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 March 31, 2010





 ̈
            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.)





900
Southeast Ocean Blvd


Suite
130D


Stuart,
FL 34994


(Address of principal
executive offices)





Issuer’s
telephone number:   (772) 600-2676







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 May
17, 2010, there were 3,040,618,507 shares of our common
stock outstanding.





Transitional
Small Business Disclosure Format:    Yes    ̈
  No   x















Quarterly
Report on Form 10-Q for the


Quarterly
Period Ended March 31, 2010





Table of
Contents





PagePART
      I. FINANCIAL INFORMATIONItem
      1. Financial Statements
            
            
            3Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
            
            
            16Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
            
            
            20Item
      4  Controls and Procedures
            
            
            20PART
      II. OTHER INFORMATIONItem
      1. Legal Proceedings
            
            
            21Item
      1A Risk Factor
            
            
            21Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            
            
            21Item
      3. Defaults upon Senior Securities
            
            
            21Item
      4. Removed and Reserved
            
            
            21Item
      5. Other Information
            
            
            21Item
      6. Exhibits
            
            
            21CERTIFICATION
      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





March
      31,
            
            
            June
      30,2010
            
            
            2009(unaudited)ASSETSCurrent
      assets:Cash
            
            $
            25,871
            
            
            $
            —Accounts
      receivable
            
            
            5,481
            
            
            
            —Inventory
            
            
            115,547
            
            
            
            —Prepayments
      and other current assets
            
            
            23,931
            
            
            
            17,000Total
      current assets
            
            
            170,830
            
            
            
            17,000Other
      assets:Security
      deposit
            
            
            5,000
            
            
            
            —Licensing
      agreement
            
            
            40,000
            
            
            
            40,000Total
      assets
            
            $
            215,830
            
            
            $
            57,000LIABILITIES
      AND DEFICIENCY IN STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
            
            $
            615,318
            
            
            $
            1,232,271Advances
      payable
            
            
            597,289
            
            
            
            44,000Convertible
      notes payable and demand notes (net of debt discount of $101,490 and
      $166,595 as of March 31, 2010 and June 30, 2009,
    respectively)
            
            
            190,435
            
            
            
            134,139Customer
      deposits
            
            
            24,351
            
            
            
            24,351Total
      current liabilities
            
            
            1,427,393
            
            
            
            1,434,761Long
      term portion of convertible notes payable (net of debt discount of $28,222
      and $167,232 as of March 31, 2010 and June 30, 2009,
      respectively)
            
            
            15,778
            
            
            
            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 March 31, 2010 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 March 31, 2010 and June 30,
      2009
            
            
            10
            
            
            
            10Common
      stock, $0.00001 par value, 5,000,000,000 shares authorized; 2,753,121,540
      and 176,092,373 shares issued and outstanding as of March 31, 2010 and
      June 30, 2009, respectively
            
            
            27,531
            
            
            
            1,761Common
      stock to be issued
            
            
            217
            
            
            
            30Treasury
      stock, 40,000 shares as of March 31, 2010 and June 30,
2009
            
            
            —
            
            
            
            —Additional
      paid in capital
            
            
            3,885,946
            
            
            
            2,726,796Accumulated
      deficit
            
            
            (5,141,046
            )
            
            
            (4,146,023
            )Total
      deficiency in stockholders' equity
            
            
            (1,227,341
            )
            
            
            (1,417,425
            )Total
      liabilities and deficiency in stockholders' equity
            
            $
            215,830
            
            
            $
            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 March 31,
              
              
              Nine
      Months Ended March 31,2010
              
              
              2009
              
              
              2010
              
              
              2009REVENUES:Sales
              
              $
              33,581
              
              
              $
              —
              
              
              $
              38,658
              
              
              $
              —Cost
      of sales
              
              
              20,731
              
              
              
              —
              
              
              
              22,252
              
              
              
              —Gross
      profit
              
              
              12,850
              
              
              
              —
              
              
              
              16,406
              
              
              
              —OPERATING
      EXPENSES:Selling
              
              
              151,290
              
              
              
              —
              
              
              
              237,897
              
              
              
              3,800General
      and administrative
              
              
              143,257
              
              
              
              98,611
              
              
              
              466,252
              
              
              
              414,877Total
      operating expense
              
              
              294,547
              
              
              
              98,611
              
              
              
