
                            
                            50,000
                            
                            
                            $
                            1
                            
                            
                            
                            1,000,000
                            
                            
                            $
                            10
                            
                            
                            
                            1,838,739,471
                            
                            
                            $
                            18,388
                            
                            
                            $
                            —
                            
                            
                            
                            40,000
                            
                            
                            $
                            —
                            
                            
                            $
                            3,590,626
                            
                            
                            $
                            (4,765,920
                            )
                            
                            $
                            (1,156,895
                            )
 
 The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
  5
 
 ZEVOTEK,
INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six
Months Ended December 31, 2009 and 2008
 (UNAUDITED)
 
 2009
                    
                    
                    2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                    
                    $
                    (619,897
                    )
                    
                    $
                    (429,333
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Common
      stock issued for services rendered
                    
                    
                    183,966
                    
                    
                    
                    80,000Common
      stock issued for officer’s compensation
                    
                    
                    10,500
                    
                    
                    
                    —Amortization
      of beneficial conversion feature
                    
                    
                    189,279
                    
                    
                    
                    86,143(Increase)
      decrease in:Accounts
      receivable
                    
                    
                    (6,485
                    )
                    
                    
                    —Inventory
                    
                    
                    (28,520
                    )
                    
                    
                    —Prepayments
                    
                    
                    (30,694
                    )
                    
                    
                    —Other
      assets
                    
                    
                    (5,000
                    )
                    
                    
                    —(Decrease)
      increase in:Cash
      overdraft
                    
                    
                    —
                    
                    
                    
                    10Accounts
      payable and accrued expenses
                    
                    
                    76,795
                    
                    
                    
                    121,429Net
      cash used in operating activities:
                    
                    
                    (230,056
                    )
                    
                    
                    (141,751
                    )CASH
      FLOWS FROM INVESTING ACTIVITIES:
                    
                    
                    —
                    
                    
                    
                    —CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from advances payable
                    
                    
                    352,056
                    
                    
                    
                    —Proceeds
      from loans
                    
                    
                    —
                    
                    
                    
                    135,000Net
      cash provided by financing activities
                    
                    
                    352,056
                    
                    
                    
                    135,000Net
      increase (decrease) in cash and cash equivalents
                    
                    
                    122,000
                    
                    
                    
                    (6,751
                    )Cash
      and cash equivalents, beginning of period
                    
                    
                    —
                    
                    
                    
                    6,755Cash
      and cash equivalents, end of period
                    
                    $
                    122,000
                    
                    
                    $
                    4SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW:Interest
      paid
                    
                    $
                    —
                    
                    
                    $
                    —Taxes
      paid
                    
                    $
                    —
                    
                    
                    $
                    —Common
      stock issued for services rendered
                    
                    $
                    183,966
                    
                    
                    $
                    80,000Common
      stock issued for officer’s compensation
                    
                    $
                    10,500
                    
                    
                    $
                    —Common
      stock issued for settlement of accrued liabilities
                    
                    $
                    489,749
                    
                    
                    $
                    —Exchange
      of convertible debenture for advances payable
                    
                    $
                    44,000
                    
                    
                    $
                    —Debt
      and accrued interest converted for shares of common stock
                    
                    $
                    152,212
                    
                    
                    $
                    11,196
 
 The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.
  6
 
 ZEVOTEK,
INC.
 NOTES
TO UNAUDITED CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
 DECEMBER
31, 2009
 
 NOTE
A - SUMMARY OF ACCOUNTING POLICIES
 
 A summary
of the significant accounting policies applied in the preparation of the
accompanying unaudited condensed consolidated financial statements
follows.
 
 Business and Basis of
Presentation
 
 ZEVOTEK,
INC. (“Company” or “Registrant”) 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 Diet Coffee Inc, and on June 25,
2008 to the current existing name.
 
 The
Company’s wholly-owned subsidiary is Ionic Bulb.com, Inc (Ionic Bulb) which was
formerly named Zevotek, Inc. Through its subsidiary, it markets and sells a
range of home care and household products. In May 2007, the Company entered into
a license agreement to sell an energy saving compact fluorescent light bulb
named the Ionic Bulb. The Company plans to market the Ionic Bulb through TV
infomercials, catalogs, magazines and major U.S. retail and specialty stores and
our websites www.ionic-bulb.com and www.zevo-tek.com.
 
 General
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America.
 
 In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
consolidated financial statements include the accounts of the Registrant and its
wholly-owned subsidiary, Ionic Bulb.com, Inc. The Registrant formed its Ionic
Bulb.com, Inc. subsidiary on August 21, 2007 and started its operations during
the fiscal year ending June 30, 2008. All significant inter-company transactions
and balances have been eliminated in consolidation.
 
 The
company has adopted the fiscal year end of June 30.
 
 Reverse Stock
Split
 
 Effective
June 26, 2008, the Company authorized for its common stock a 50:1 reverse stock
split Also, par value for the Preferred Stock and Common stock was changed to
$.00001 per share All preferred and common stock and related information have
been retroactively restated.
 
 Revenue
Recognition
 
 The
Company recognizes revenue from product sales based on four basic criteria
must be met before revenue can be recognized:(1) persuasive evidence of
an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed
and determinable; and (4) collectibility is reasonably assured. Determination of
criteria (3) and (4) are based on management's judgment regarding the fixed
nature of the selling prices of the products delivered and the collectibility of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. The Company defers any revenue for which
the product was not delivered or is subject to refund until such time that the
Company and the customer jointly determine that the product has been delivered
or no refund will be required.
 
 Consideration Paid to
Customers
 
 The
Company offers our customers certain incentives in the form of cooperative
advertising arrangements, product markdown allowances, trade discounts, cash
discounts, and slotting fees. Markdown allowances, trade discounts, cooperative
advertising program participation and cash discounts are all recorded as
reductions of net sales. No customer incentives
are included in sales for the three and six months ended December 31, 2009 and
2008.
  7
 
 Use of
Estimates
 
 The
preparation of the financial statement in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
 
 Foreign Currency
Translation
 
 The
Company translates the foreign currency assets and liabilities at current
exchange rates, and related revenue and expenses are translated at average
exchange rates in effect during the period. Resulting translation adjustments
are recorded as a separate component in stockholders' equity. Foreign currency
translation gains and losses are included in the statement of
operations.
 
 Cash and Cash
Equivalents
 
 For the
purpose of the accompanying financial statements, all highly liquid investments
with a maturity of three months or less are considered to be cash
equivalents.
 
 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. Warehousing costs are charged to cost of
goods in the period the costs are incurred. The Company provides inventory
allowances based on estimates of obsolete inventories.
 
 Inventories
consist of finished products available for sale to distributors and customers.
At December 31, 2009 and June 30, 2009 Finished Goods inventory was $28,520 and
0, respectively.
 
 Allowance for doubtful
accounts
 
 The
Company maintains an allowance for doubtful accounts to reduce amounts to their
estimated realizable value, including reserves for customer and other receivable
allowances and incentives. In estimating the provision for doubtful accounts,
the company considers a number of factors including age of the accounts
receivable, trends and ratios involving the age of the accounts receivable and
the customer mix of each aging categories. As of December 31, 2009 and June 30,
2009 the allowance for doubtful accounts was $0.
 
 Property and
Equipment
 
 Property
and equipment are stated at cost. When retired or otherwise disposed, the
related carrying value and accumulated depreciation are removed from the
respective accounts and the net difference less any amount realized from
disposition, is reflected in earnings. For financial statement purposes,
property and equipment would be recorded at cost and depreciated using the
straight-line method over their estimated useful lives.
 
 Impairment of Long-Lived
Assets
 
 Long-lived
assets and certain identifiable intangibles held and used by the Company are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Events relating to
recoverability may include significant unfavorable changes in business
conditions, recurring losses, or a forecasted inability to achieve break-even
operating results over an extended period. The Company evaluates the
recoverability of long-lived assets based upon forecasted discounted cash flows.
Should impairment in value be indicated, the carrying value of intangible assets
will be adjusted, based on estimates of future discounted cash flows resulting
from the use and ultimate disposition of the asset. Assets to be disposed of are
reported at the lower of the carrying amount or the fair value less disposal
costs.
 
 Advertising
 
 The
Company charges the costs of advertising to expenses as incurred.  The
Company charged $69,331 and $0 to operations for the six months ended December
31, 2009 and 2008, respectively.
 
 Research and
Development
 
 All
research and development costs must be charged to expense as incurred.
Accordingly, internal research and development costs are expensed as incurred.
Third-party research and development costs are expensed when the contracted work
has been performed or as milestone results have been
achieved.  Company-sponsored research and development costs related to
both present and future products are expensed in the period incurred. The
Company had no expenditures on research and product development for three and
six months ended December 31, 2009 and 2008, respectively.
  8
  Stock Based
Compensation
 
 The
Company made no employee stock-based compensation grants before June 30, 2007,
during the years ended June 30, 2009 and 2008 and during the three and six
months ended December 31, 2009; therefore has no unrecognized stock compensation
related liabilities or expense unvested or vested.
 
 Loss 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.  Potentially dilutive shares of common stock realizable
from the conversion of our convertible debentures of 3,991,766,653 and
347,494,370, respectively at December 31, 2009 and 2008, are excluded from the
computation of diluted net loss per share as their inclusion would be
anti-dilutive.
 
 Concentration of Credit
Risk
 
 Financial
instruments and related items, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash, cash equivalents and
trade receivables. The Company places its cash and temporary cash investments
with high credit quality institutions. At times, such investments may be in
excess of the FDIC insurance limit.
 
 Liquidity
 
 As shown
in the accompanying unaudited condensed consolidated financial statements, the
Company’s current liabilities exceed its current assets by $1,100,800 as of
December 31, 2009. The Company has incurred a net loss of $619,897 and used
$230,056 in cash flows for operations during the six months ended December 31,
2009.
 
 Reclassifications
 
 Certain
reclassifications have been made in prior year's financial statements to conform
to classifications used in the current year.
 
 Recent accounting
pronouncements
 
 New Accounting Requirements
and Disclosures
 
 Accounting Standards Codification
and GAAP Hierarchy —Effective for interim and annual periods
ending after September 15, 2009, the Accounting Standards Codification and
related disclosure requirements issued by the FASB became the single official
source of authoritative, nongovernmental GAAP. The ASC simplifies GAAP, without
change, by consolidating the numerous, predecessor accounting standards and
requirements into logically organized topics. All other literature not included
in the ASC is non-authoritative. We adopted the ASC as of September 30, 2009,
which did not have any impact on our results of operations, financial condition
or cash flows as it does not represent new accounting literature or
requirements.  All references to pre-codified U.S. GAAP have been
removed from this Form 10Q.
 
 Determining Fair Value in Inactive
Markets — Effective for interim and annual periods beginning
after June 15, 2009, GAAP established new accounting standards for determining
fair value when the volume and level of activity for the asset or liability have
significantly decreased and the identifying transactions are not orderly. The
new standards apply to all fair value measurements when appropriate. Among other
things, the new standards:
 
 •
              affirm
      that the objective of fair value, when the market for an asset is not
      active, is the price that would be received in a sale of the asset in an
      orderly transaction;
 
 •
              clarify
      certain factors and provide additional factors for determining whether
      there has been a significant decrease in market activity for an asset when
      the market for that asset is not
active;
 
 •
              provide
      that a transaction for an asset or liability may not be presumed to be
      distressed (not orderly) simply because there has been a significant
      decrease in the volume and level of activity for the asset or liability,
      rather, a company must determine whether a transaction is not orderly
      based on the weight of the evidence, and provide a non-exclusive list of
      the evidence that may indicate that a transaction is not orderly;
      and
 
 •
              require
      disclosure in interim and annual periods of the inputs and valuation
      techniques used to measure fair value and any change in valuation
      technique (and the related inputs) resulting from the application of the
      standard, including quantification of its effects, if
      practicable.
 
 These new
accounting standards must be applied prospectively and retrospective application
is not permitted. See Note K for disclosure of our fair value
measurements.
  9
 
 Financial
Instruments — Effective for interim and annual periods ending
after June 15, 2009, GAAP established new disclosure requirements for the
fair value of financial instruments in both interim and annual financial
statements. Previously, the disclosure was only required annually. We adopted
the new requirements as of September 30, 2009, which resulted in no change to
our accounting policies, and had no effect on our results of operations, cash
flows or financial position, but did result in the addition of interim
disclosure of the fair values of our financial instruments. See Note 4 for
disclosure of the fair value of our debt.
 
 Subsequent
Events — Effective for interim and annual periods ending after
June 15, 2009, GAAP established general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. The new
requirements do not change the accounting for subsequent events; however, they
do require disclosure, on a prospective basis, of the date an entity has
evaluated subsequent events. We adopted these new requirements as of September
30, 2009, which had no impact on our results of operations, financial condition
or cash flows.
 
 Consolidation— Effective
for interim and annual periods beginning after November 15, 2009, with
earlier application prohibited, GAAP amends the current accounting standards for
determining which enterprise has a controlling financial interest in a VIE and
amends guidance for determining whether an entity is a VIE. The new standards
will also add reconsideration events for determining whether an entity is a VIE
and will require ongoing reassessment of which entity is determined to be the
VIE’s primary beneficiary as well as enhanced disclosures about the enterprise’s
involvement with a VIE. We are currently assessing the future impact these new
standards will have on our results of operations, financial position or cash
flows.
 
 Transfers and Servicing —
Effective for interim and annual periods beginning after November 15, 2009,
GAAP eliminates the concept of a qualifying special purpose entity, changes the
requirements for derecognizing financial assets and requires additional
disclosures. We are currently assessing the future impact these new standards
will have on our results of operations, financial position or cash
flows.
 
 Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on the Company’s present or future
consolidated financial statements.
 
 NOTE
B - GOING CONCERN MATTERS
 
 The
accompanying unaudited condensed consolidated 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 consolidated financial statements, for the six
months ended December 31, 2009, the Company incurred a net loss of
$619,897. At December 31, 2009, the Company had a working capital deficit of
$1,100,800 and accumulated losses of $4,765,920. 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 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 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 unaudited condensed
consolidated financial statements do not include any adjustments that might
result should the Company be unable to continue as a going concern.
 
 NOTE
C – LICENSING AGREEMENT AND DISTRIBUTION AGREEMENT
 
 On
February 24, 2009, the Company entered into an Exclusive License and Sales
Agreement whereby the Company has worldwide exclusive rights to manufacture,
market use, sell, distribute and advertise certain licensed
products.  The license is on a year to year basis with automatic
renewal subject to the Company re-acquire listing on the OTC BB exchange by
February 14, 2010 and files all quarterly and annual reports by due dates,
inclusive of allowable extensions.
 
 In
exchange for the exclusive license, the Company issued 50,000,000 shares of its
common stock.  The license was valued at the market price of the
underlying security.
 