              704,149
              
              
              
              418,677Loss
      from operations
              
              
              (281,697
              )
              
              
              (98,611
              )
              
              
              (687,743
              )
              
              
              (418,677
              )OTHER
      (EXPENSE):Interest,
      net
              
              
              (34,592
              )
              
              
              (14,448
              )
              
              
              (59,164
              )
              
              
              (37,572
              )Amortization
      of beneficial conversion feature
              
              
              (58,837
              )
              
              (354,447
              )
              
              
              (248,116
              )
              
              (440,590
              )Total
      other expense
              
              
              (93,429
              )
              
              
              (368,895
              )
              
              
              (307,280
              )
              
              
              (478,162
              )Net
      loss before provision for income taxes
              
              
              (375,126
              )
              
              
              (467,506
              )
              
              
              (995,023
              )
              
              
              (896,839
              )Income
      taxes
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —NET
      LOSS
              
              $
              (375,126
              )
              
              $
              (467,506
              )
              
              $
              (995,023
              )
              
              $
              (896,839
              )Net
      loss per common share, basic and fully diluted
              
              $
              (0.00
              )
              
              $
              (0.01
              )
              
              $
              (0.00
              )
              
              $
              (0.04
              )Weighted
      average number of common shares outstanding, basic and fully
      diluted
              
              
              2,246,695,391
              
              
              
              36,543,621
              
              
              
              1,277,443,214
              
              
              
              20,414,783




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 March 31, 2010


(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
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            108,804,167
            
            
            1,088
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            226,375
            
            
            
            —
            
            
            
            227,463Common
      stock issued for accrued expenses
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            30,000,000
            
            
            300
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            489,449
            
            
            
            —
            
            
            
            489,749Conversion
      of debt and accrued interest for common stock
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            2,431,225,000
            
            
            24,312
            
            
            (30
            )
            
            
            —
            
            
            
            —
            
            
            
            218,540
            
            
            
            —
            
            
            
            242,822Common
      stock issued for officer’s compensation
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            7,000,000
            
            
            70
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            10,430
            
            
            
            —
            
            
            
            10,500Fair
      value of Beneficial conversion feature
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            —
            
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            44,000
            
            
            
            —
            
            
            
            44,000Common
      stock  to be issued to former officer for accrued
      compensation
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            _
            
            
            _
            
            
            217
            
            
            
            —
            
            
            
            —
            
            
            
            170,356
            
            
            
            —
            
            
            
            170,573Net
      loss
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            —
            
            
            —
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            (995,023
            )
            
            
            (995,023
            )BALANCE,
      March 31, 2010
            
            
            50,000
            
            
            $
            1
            
            
            
            1,000,000
            
            
            $
            10
            
            2,753,121,540
            
            $
            27,531
            
            $
            217
            
            
            
            40,000
            
            
            $
            —
            
            
            $
            3,885,946
            
            
            $
            (5,141,046
            )
            
            $
            (1,227,341
            )





The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.


5


ZEVOTEK,
INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


Nine
Months Ended March 31, 2010 and 2009


(UNAUDITED)





2010
                              
                              
                              2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                              
                              $
                              (995,023
                              )
                              
                              $
                              (896,839
                              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Common
      stock issued for services rendered
                              
                              
                              227,463
                              
                              
                              
                              80,000Common
      stock issued for officer’s compensation
                              
                              
                              10,500
                              
                              
                              
                              —Amortization
      of beneficial conversion feature
                              
                              
                              248,116
                              
                              
                              
                              440,590(Increase)
      decrease in:Accounts
      receivable
                              
                              
                              (5,481
                              )
                              
                              
                              —Inventory
                              
                              
                              (115,547
                              )
                              
                              
                              —Prepayments
                              
                              
                              (6,931
                              )
                              
                              
                              —Other
      assets
                              
                              
                              (5,000
                              )
                              
                              
                              —(Decrease)
      increase in:Accounts
      payable and accrued expenses
                              
                              
                              70,485
                              
                              
                              
                              205,988Net
      cash used in operating activities:
                              
                              
                              (571,418
                              )
                              
                              
                              (170,261
                              )CASH
      FLOWS FROM INVESTING ACTIVITIES:
                              
                              
                              —
                              
                              
                              
                              —CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from advances payable
                              
                              
                              597,289
                              
                              
                              