 In
addition, the Agreement also provides for the retention of Ryu as a
non-exclusive independent contractor sales representative to obtain purchase
orders for the Licensed Products on our behalf  In consideration for
his consulting services, we agreed to issue Ryu 750,000 shares of Common Stock
for each $100,000 in gross sales of the Licensed Product by Ryu (or any Sales
Associate hired by him) on or before February 28, 2010 up to a maximum of
75,000,000 shares of Common Stock (collectively, the “Incentive
Shares”).  The Incentive Shares shall not vest unless Ryu (or
any Sales Associate hired by him) shall have collectively procured gross sales
of $5,000,000 for the Licensed Products on or before February 28, 2010 (the
“Target”).  If
Ryu fails to achieve the Target, such Incentive Shares shall be null and void
and of no further force and effect.  In addition to the Incentive
Shares, we also agreed to pay Ryu a commission at the rate 50% of all Net
Profits (as defined on the Agreement) recognized by us on sales of the Licensed
Products made by Ryu (or Sales Associates hired by Ryu) on our behalf during the
period of this Agreement.
  10
 
 On April
29, 2009 the Company entered into a Distribution Agreement with a German
distributor pursuant to which the Company granted such distributor the exclusive
right (subject to minimum sales in the first year) to advertise, market and sell
our ionic bulb product in Germany, Austria, Switzerland, Liechtenstein, Czech
Republic, Slovakia, Hungary, Romania and Poland (the
“Territory”).  Upon satisfactory sales of an initial order (in
dealer’s reasonable discretion) of 5,000 units of the Company’s ionic bulb
product, the distributor agreed to purchase 5,000 units of the Company’s ionic
bulb product per month during the first year of the contact to maintain
exclusive status in the Territory.  The Company also granted
distributor a license to use certain marketing material to advertise and sell
the ionic bulb product.  Such distributor also agreed to maintain
general and product liability insurance in an amount of at least $1,000,000 and
agreed to name us as an additional insured under such policy.  The
term of the agreement is for one year and will be automatically renewed for
successive 1 year periods if the minimum quantities (5,000/month and
60,000/year) are met.
 
 NOTE
D- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
 Accounts
payable and accrued liabilities are as follows:
  December 31,
                                    2009
                                  
                                  
                                  June 30,
                                    2009(unaudited)Accounts
      payable
                                  
                                  $
                                  48,123
                                  
                                  
                                  $
                                  —Accrued
      professional fees
                                  
                                  
                                  100,000
                                  
                                  
                                  
                                  100,000Accrued
      payroll and payroll taxes
                                  
                                  
                                  332,091
                                  
                                  
                                  
                                  799,280Old
      disputed accounts payable
                                  
                                  
                                  136,405
                                  
                                  
                                  
                                  195,181Accrued
      interest
                                  
                                  
                                  63,949
                                  
                                  
                                  
                                  43,494Other
      accrued liabilities
                                  
                                  
                                  137,831
                                  
                                  
                                  
                                  94,316Total
                                  
                                  $
                                  818,399
                                  
                                  
                                  $
                                  1,232,271
 
 NOTE
E - CONVERTIBLE NOTES PAYABLE AND DEMAND NOTES
  December 31,
                        2009
                      
                      
                      June 30,
                        2009(unaudited)Notes
      Payable to Interstellar Holdings, LLC.Convertible
      term note (a)
                      
                      $
                      6,623
                      
                      
                      $
                      87,013Convertible
      term note ( b )
                      
                      
                      87,535
                      
                      
                      
                      155,789Convertible
      term note (c)
                      
                      
                      50,000
                      
                      
                      
                      50,000Convertible
      term note (d)
                      
                      
                      90,274
                      
                      
                      
                      92,924Convertible
      term note (e)
                      
                      
                      113,972
                      
                      
                      
                      113,972Convertible
      term note (f)
                      
                      
                      7,932
                      
                      
                      
                      7,932Convertible
      term note (g)
                      
                      
                      44,000
                      
                      
                      
                      —Subtotal
                      
                      
                      400,336
                      
                      
                      
                      507,630Less:
      discount on debt
                      
                      
                      (188,549
                      )
                      
                      
                      (
      333,827
                      )211,787
                      
                      
                      
                      173,803Less:
      current portion
                      
                      
                      (110,692
                      )
                      
                      
                      (134,139
                      )Long
      term debt
                      
                      $
                      101,095
                      
                      
                      $
                      39,664
 
 a)
              On May 14, 2008, the Company
      entered into a convertible term note bearing interest at 10% per annum
      with a maturity date of May 14, 2010.   At any time at the
      option of the note holder, principal and interest payments may be paid in
      common stock at a conversion price of $0.0001 per share (see
      below).
 b)
              On May 27, 2008, the Company
      entered into a convertible term note bearing interest at 10% per annum
      with a maturity date of May 27, 2010.   At any time at the
      option of the note holder, principal and interest payments may be paid in
      common stock at a conversion price of $0.0001 per share (see
      below).
 c)
              On January 1, 2008, Company
      entered into a convertible term note for the principal amount of $50,000
      bearing interest at 7% per annum with a maturity date of June 30,
      2008.  This note is convertible into common stock at 90% of the
      common stock closing price at June 30, 2008, or approximately 370,000
      shares of common stock.  The Company is in default of payment of
      principal and interest on the note and the Company is in discussions with
      the note holder about amending the conversion terms to cure the
      default.
 d)
              On January 8, 2009, the Company
      entered into a convertible term note bearing interest at 10% per annum
      with a maturity date of January 8, 2011.   At any time at
      the option of the note holder, principal and interest payments may be paid
      in common stock at a conversion price of $0.0001 per share (see
      below).
  11
  e)
              On
      March 9, 2009, the Company entered into a convertible term note bearing
      interest at 10% per annum with a maturity date of March 9,
      2011.   At any time at the option of the note holder,
      principal and interest payments may be paid in common stock at a
      conversion price of $0.0001 per share (see below).f)
              Of
      the convertible term notes entered into on May 14, 2008, certain notes
      having a principal amount of $7,932 and $7,932 as of September 30, 2009
      and June 30, 2009, respectively, were not amended with respect to their
      conversion price and, at any time at the option of the note holder,
      principal and interest payments may be paid in common stock at a
      conversion price of $0.001 per share (see below).g)
              On
      July 28, 2009, the Company entered into a convertible term note bearing
      interest at 10% per annum with a maturity date of July 28,
      2011.   At any time at the option of the note holder,
      principal and interest payments may be paid in common stock at a
      conversion price of $0.0001 per share (see
below).
  In
accordance with Emerging Issues Task Force Issue 98-5, Accounting for
Convertible Securities with a Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios ("EITF 98-5"), the Company recognized an imbedded
beneficial conversion feature present in the notes. The Company allocated a
portion of the proceeds equal to the intrinsic value of that feature to
additional paid in capital. The Company recognized and measured an aggregate of
$314,049 of the proceeds, which was equal to the intrinsic value of the imbedded
beneficial conversion feature at the time, to additional paid in capital and a
discount against the Notes issued during the year ended June 30, 2008. The debt
discount attributed to the beneficial conversion feature was originally
amortized over the Notes maturity period (two years) as interest expense,
adjusted for conversion of debt to common stock. In January 2009 through March
2009, the Company restructured certain Notes to a conversion rate of $0.0001 per
share with a two year term and accordingly fully amortized the remaining debt
discount of $206,160. In accordance with Emerging Issues Task Force Issue 98-5,
Accounting for Convertible Securities with a Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios ("EITF 98-5"), the Company recognized
an imbedded beneficial conversion feature present in the notes. The Company
recognized and measured an aggregate of $457,849 of the proceeds, which is equal
to the intrinsic value of the imbedded amended beneficial conversion feature, to
additional paid in capital and a discount against the Notes issued during the
year ended June 30, 2009. The remaining debt discount attributed to the original
beneficial conversion feature was expensed at the time the Notes were amended
and the $457,849 assigned to the amended beneficial conversion feature is being
amortized over the Notes maturity period.
 
 On July
28, 2009, the Company issued a $44,000 convertible note having the same terms as
the amended outstanding convertible notes.  The Company recognized and
measured an aggregate of $44,000 of the proceeds, which is equal to the
intrinsic value of the imbedded amended beneficial conversion feature, to
additional paid in capital and a discount against the note issued, with the
discount being amortized over the note’s two-year term.  During the
three and six months ended December 31, 2009, amortization related to the
beneficial conversion feature on the convertible notes was $110,548 and
$189,279, respectively. During the three and six months ended December 31, 2008,
amortization related to the beneficial conversion feature on the convertible
notes was $48,233 and $86,143, respectively.
 
 During
the three months ended December 31, 2009, two note holders submitted conversion
notices to the Company seeking to convert outstanding note principal and
interest on the notes they hold into Company common stock.  As a
result of not processing the conversion notices, the Company is in default of
their notes and is required under the note terms to repay all principal and
accrued interest upon the earlier of receipt of a request for repayment by the
note holders or upon the maturity dates.
 