                              —Proceeds
      from loans
                              
                              
                              —
                              
                              
                              
                              164,000Net
      cash provided by financing activities
                              
                              
                              597,289
                              
                              
                              
                              164,000Net
      increase (decrease) in cash and cash equivalents
                              
                              
                              25,871
                              
                              
                              
                              (6,261
                              )Cash
      and cash equivalents, beginning of period
                              
                              
                              —
                              
                              
                              
                              6,755Cash
      and cash equivalents, end of period
                              
                              $
                              25,871
                              
                              
                              $
                              494SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW:Interest
      paid
                              
                              $
                              —
                              
                              
                              $
                              —Taxes
      paid
                              
                              $
                              —
                              
                              
                              $
                              —Summary
      of non-cash itemsCommon
      stock issued for services rendered
                              
                              $
                              227,463
                              
                              
                              $
                              80,000Common
      stock issued for officer’s compensation
                              
                              $
                              10,500
                              
                              
                              $
                              —Common
      stock issued for licensing agreement
                              
                              $
                              —
                              
                              
                              $
                              40,000Common
      stock issued for settlement of accrued liabilities
                              
                              $
                              660,322
                              
                              
                              $
                              —Exchange
      of convertible debenture for advances payable
                              
                              $
                              44,000
                              
                              
                              $
                              —Debt
      and accrued interest converted for shares of common stock
                              
                              $
                              242,822
                              
                              
                              $
                              6,150





The
accompanying notes are an integral part of the unaudited condensed consolidated
financial statements.


6




ZEVOTEK,
INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


MARCH
31, 2010





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 markets the Ionic Bulb through TV
infomercials, and plans to sell through 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
which 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 nine months ended March 31, 2010 and
2009.




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 unaudited condensed consolidated 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 March 31, 2010 and June 30, 2009, Finished Goods inventory was $115,547 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 March 31, 2010 and June 30,
2009 the allowance for doubtful accounts was $17,803 and $0,
respectively.





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 $183,563 and $0 to operations for the nine months ended March
31, 2010 and 2009, 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
nine months ended March 31, 2010 and 2009, 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 nine
months ended March 31, 2010; therefore, it 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 3,198,819,323 and
4,918,412,196, respectively at March 31, 2010 and 2009, 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 $1,256,563 as of
March 31, 2010. The Company has incurred a net loss of $995,023and used $571,418 in cash
flows for operations during the nine months ended March 31, 2010.





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.




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 J for
disclosure of the fair value of our debt.




9


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.





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 nine
months ended March 31, 2010, the Company incurred a net loss of
$995,023.  At March 31, 2010, the Company had a working capital
deficit of $1,256,563 and accumulated losses of $5,141,046. 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 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 in 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.  The Target has concluded without any sales,
incentive shares or commissions realized.





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.


10





NOTE
D- ACCOUNTS PAYABLE AND ACCRUED EXPENSES





Accounts
payable and accrued liabilities are as follows:




March 31,
              2010
            
            
            June 30,
              2009(unaudited)Accounts
      payable
            
            $
            29,626
            
            
            $
            —Accrued
      professional fees
            
            
            100,000
            
            
            
            100,000Accrued
      payroll and payroll taxes
            
            
            156,817
            
            
            
            799,280Old
      disputed accounts payable
            
            
            136,405
            
            
            
            195,181Accrued
      interest
            
            
            75,174
            
            
            
            43,494Other
      accrued liabilities
            
            
            117,296
            
            
            
            94,316Total
            
            $
            615,318
            
            
            $
            1,232,271




NOTE
E – ADVANCES PAYABLE
  As of
March 31, 2010 and June 30, 2009, the Company owed $597,289 and $44,000,
respectively, to a note holder for cash advanced to the Company for operating
purposes.  The advances accrue interest at 10% per annum are repayable
on demand.  The Company and note holder are discussing changes to the
terms of the borrowings.


NOTE F
- CONVERTIBLE NOTES PAYABLE AND DEMAND NOTES




March 31,
              2010
            
            
            June 30,
              2009(unaudited)Notes
      Payable:Convertible
      term note (a)
            
            $
            6,623
            
            
            $
            87,013Convertible
      term note (b)
            
            
            23,124
            
            
            
            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
            
            
            335,925
            
            
            
            507,630Less:
      discount on debt
            
            
            (129,712
            )
            
            
            (333,827
            )206,213
            
            
            
            173,803Less:
      current portion
            
            
            (190,435
            )
            
            
            (134,139
            )Long
      term debt
            
            $
            15,778
            
            
            $
            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).