 NOTE
F – STOCKHOLDERS’ EQUITY
 
 Preferred
Stock
 
 The
Company has authorized 10,000,000 shares of Preferred Stock of which 50,000
shares have been designated as Series A Preferred stock, par value $0.00001, and
1,000,000 shares have been designated as Series B Preferred Stock, par
value $0.00001 within the limitations and restrictions stated in the Certificate
of Incorporation of the Company.
 
 The
Company 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.
 
 The
Company designated and issued 1,000,000 shares of Series B Preferred
Stock.  On May 14, 2008 the Company and an unrelated third party
entered into an exchange agreement under which the third party note holder
exchanged a $21,026 promissory note for 1,000,000 shares of Series B Preferred
Stock.   Each share of Series B Preferred Stock is entitled to
5,000 votes on all matters submitted to the stockholders of the
Company.
  12
 
 Common
stock
 
 The
Company effectuated a 1 for 50 reverse stock split on June 26, 2008. All common
stock and related information has been retroactively restated. In addition,
contemporaneously with the stock split the Company increased its authorized
Common stock, par value $0.00001 to 1,000,000,000 shares. Prior to this date,
the authorized shares were 200,000,000 shares. On October 14, 2009, the company
authorized capital was increased to 5,000,000,000
 
 At
December 31, 2009 and June 30, 2009, common shares issued and outstanding were
1,838,739,471
and 176,092,373, respectively.
 
 On
September 11, 2007, the Company adopted its 2007 Stock Incentive Plan (the “2007
Plan”). The Company is permitted to issue up to 21,450,000 shares of common
stock under the Plan in the form of stock options, restricted stock awards, and
stock awards to employees, non-employee directors, and outside
consultants.  As of December 31, 2009, 14,429,000 shares have been
issued under this 2007 Plan.
 
 On
December 13, 2007, the Company adopted its 2007 Stock Incentive Plan No. 2. (the
“2007 Plan #2”). The Company is permitted to issue up to 17,994,000 shares of
common stock under the Plan in the form of stock options, restricted stock
awards, and stock awards to employees, non-employee directors, and outside
consultants.  As of December 31, 2009, 359,880 shares have been issued
under this 2007 Plan #2.
 
 On
February 21, 2008 the Company adopted its 2008 Stock Incentive Plan. The Company
is permitted to issue up to 33,000,000 shares of common stock under the Plan in
the form of stock options, restricted stock awards, and stock awards to
employees, non-employee directors, and outside consultants. As of December 31,
2009, 21,340,685 shares have been issued under this Plan.
 
 On
February 21, 2008 the Company adopted its 2008 California Stock Incentive Plan.
The Company is permitted to issue up to 33,000,000 shares of common stock under
the Plan in the form of stock options, restricted stock awards, and stock awards
to employees, non-employee directors, and outside consultants.  As of
December 31, 2009, 32,925,190 shares have been issued under this
Plan.
 
 On
September 15, 2009 the Company adopted its 2009 Stock Incentive Plan. The
Company is permitted to issue up to 136,715,000 shares of common stock under the
Plan in the form of stock options, restricted stock awards, and stock awards to
employees, non-employee directors, and outside consultants.  As of
December 31, 2009, no shares have been issued under this Plan.
 
 On
September 15, 2009 the Company adopted its 2009 California Stock Incentive Plan.
The Company is permitted to issue up to 136,715,000 shares of common stock under
the Plan in the form of stock options, restricted stock awards, and stock awards
to employees, non-employee directors, and outside consultants.  As of
December 31, 2009, 25,000,000 shares have been issued under this
Plan.
 
 During
the six months ending December 31, 2009, the Company issued 130,529,728 shares
of common stock, valued at $673,715 for services and accrued
expenses.
 
 During
the six months ended December 31, 2009, the Company converted debt and accrued
interest of $152,212 into 1,525,117,300 shares of common stock, excluding
3,000,000 shares the Company was committed to issue as of June 30,
3009.
 
 During
the six months ending December 31, 2009, the Company issued 7,000,000 shares of
common stock as officer’s compensation, valued at $10,500
 
 Treasury
Stock
 
 As of
December 31, 2009 and June 30, 2009, the Company had 40,000 shares of common
stock held in treasury that are carried at $0 based on a $0.00001 par
value.
 
 NOTE
G - INCOME TAXES
 
 The
Company recognizes 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. A
management estimate that at December 31, 2009, the Company has available for
federal income tax purposes a net operating loss carry forward of approximately
$2.5 million expiring by the year 2028, 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 December 31, 2009
are as follows:
  13
 
 Net
      operating loss carry forward
                        
                        $
                        1,800,000Valuation
      allowance
                        
                        
                        (1,800,000
                        )Net
                        
                        $
                        0
 
 The
Company has not filed their federal or state income tax returns for fiscal years
ended June 30, 2006, 2007, 2008 and 2009.
 
 NOTE
H - STOCK OPTIONS AND WARRANTS
 
 During
the six months ended December 31, 2009, the Company did not issue any stock
warrants.  As of December 31, 2009, no warrants are
outstanding.
 
 On
December 13, 2007, the Company agreed to grant Mr. Engel options to purchase
72,000 shares of common stock, which options would vest at a rate of 2,000
shares per month. These options have not yet been deemed granted.
 
 NOTE
I - COMMITMENTS AND CONTINGENCIES
 
 Employment
Agreement
 
 On
December 13, 2007, the Company entered into an employment agreement with Adam
Engel pursuant to which the Company employs Mr. Engel as President, Chief
Executive Officer, Chief Financial Officer, Treasurer and Secretary. The
agreement is for an initial term of three years and provides for an annual base
salary during the term of the agreement of $120,000, payable either in cash or
stock. The Company also agreed to grant Mr. Engel options to purchase 72,000
shares of Company common stock with an exercise price of $0.25 per share (which
price shall not be less than 85% of the “fair market value” of the Company’s
common stock on the date of grant), which options would vest at a rate of 2,000
shares per month. These options have not yet been granted. In addition to salary
and benefit provisions, the agreements include defined commitments should we
terminate his employment without cause and 24 month non-compete/non solicitation
terms.
 
 U.S. Federal Trade
Commission Settlement
 
 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 was conducting an
investigation into advertising claims made for the Company’s weight loss product
known as “Slim Coffee.”  The purpose of the investigation was to determine
whether the Company, in connection with its sales of Slim Coffee, engaged in
unfair or deceptive acts or practices and false advertising. The FTC threatened
to file a complaint in the United States District Court, Southern District of
New York, alleging false advertising, unless the Company and the FTC could reach
a satisfactory resolution to the matter.  A negotiated settlement has been
reached with the FTC under which the Company, its officers and directors did not
admit any wrongdoing.  On January 10, 2008, pursuant to a stipulated final
judgment and order, the United States District Court, Southern District of New
York, entered a final judgment and order against the Company in the amount of
$923,910.  The full amount of the judgment, and payment of any portion of
it is suspended and cannot be reinstated so long as (a) the Company abides by
the reporting and monitoring requirements of the judgment, (b) does not make
false advertising claims in connection with any of its products in the future,
and (c) its past financial disclosures to the FTC were materially
accurate. Company to comply with terms of the stipulation and do not
anticipate incurring a liability for the judgment, however there can be no
assurance of compliance.  Should Company fail to comply with the FTC’s
final judgment, this could have a material adverse on Companies business,
financial condition and results of operations.
 
 Royalty commitment and
Agreement Termination
 
 On May
18, 2007, the Company entered into a Consulting, License and Supply Agreement
with Jason Ryu, pursuant to which the Company licensed the right to market and
sell a fluorescent light bulb that contains an air purifying microchip ion
emitter from Mr. Ryu. In exchange for this license the Company agreed to pay Mr.
Ryu a royalty of $0.20 per unit for the first 1.5 million units sold by the
Company and the lesser of $0.15 per unit or 5% of manufacturing costs for all
additional units. The initial term of this agreement was for two years and was
to be automatically be renewed for subsequent two year periods if at least 5
million units are old by the Company during each period. Within ninety days from
the date of this Agreement, the Company was required to place an order not less
than 100,000 units and at least 600,000 units each quarter
thereafter.  Mr. Ryu sent notice to the Company that license agreement
shall continue on a non-exclusive basis.
 
 On
February 24, 2009, the Company entered into an Exclusive License and Sales
Agreement whereby the Company has worldwide exclusive rights to manufacture,
market use, sell, distribute and advertise certain licensed
products.  The license is on a year to year basis with automatic
renewal subject to the Company re-acquire listing on the OTC BB exchange by
February 14, 2010 and files all quarterly and annual reports by due dates,
inclusive of allowable extensions.  In exchange for the exclusive
license, the Company issued 50,000,000 shares of its common stock.
  14
  In
addition, the Agreement also provides for the retention of Ryu as a
non-exclusive independent contractor sales representative to obtain purchase
orders for the Licensed Products on companies behalf  In consideration
for his consulting services, Company agreed to issue Ryu 750,000 shares of
Common Stock for each $100,000 in gross sales of the Licensed Product by Ryu (or
any Sales Associate hired by him) on or before February 28, 2010 up to a maximum
of 75,000,000 shares of Common Stock (collectively, the “Incentive
Shares”).  The Incentive Shares shall not vest unless Ryu (or
any Sales Associate hired by him) shall have collectively procured gross sales
of $5,000,000 for the Licensed Products on or before February 28, 2010 (the
“Target”).  If
Ryu fails to achieve the Target, such Incentive Shares shall be null and void
and of no further force and effect.  In addition to the Incentive
Shares, Company also agreed to pay Ryu a commission at the rate 50% of all Net
Profits (as defined on the Agreement) recognized by Company on sales of the
Licensed Products made by Ryu (or Sales Associates hired by Ryu) on Companies
behalf during the period of this Agreement.
 
 Distribution
Agreement
 
 On April
29, 2009 the Company entered into a Distribution Agreement with a German
distributor pursuant to which the Company granted such distributor the exclusive
right (subject to minimum sales in the first year) to advertise, market and sell
our ionic bulb product in Germany, Austria, Switzerland, Liechtenstein, Czech
Republic, Slovakia, Hungary, Romania and Poland (the
“Territory”).  Upon satisfactory sales of an initial order (in
dealer’s reasonable discretion) of 5,000 units of the Company’s ionic bulb
product, the distributor agreed to purchase 5,000 units of the Company’s ionic
bulb product per month during the first year of the contact to maintain
exclusive status in the Territory.  The Company also granted
distributor a license to use certain marketing material to advertise and sell
the ionic bulb product.  Such distributor also agreed to maintain
general and product liability insurance in an amount of at least $1,000,000 and
agreed to name us as an additional insured under such policy.  The
term of the agreement is for one year and will be automatically renewed for
successive 1 year periods if the minimum quantities (5,000/month and
60,000/year) are met.
 
 Payroll
Taxes
 
 At
December 31, 2009, the Company is delinquent with filing and remitting payroll
taxes of approximately $83,227 including estimated penalties and interest
related to payroll taxes withheld since April 2007. The Company has recorded the
delinquent payroll taxes, which are included in accrued expenses on the balance
sheet. Although the Company has not entered into any formal repayment agreements
with the respective tax authorities, management plans to make payment as funds
become available. Penalties and interest amounts are subject to increase based
on a number of factors that can cause the estimated liability to increase
further. Interest and penalties were accrued in an amount estimated to cover the
ultimate liability.
 
 Sales
Taxes
 
 At
December 31, 2009, the Company is delinquent with remitting sales taxes of
approximately $16,000, including related estimated penalties and interest
related to sales taxes withheld since 2006 in the state of New York. The Company
has recorded the delinquent sales taxes, which are included in accrued expenses
on the balance sheet. Although the Company has not entered into any formal
repayment agreements with the respective tax authorities, management plans to
make payment as funds become available. Penalties and interest amounts are
subject to increase based on a number of factors that can cause the estimated
liability to increase further. Interest and penalties were accrued in an amount
estimated to cover the ultimate liability.
 
 NOTE
J - FAIR VALUE MEASUREMENT
 
 Fair Value Measurements under
GAAP clarifies the principle that fair value should be based on the assumptions
market participants would use when pricing an asset or liability and establishes
a fair value hierarchy that prioritizes the information used to develop those
assumptions. Under the standard, fair value measurements are separately
disclosed by level within the fair value hierarchy.  It only applies
to accounting pronouncements that already require or permit fair value measures,
except for standards that relate to share-based payments
 
 Level 1 -
Quoted prices in active markets for identical assets or
liabilities.
 
 Level 2 -
Observable inputs other than Level 1 prices such as quoted prices for similar
assets or liabilities; quoted prices in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which all significant inputs are observable or can be derived principally from
or corroborated by observable market data for substantially the full term of the
assets or liabilities.
 
 Level 3 -
Unobservable inputs to the valuation methodology that are significant to the
measurement of fair value of assets or liabilities.
 
 To the
extent that valuation is based on models or inputs that are less observable or
unobservable in the market, the determination of fair value requires more
judgment.  In certain cases, the inputs used to measure fair value may fall
into different levels of the fair value hierarchy.  In such cases, for
disclosure purposes, the level in the fair value hierarchy within which the fair
value measurement is disclosed and is determined based on the lowest level input
that is significant to the fair value measurement.
 
 The
carrying value of the Company’s cash and cash equivalents, accounts receivable,
prepayments, accounts payable, short-term borrowings (including convertible
notes payable), and other current assets and liabilities approximate fair value
because of their short-term maturity.  All other significant financial
assets, financial liabilities and equity instruments of the Company are either
recognized or disclosed in the consolidated financial statements together with
other information relevant for making a reasonable assessment of future cash
flows, interest rate risk and credit risk. Where practicable the fair values of
financial assets and financial liabilities have been determined and disclosed;
otherwise only available information pertinent to fair value has been
disclosed.
  15
  The
following table sets forth the Company’s short investments as of December 31,
2009, which are measured at fair value on a recurring basis by level within the
fair value hierarchy.  The table is classified based on the lowest
level of input that is significant to the fair value measurement:
 
 Quoted
                                                  Prices
      in
                                                  Active
                                                  Markets
      for
                                                  Identical
                                                  Instruments
                                                  Level
      1
                                                
                                                
                                                Significant
                                                  Other
                                                  Observable
                                                  Inputs
                                                  Level
      2
                                                
                                                
                                                Significant
                                                  Unobservable
                                                  Inputs
                                                  Level
      3
                                                
                                                
                                                Assets
      at
                                                  Fair
      ValueAssets:Security
      deposit
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                5,000
                                                
                                                
                                                $
                                                5,000License
      agreement
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                40,000
                                                
                                                
                                                $
                                                40,000Liabilities:Advances
      payable
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                (352,056
                                                )
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                (352,056
                                                )Convertible
      notes payable
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                (211,787
                                                )
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                (211,787
                                                )
 
 NOTE
K – SUBSEQUENT EVENTS
 
 The
Company has evaluated subsequent events through the date of this filing
(February 19, 2010).
 
 Since
December 31, 2009, the Company issued an aggregate of 1,818,182 shares of common
stock to consultants for services rendered.
 
 Since
December 31, 2009, the Company issued an aggregate of 328,000,000 shares of
common stock upon conversion of convertible promissory notes.
  16




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





The
following discussion and analysis should be read in conjunction with our
unaudited consolidated financial statements and related notes included in this
report.  This report contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.  The
statements contained in this report that are not historic in nature,
particularly those that utilize terminology such as “may,” “will,” “should,”
“expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable
terminology are forward-looking statements based on current expectations and
assumptions.  Various risks and uncertainties could cause actual
results to differ materially from those expressed in forward-looking
statements.