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 March 31, 2010 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).




11




In
accordance with Emerging Issues Task Force Issue 98-5, Accounting for
Convertible Securities with 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 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 nine months ended March 31, 2010, amortization related to the
beneficial conversion feature on the convertible notes was $58,837 and $248,116,
respectively. During the three and nine months ended March 31, 2009,
amortization related to the beneficial conversion feature on the convertible
notes was $354,447 and $440,590, respectively.





In
November and December 2009 and April 2010, two note holders submitted conversion
notices to the Company seeking to convert note principal and interest on the
notes they hold into 183,798,500 shares of Company common stock. The
Company has not honored these conversion notices.


NOTE G
– 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.





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 March
31, 2010 and June 30, 2009, common shares issued and outstanding were
2,753,121,540 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 March 31, 2010, there were 21,450,000 shares
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 March 31, 2010, there were 17,994,000
shares issued under this 2007 Plan #2.




12


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 March 31,
2010, there were 32,340,948 shares issued under this 2008 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
March 31, 2010, there were 32,925,191 shares issued under this 2008
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
March 31, 2010, there were 53,400,000 shares issued under this 2009
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
March 31, 2010, there were 47,577,400 shares issued under this 2009
Plan.





During
the nine months ending March 31, 2010, the Company issued 138,804,167 shares of
common stock, valued at $717,212 for services and accrued expenses.





During
the nine months ended March 31, 2010, the Company converted debt and accrued
interest of $242,822 into 2,431,225,000 shares of common stock, excluding
3,000,000 shares the Company was committed to issue as of June 30,
3009.





During
the nine months ending March 31, 2010, the Company issued 7,000,000 shares of
common stock as officer’s compensation, valued at $10,500 and agreed to issue an
additional $50,000 in shares of the Company’s common stock to a former officer
as discussed in Note I.








Treasury
Stock





As of
March 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 H
- 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 March 31, 2010, the Company has available for
federal income tax purposes a net operating loss carry forward of approximately
$2.5
million expiring by the year 2030, that may be used to offset future taxable
income. Due to significant changes in the Company's ownership, the future use of
its existing net operating losses may be limited.





The
Company has provided a valuation reserve against the full amount of the net
operating loss benefit, since in the opinion of management based upon the
earnings history of the Company; it is more likely than not that the benefits
will not be realized. Components of deferred tax assets as of March 31, 2010 are
as follows:




Net
      operating loss carry forward
            
            $
            1,800,000Valuation
      allowance
            
            
            (1,800,000
            )Net
            
            $
            0





The
Company has not filed federal or state income tax returns for fiscal years ended
June 30, 2006, 2007, 2008 and 2009.





NOTE I
- STOCK OPTIONS AND WARRANTS





During
the nine months ended March 31, 2010, the Company did not issue any stock
warrants.  As of March 31, 2010, 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 were not granted as of his resignation on
February 25, 2010.




13


NOTE J
- COMMITMENTS AND CONTINGENCIES





Employment
Agreement





On
December 13, 2007, the Company entered into an employment agreement with Adam
Engel pursuant to which the Company employed Mr. Engel as President, Chief
Executive Officer, Chief Financial Officer, Treasurer and Secretary. The
agreement was for an initial term of three years and provided 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 were not granted. In addition to salary and
benefit provisions, the agreements included defined commitments should we
terminate his employment without cause and 24 month non-compete/non solicitation
terms.





On
February 25, 2010, Adam Engel resigned from his positions as President, Chief
Executive Officer, Chief Financial Officer, Secretary and Treasurer. In
connection with Mr. Engel’s resignation, the Company entered into a letter
agreement dated February 24, 2010 setting forth the terms of the mutual
separation. Under the terms, Mr. Engel and the Company agreed to waive any and
all continuing rights and obligations under Mr. Engel’s employment agreement
dated December 13, 2007.  Mr. Engel also agreed to a 1 year
non-compete/non solicitation provision as well as confidentiality and
non-disparagement clauses.  In consideration thereof and to enter into
the Letter Agreement, the Company agreed to pay Mr. Engel as follows: $20,000 in
cash on the Effective Date (as defined) and $50,000 in shares of the Company’s
common stock issuable in five installments beginning on the 90th  day
from the Termination Date, with each remaining installment payment being made 30
days thereafter.The
number of shares to be issued for each installment shall be calculated based
upon the average per share market values during the three trading days
immediately preceding the date on which the installment is
due.