The
forward-looking events discussed in this annual report, the documents to which
we refer you and other statements made from time to time by us or our
representatives, may not occur, and actual events and results may differ
materially and are subject to risks, uncertainties and assumptions about
us.  For these statements, we claim the protection of the “bespeaks
caution” doctrine.  All forward-looking statements in this document
are based on information currently available to us as of the date of this
report, and we assume no obligation to update any forward-looking
statements.  Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results to
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements.


17


General





The
following discussion and analysis is provided to increase the understanding of,
and should be read in conjunction with, our unaudited financial statements and
related notes included elsewhere in this Report.  Historical results
and percentage relationships among any amounts in these financial statements are
not necessarily indicative of trends in operating results for any future period.
This report contains “forward looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995.  The statements,
which are not historical facts contained in this Report, including this
Management’s discussion and analysis of financial condition and results of
operation, and notes to our unaudited financial statements, particularly those
that utilize terminology such as “may” “will,” “should,” “expects,”
“anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are
forward-looking statements. Such statements are based on currently available
operating, financial and competitive information, and are subject to various
risks and uncertainties. Future events and our actual results may differ
materially from the results reflected in these forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
dependence on existing and future key strategic and strategic end-user
customers, limited ability to establish new strategic relationships, ability to
sustain and manage growth, variability of operating results, our expansion and
development of new service lines, marketing and other business development
initiatives, the commencement of new engagements, competition in the industry,
general economic conditions, dependence on key personnel, the ability to
attract, hire and retain personnel who possess the technical skills and
experience necessary to meet the service requirements of our clients, the
potential liability with respect to actions taken by our existing and past
employees, risks associated with international sales, and other risks described
herein and in our other filings with the Securities and Exchange
Commission.





The
safe harbor for forward-looking statements provided by Section 21E of the
Securities Exchange Act of 1934 excludes issuers of “penny stock” (as defined
under Rule 3a51-1 of the Securities Exchange Act of 1934). Our common stock
currently falls within that definition





All
forward-looking statements in this document are based on information currently
available to us as of the date of this report, and we assume no obligation to
update any forward-looking statements.  Forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
the actual results to differ materially from any future results, performance or
achievements expressed or implied by such forward looking
statements.





The
following discussion of our financial condition and results of operations should
be read in conjunction with our unaudited financial statements and related notes
appearing elsewhere in this report.





Company
History





We were
incorporated in the State of Delaware on December 19, 2005 and amended our
Certificate of Incorporation on March 1, 2006. On March 1, 2006, we changed our
name from The Diet Coffee Company, Inc. to Diet Coffee, Inc. and on June 26,
2008, we changed our name to Zevotek, Inc.   Our principal
executive offices are located at 134 Cedar Street, Nutley, NJ 07110. Our
telephone number is (201) 394-8684.





We are
engaged in the direct marketing and distribution of consumer
products.  Our first offering was the Slim Coffee product line, which
featured coffee beverages. We no longer sell or market Slim Coffee products and
do not anticipate selling Slim Coffee products in the fiscal year ended June 30,
2008.  In May 2007, we entered into a license agreement to sell an
  energy saving compact fluorescent light bulb named the Ionic Bulb, which
agreement was replaced by an Exclusive License and Sales Agreement dated
February 24, 2009 under which we currently retain the exclusive worldwide rights
to manufacture, market, use, sell, distribute and advertise the Ionic
Bulb.  We plan to market the Ionic Bulb through TV infomercials,
catalogs, magazines and major U.S. retail and specialty stores and our websites
www.zevo-tek.com
and   www.newionicbulb.
com
..





Recent
Developments





In April
2009, we signed a Distribution Agreement with a German distributor pursuant to
which we granted such distributor the exclusive right (subject to minimum sales
in the first year) to advertise, market and sell our ionic bulb product in
Germany, Austria, Switzerland, Liechtenstein, Czech Republic, Slovakia, Hungary,
Romania and Poland.





On August
25, 2009 we announced that we had completed an extensive search in order to
increase sales and presence in the retail markets and is close to completing a
sales partnership with ELS Group LLC of Danbury, CT.  Since that
announcement, we have terminated negotiations with ELS Group due to
disagreements which arose during negotiations of the definitive
agreement.  We are continuing our efforts to determine the most
efficient and effective way to increase sales in our target
markets.





In
September 2009, we signed a media buying agreement with a Diray TV, a media
buying agency, for buying TV airtime to advertise our ionic bulb
product.





In
October 2009, we signed a sales processing and warehousing agreement with
Imagine Fulfillment Services to handle billing and shipping for orders of our
ionic bulb product.





On
October 30, 2009, we issued a press release announcing that an infomercial
featuring our ionic bulb would start airing in Europe in the first week of
November 2009.  Due to the backlog with our media partner the airing
has been delayed.  We currently expect the infomercial to air in
December 2009.





On
December 21, 2009, we began selling the Ionic Bulb on our website
www.newionicbulb.com and on December 28, 2009, we began airing our two-minute
infomercial on U.S. television and accepting orders through a customized third
party call center.


18





Comparison
of Three Months Ended December 31, 2009 To December 31, 2008


Results
of Operations





Revenue





Our sales were $5,077 for
the three months ended December 31, 2009 and $0 for the three months ended
2008. The increase of $5,077 or 100% was due to the start of our sales
activities.  In December, we began test marketing the Ionic Bulb in
the U.S.  Our test marketing consisted of airing our two-minute Ionic
Bulb infomercial on a variety of U.S. cable television channels at different
times of the day and days of the week.  The television test marketing,
which began on December 28, 2009, is designed to find viewing audiences more
inclined to purchase Ionic Bulbs and to educate viewers on the Ionic Bulb's
performance and money saving features which can be beneficial to promote planned
retail sales of Ionic Bulbs. We also introduced the Ionic Bulb to journalists at
magazines, newspapers, electronic journals and blogs to gain publicity and
reviews for our product.  Sales for the three months ended December
31, 2009 are comprised only of Ionic Bulbs ordered by visitors to our
www.newionicbulb.com website and shipped on or before December 31,
2009.  Sales for the three months ended December 31, 2009, exclude
orders received from customers who viewed our television infomercials that
started airing December 28, 2009, as a result of those orders still being
compiled and transmitted by the call center to our sales order fulfillment
center as of December 31, 2009, and therefore not eligible for revenue
recognition until January 2010.  Direct response sales to consumers
will increase in future periods in connection with the increased frequency of
airings of our TV infomercial and other Ionic Bulb promotional
activities.  Our sales plans include establishing a retail sales
channel consisting of sales of Ionic Bulbs to U.S. retailers, speciality stores,
and catalog and e-commerce merchants.  We have started efforts to
establish our retail sales channel and expect to begin seeing sales results
after we have further developed market awareness for our Ionic Bulb, a needed
prerequisite for successful relationships with retailers.





Gross
Profit





Our gross
profit was $3,556 for the three months ended December 31, 2009 and $0 for the
three months ended December 31, 2008. The increase of $3,556 or 100% was due to
the start of our sales activities in late December 2009. We realized gross
profit in the three months ended December 31, 2009 entirely from sales of Ionic
Bulbs.  We had no sales for the three months ended December 31, 2008,
and therefore had no gross profits.  Gross profit will increase in
connection with our expected sales in future periods.





Operating
Expenses





Operating
expenses were $207,817 for the three months ended December 31, 2009, as compared
to $159,164 for the three months ended December 31, 2008.  The
increase of $48,653 or 31% was primarily due the increase in selling expenses
related to the start of Ionic Bulb sales and marketing activities.  We
incurred $86,571 and $0 in selling expenses during the three months ended
December 31, 2009 and 2008, respectively.  Selling expenses were
comprised of advertising and marketing costs in connection with starting a sales
and marketing campaign the Ionic Bulb that began generating Ionic Bulb sales
orders in late December.  We incurred $121,246 and $159,164 in general
and administrative expenses for the three months ended December 31, 2009 and
2008, respectively.