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. The Company plans to comply with the terms of the stipulation and
do not anticipate incurring a liability for the judgment, however there can be
no assurance of compliance.  Should the 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 renewed for subsequent two year periods if at least 5
million units are sold 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 a notice to the Company that
the 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.




In
addition, the Agreement 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, the 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, the Company also agreed to pay Ryu a commission at the rate 50% of all
Net Profits (as defined on the Agreement) recognized by the Company on sales of
the Licensed Products made by Ryu (or Sales Associates hired by Ryu) on the
Company’s behalf during the period of this Agreement. The Target has concluded
without any sales, incentive shares or commissions realized.




14


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 the Company as an additional insured under such
policy.  The term of the agreement is for one year and will be
automatically renewed for successive one year periods if the minimum
quantities (5,000/month and 60,000/year) are met.





Payroll
Taxes





At March
31, 2010, 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 March
31, 2010, 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 K
- 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, accounts receivable, prepayments, accounts
payable, advances payable, 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.




As of
March 31, 2010, there are no financial assets or liabilities that 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:





NOTE L
– SUBSEQUENT EVENTS





The
Company has evaluated subsequent events through the date of this filing (May 17,
2010).





Since
March 31, 2010, the Company issued an aggregate of 285,830,300 shares of common
stock upon conversion of convertible promissory notes.





Since
March 31, 2010, the Company issued an aggregate of 1,666,667 shares of common
stock in exchange for legal services
rendered.


15




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 condensed 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 quarterly 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.





General





The
following discussion and analysis is provided to increase the understanding of,
and should be read in conjunction with, our unaudited condensed consolidated
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 condensed consolidated 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 condensed consolidated financial
statements and related notes appearing elsewhere in this report.





Company
History





We were
incorporated in the State of Delaware on December 19, 2005. 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 900 Southeast Ocean Blvd, Stuart, FL
34994. Our telephone number is (772) 600-2676.





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 near future.  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 market the Ionic
Bulb through TV infomercials and plan to sell through catalogs, magazines and
major U.S. retail and specialty stores and our websites www.zevo-tek.com
and   www.newionicbulb.
com
..


16


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.





Comparison of Three Months Ended
March 31, 2010 To March 31, 2009





Results
of Operations





Revenue





Our sales
were $33,581 for the three months ended March 31, 2010 and $0 for the three
months ended 2009. The increase of $33,581 or 100 % was due to the start of our
sales activities.  In
December2009, 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 March
31, 2010 are comprised of Ionic
Bulb orders placed by individual consumers who called toll-free telephone
numbers that appeared in our TV ads or visited toour
www.newionicbulb.com website and shipped on or before March 31, 2010. Revenues
exclude shipping and handling fees, which we include as an offset to our
shipping and handling costs.  For the three months ended March 31,
2010, we received and shipped 1,054 Ionic Bulb orders with an average sale of
$32 per order. In February 2010, we changed advertising agencies, modified our
TV ad, changed our Ionic Bulb sales offer, changed our call center script and
modified our website’s shopping cart.  During the process of making
the changes, we reduced the frequency of our TV advertising, which had the
effect of reducing our revenues at the time.  Saleswill
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 additional 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 $12,850 for the three months ended March 31, 2010 and $0 for the
three months ended March 31, 2009. The increase of $12,850 or 100% was due to
the airing of our TV infomercials. We realized gross profit in the three months
ended March 31, 2010 entirely from the sale of our Ionic Bulbs.  We
had no sales for the three months ended March 31, 2009, and therefore had no
gross profits.  Gross profit will increase in connection with our
expected sales in future periods.





Operating
Expenses





Operating
expenses were $294,547for the
three months ended March 31, 2010, as compared to $98,611for
the three months ended March 31, 2009.  The increase of $195,936or198.7%
was primarily due the start
of Ionic Bulb sales and marketing operations.  We
incurred $151,290and
$0in
selling expenses during the three months ended March 31, 2010 and 2009,
respectively.  Selling expenses were comprised of advertising and
marketing costs in connection with starting a sales and marketing campaign of
the Ionic Bulb that began generating Ionic Bulb sales orders in late
December.  We incurred $143,257and
$98,611in
general and administrative expenses for the three months ended March 31, 2010
and 2009, respectively.