Net
Loss





Our net
loss was $325,636 for the quarter ended December 31, 2009 and our net loss was
$219,131 for the quarter ended December 31, 2008.





Our
net income per common share was $0.00 (basic and diluted) for three months
ended December 31, 2009 as compared to our net loss per common share of $0.01
for the three months ended December 31, 2008.





The
weighted average number of outstanding shares was 670,885,307 (basic and
diluted) for three months ended December 31, 2009 as compared to 15,540,950
(basic and diluted) for the three months ended December 31, 2008.





Comparison
of Six Months Ended December 31, 2009 To December 31, 2008





Results
of Operations





Revenues





Our sales
were $5,077 for the six months ended December 31, 2009 and $0 for the six
months ended 2008. The increase of $5,077 or 100% was due to the start of our
sales activities. In December, we began test marketing the Ionic Bulb in the
U.S.  Our test marketing consisted of airing our two-minute Ionic Bulb
infomercial on a variety of U.S. cable television channels at different times of
the day and days of the week.  The television test marketing, which
began on December 28, 2009, is designed to find viewing audiences more inclined
to purchase Ionic Bulbs and to educate viewers on the Ionic Bulb's performance
and money saving features which can be beneficial to promote planned retail
sales of Ionic Bulbs. We also introduced the Ionic Bulb to journalists at
magazines, newspapers, electronic journals and blogs to gain publicity and
reviews for our product.  Sales for the six months ended December 31,
2009 are comprised only of Ionic Bulbs ordered by visitors to our
www.newionicbulb.com website and shipped on or before December 31,
2009.  Sales for the six months ended December 31, 2009, exclude
orders received from customers who viewed our infomercials that started airing
December 28, 2009, as a result of those orders still being compiled and
transmitted by the call center to our sales order fulfillment center as of
December 31, 2009, and therefore not eligible for revenue recognition until
January 2010.  Direct response sales to consumers will increase in
future periods in connection with the increased frequency of airings of our TV
infomercial and other Ionic Bulb promotional activities.  Our sales
plans include establishing a retail sales channel consisting of sales of Ionic
Bulbs to U.S. retailers, speciality stores, and catalog and e-commerce
merchants.  We have started efforts to establish our retail sales
channel and expect to begin seeing sales results after we have further developed
market awareness for our Ionic Bulb, a needed prerequisite for successful
relationships with retailers.


19


Gross
Profit





Our gross
profit was $3,556 for the six months ended December 31, 2009 and $0 for the six
months ended December 31, 2008. The increase of $3,556 or 100% was due to the
start of our sales activities in late December 2009. We realized gross profit in
the six months ended December 31, 2009 entirely from sales of Ionic
Bulbs.  We had no sales for the six months ended December 31, 2008,
and therefore had no gross profits.  Gross profit will increase in
connection with our expected sales in future periods.





Operating
Expenses





Operating
expenses were $409,602 for the six months ended December 31, 2009, as compared
to $320,066 for the six months ended December 31, 2008.  The increase
of $89,536 or 28% was primarily due to the increase in selling expenses related
to the start of Ionic Bulb sales and marketing activities. We incurred $86,571
and $3,800 in selling expenses during the six months ended December 31, 2009 and
2008, respectively.  Selling expenses were comprised of advertising
and marketing costs in connection with starting a Ionic Bulb product sales and
marketing campaign that began generating Ionic Bulb sales orders in late
December.  We incurred $323,031 and $312,266 in general and
administrative expenses for the six months ended December 31, 2009 and 2008,
respectively.





Net
Loss





Our net
loss was $619,897 for the six months ended December 31, 2009 and our net loss
was $429,333 for the six months ended December 31, 2008. We developed a sales
and marketing campaign to sell the Ionic Bulb directly to consumers and to
retailers, specialty stores, catalog sales companies, e-commerce companies and
international distributors.  We incurred the costs of developing
campaign during the six months ended December 31, 2009 with the expectation that
the campaign will generate significant sales in 2010.  We plan to
generate a higher sales volume that produces gross profits that more than offset
our operating expenses. 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 six months ended
December 31, 2009 as compared to our net loss per common share
of  ($0.03) (basic and diluted) for the six months ended December 31,
2008.





The
weighted average number of outstanding shares was 500,533,096 for the six
months ended December 31, 2009 as compared to 12,525,678 (basic and diluted) for
the six-month period ended December 31, 2008.





Liquidity
and Capital Resources





Overview





As of
December 31, 2009, we had a working capital deficit of $1,100,800.  As
of June 30, 2009, we had a working capital deficit of $1,417,761.  Our
cash position at December 31, 2009 was $122,000 as compared to $0 at June 30,
2009.  We significantly lowered the working capital deficit by
reducing current liabilities through settlement agreements and the elimination
of accounts payables that were  inactive for the past two
years.





For six
months ended December 31, 2009, net cash used in operating activities was
$230,056, consisting primarily of a net loss of ($619,897), adjusted primarily
for common stock issued for services of $183,966, amortization of debt discount
of $189,279 and a $76,795 increase in accounts payable and accrued
expenses.





Cash
provided by financing activities totaled $352,056 for the six months ended
December 31, 2009 consisting of proceeds from third party loans.





We expect
capital expenditures to be nominal for the year ending June 30, 2010. These
anticipated expenditures are for continued investments in property and equipment
used in our business and software for our accounting and information
systems.





Financing





As of
December 31, 2008, we have raised an aggregate of $1,272,439 in financing
through the issuance debt and equity securities.


20


Star
Funding Financing Facility





On
October 23, 2007, Ionicbulb.com, Inc. (f/k/a Zevotek, Inc.), our wholly owned
subsidiary, entered into a Supply Agreement with Star Funding, Inc. pursuant to
which Star Funding will provide, on a discretionary basis, purchase order
financing up to $2.5 million to facilitate Ionbulb.com Inc’s sale of its Ionic
Bulb product. This purchase order financing may be made via direct payment to
Ionbulb.com Inc’s suppliers, issue or cause the issuance of letters of credit,
and/or advances to Ionicbulb.com. Ionicbulb.com will be required to pay Star
Funding an amount equal to 2.5% of all “Expenses” (as defined) associated with
the purchase of any Goods under the Agreement, including letter of credit fees,
if any, which will equal 0.25% of the face amount of any letter of credit. As
collateral security for all of Ionicbulb.com Inc.’s obligations under the Supply
Agreement, Ionicbulb.com granted Star Funding a security interest in all of
Ionicbulb.com’s personal property and fixtures. The Supply Agreement is for an
initial term of two years, and will be automatically extended for additional 1
year terms unless terminated by either party with 60 days’ prior written notice
before the end of the initial or any renewal period.





On
October 23, 2007, Ionicbulb.com also entered into a Factoring Agreement with
Star Funding pursuant to which Star Funding has agreed to purchase certain
accounts receivables of Ionicbulb.com under the Supply Agreement. Ionicbulb.com
has agreed to pay Star Funding a factoring commission of 1.5% of the gross
amount of each receivable under the Factoring Agreement provided, however, that
Ionicbulb.com has agreed that Star Funding will receive $15,000 in fees under
the Supply Agreement and the Factoring Agreement in the first 12 months and
Ionicbulb.com has agreed to pay Star Funding the shortfall by which all fees and
commissions are less than $15,000. As collateral security for all of
Ioncibulb.com’s obligations under the Supply Agreement, Ioncibulb.com granted
Star Funding a security interest in all of Ionicbulb.com’s personal property and
fixtures. The Supply Agreement is for an initial term of two years, and will be
automatically extended for additional 1 year terms unless terminated by
Ionicbulb.com upon 60 days’ prior written notice before the end of the initial
or any renewal period, or by Star Funding upon 30 days prior written
notice.





To
further secure Ionicbulb.com’s obligations under the Supply Agreement and the
Factoring Agreement (as discussed below), we have executed (i) a guarantee and
(ii) an assignment of that certain License and Supply Agreement under which is
obtained its distribution rights for the Ionic Bulb. In addition, Adam Engel,
President of Zevotek and Ionicbulb.com, executed an Anti Fraud and Performance
Agreement under which Mr. Engel guaranteed Ionicbulb.com’s representations and
warranties under the Supply and Factoring Agreements. Mr. Engel explicitly
agrees that if any receivable purchased by Star Funding is not paid when due
(subject to certain exceptions), such non-payment shall be presumed to be the
result of a breach of Ionicbulb.com’s representations and warranties under the
Supply Agreement and/or the Factoring Agreement at which time Star Funding may
be able to execute on the (i) collateral pledged under the Supply and Factoring
Agreements and (ii) license for distribution of the Ionic bulb
product.





Financing
Needs





Since our
inception on December 19, 2005 to December 31, 2009, we have generated revenues
of $1,210,419 and have incurred an accumulated deficit of
$4,225,556.  It is hoped that we will begin to achieve sustainable
revenues in 2010 from sales of our Ionic Bulb product.  Our ability to
achieve 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 conditions in the U.S. stock and debt markets make
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 our June 30, 2009 financial statements states
that our recurring losses raise substantial doubts about our 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.





We do not
maintain off-balance sheet arrangements nor do we participate in non-exchange
traded contracts requiring fair value accounting treatment.





CRITICAL
ACCOUNTING POLICIES AND USE OF ESTIMATES





Financial
Reporting Release No. 60, recently released by the Securities and Exchange
Commission, requires all companies to include a discussion of critical
accounting policies or methods used in the preparation of financial statements.
The notes to the consolidated financial statements include a summary of
significant accounting policies and methods used in the preparation of our
Consolidated Financial Statements. In addition, Financial Reporting Release No.
61 was recently released by the SEC requires all companies to include a
discussion which addresses, among other things, liquidity, off-balance sheet
arrangements, contractual obligations and commercial commitments. The following
is a brief discussion of the more significant accounting policies and methods
used by us.


21





The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of financial statements in accordance with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
including the recoverability of tangible and intangible assets, disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reported
period.





On an
on-going basis, we evaluate our estimates. The most significant estimates relate
to our recognition of revenue, the allowance for doubtful accounts receivable
and inventory valuation reserves.





We
believe the following critical accounting policies affect our more significant
judgments and estimates used in the preparation of our consolidated financial
statements:





Reverse
Stock Split





The
Company effectuated a 1 for 50 reverse stock split on June 26,
2008.  In addition, contemporaneously with the reverse stock split,
the par value for the Preferred Stock and Common stock was changed to $.00001
per share   All preferred and common stock and related
information have been retroactively restated.





Revenue
Recognition





The
Company recognizes revenue from product sales based on four basic criteria that
must be met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred; (3) the selling price is fixed
and determinable; and (4) collectibility is reasonably assured. Determination of
criteria (3) and (4) are based on management's judgment regarding the fixed
nature of the selling prices of the products delivered and the collectibility of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. The Company defers any revenue for which
the product was not delivered or is subject to refund until such time that the
Company and the customer jointly determine that the product has been delivered
or no refund will be required.





Valuation
of Accounts Receivable





Our
allowance for doubtful accounts reflects our best estimate of probable losses,
determined principally on the basis of historical experience and specific
allowances for known troubled accounts.





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. Warehousing costs are charged to cost of
goods in the period the costs are incurred. The Company provides inventory
allowances based on estimates of obsolete inventories.





Allowance
for doubtful accounts





The
Company maintains an allowance for doubtful accounts to reduce amounts to their
estimated realizable value, including reserves for customer and other receivable
allowances and incentives. In estimating the provision for doubtful accounts,
the company considers a number of factors including age of the accounts
receivable, trends and ratios involving the age of the accounts receivable and
the customer mix of each aging categories.





Advertising





The
Company charges the costs of advertising to expenses as incurred.





Off Balance Sheet
Arrangements





None





ITEM
3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





As
a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are
not required to provide the information required by this item.


22


ITEM
4 – CONTROLS AND PROCEDURES





Evaluation of Disclosure
Controls and Procedures





Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by us in
the reports that we file under the Exchange Act is accumulated and communicated
to our management, including our principal executive and financial officers, as
appropriate to allow timely decisions regarding required
disclosure.





The
Company’s management, under the supervision and with the participation of our
Chief Executive Officer and Chief Financial Officer, carried out an evaluation
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the
Exchange Act) as of December 31, 2009.  Based upon that evaluation and
the identification of the material weakness in the Company’s internal control
over financial reporting as previously disclosed in our quarterly report for the
period ended December 31, 2009, the Chief Executive Officer and Chief Financial
Officer concluded that the Company’s disclosure controls and procedures were
ineffective as of the end of the period covered by this report.





Changes
in Internal Control over Financial Reporting





There
were no changes in our internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of Rule 13a-15 or
15d-15 under the Exchange Act that occurred during the quarter ended December
31, 2009 that have materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.





PART
II:  OTHER INFORMATION





ITEM
1 – LEGAL PROCEEDINGS





On March
26, 2007, Zevotek, Inc. f/k/a Diet Coffee, Inc. (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 was to determine whether the Company, in connection with
its sales of Slim Coffee, engaged in unfair or deceptive acts or practices and
false advertising. The FTC threatened to file a complaint in the United States
District Court, Southern District of New York, alleging False Advertising,
unless the Company and the FTC could reach a satisfactory resolution to the
matter. A negotiated settlement has been reached with the FTC under which the
Company, its officers and directors did not admit any wrongdoing. On October 5,
2007, the Company executed a stipulation to a final order and judgment in the
amount of $923,910. The full amount of the judgment, and payment of any portion
of it is suspended and cannot be reinstated so long as the Company abides by the
reporting and monitoring requirements of the judgment; does not make false
advertising claims in connection with any of its products in the future; and its
past financial disclosures to the FTC were materially accurate. The Company
expects stipulation will be executed by the FTC and filed with the United States
District Court, Southern District of New York. The Company expects to comply
with terms of the stipulation and does not anticipate incurring a liability for
the judgment.





ITEM
1A – RISK FACTORS





As a
“small reporting company” as defined by Item 10 of Regulation S-K, we are not
required to provide information required by this item.





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





None.





ITEM
3 – DEFAULT UPON SENIOR SECURITIES





During the three months ended December
31, 2009, two note holders submitted conversion notices to the Company seeking
to convert outstanding note principal and interest on the notes they hold into
Company common stock.  As a result of not processing the conversion
notices, the Company is in default of their notes and is required under the note
terms to repay all principal and accrued interest upon the earlier of receipt of
a request for repayment by the note holders or upon the maturity
dates.





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





None.


23


ITEM
5 – OTHER INFORMATION





On
October 14, 2009, we filed an amendment to our certificate of incorporation with
the Delaware Secretary of State to: increase the Corporation’s authorized common
stock from 1,000,000,000 shares to 5,000,000,000 shares. This amendment was
unanimously approved by our board of directors and by a majority of our
stockholders by written consent.





ITEM
6 - EXHIBITS





Item
                  No.
                
                Description4.1
                
                Certificate
      of Amendment to Certificate of Incorporation (Incorporated by reference to
      the Current Report on Form 8-K, filed with the SEC on October 19,
      2009)31.1
                
                Certification
      of Adam J. Engel, Chief Executive Officer and Chief Financial Officer of
      Zevotek, Inc. pursuant to Rule 13a-14(a)32.1
                
                Certification
      of Adam J. Engel, Chief Executive Officer and Chief Financial Officer of
      Zevotek, Inc. pursuant to 18 U.S.C. § 1350 adopted pursuant to Section 906
      of the Sarbanes Oxley Act of
2002





SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





ZEVOTEK,
      INC.February
      22, 2010
            /s/ Adam J. EngelAdam
      J. EngelPresident,
      Chief Executive Officer and Chief Financial Officer(Principal
      Executive and Financial and Accounting
Officer)


24