17


Net
Loss





Our net
loss was $375,126 for the quarter ended March 31, 2010 and our net loss was
$467,506 for the quarter ended March 31, 2009.  The decrease of
$92,380 or 19.7% was
primarily due to the amortization ofthe
beneficial conversion feature.





Our
net income per common share was $0 (basic and diluted) for three months
ended March 31, 2010 as compared to our net loss per common share of $0.01 for
the three months ended March 31, 2009.





The
weighted average number of outstanding shares was 2,246,695,391 (basic and
diluted) for three months ended March 31, 2010 as compared to 36,543,621 (basic
and diluted) for the three months ended March 31, 2009.





Comparison
of Nine Months Ended March 31, 2010 To March 31, 2009





Results
of Operations





Revenues





Our sales
were $38,658 for the nine months ended March 31, 2010 and $0 for the nine
months ended 2009. The increase of $38,658 or 100 % was due to the start of our
sales activities. In
December 2009, 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 nine months ended March 31, 2010 are
comprised of Ionic
Bulb orders placed by individual consumers who called toll-free telephone
numbers that appeared in our TV ads or visited toour
www.newionicbulb.com website and shipped on or before March 31, 2010. Revenues
exclude shipping and handling fees, which we include as an offset to our
shipping and handling costs.  For the three months ended March 31,
2010, we received and shipped 1,054 Ionic Bulb orders with an average sale of
$32 per order. In February 2010, we changed advertising agencies, modified our
TV ad, changed our Ionic Bulb sales offer, changed our call center script and
modified our website’s shopping cart.  During the process of making
the changes, we reduced the frequency of our TV advertising, which had the
effect of reducing our revenues at the time.  Saleswill
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 additional 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 $16,406 for the nine months ended March 31, 2010 and $0 for the nine
months ended March 31, 2009. The increase of $16,406 or 100% was due to airing
of our TV infomercials. We had no sales for the three months ended March 31,
2009, and therefore had no gross profits.  Gross profit will increase
in connection with our expected sales in future periods.





Operating
Expenses





Operating
expenses were $704,149 for the nine months ended March 31, 2010, as compared to
$418,677 for the nine months ended March 31, 2009.  The increase of
$285,472 or 68.2% was primarily due to the start
of Ionic Bulb sales and marketing operations. We incurred $237,897 and
$3,800 in selling expenses during the nine months ended March 31, 2010 and 2009,
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 $466,252 and $414,877 in general and
administrative expenses for the nine months ended March 31, 2010 and 2009,
respectively.





Net
Loss





Our net
loss was $995,023 for the nine months ended March 31, 2010 and our net loss was
$896,839 for the nine months ended March 31, 2009. 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 a
campaign during the nine months ended March 31, 2010 with the expectation that
the campaign will generate significant sales in fiscal year ending June 30,
2011.





Our net
loss per common share was $0 (basic and diluted) for the nine months ended March
31, 2010 as compared to our net loss per common share of  $.04 (basic
and diluted) for the nine months ended March 31, 2009.





The
weighted average number of outstanding shares was 1,277,443,214 for the
nine months ended March 31, 2010 as compared to 20,414,783 (basic and diluted)
for the nine month period ended March 31, 2009.


18


Liquidity
and Capital Resources





Overview





As of
March 31, 2010, we had a working capital deficit of $1,256,563.  As of
June 30, 2009, we had a working capital deficit of $1,417,761.  Our
cash position at March 31, 2010 was $25,871 as compared to $0 at June 30,
2009. We 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 nine
months ended March 31, 2010, net cash used in operating activities was $571,418,
consisting primarily of a net loss of ($995,023), adjusted primarily for common
stock issued for services of $227,463, amortization of debt discount of $248,116
and a increase in inventory and accounts payable and accrued expenses of
$115,547 and 70,485, respectively.





Cash
provided by financing activities totaled $597,289 for the nine months ended
March 31, 2010 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
Needs





Since our
inception on December 19, 2005 to March 31, 2010, we have generated revenues of
$1,244,000 and have incurred an accumulated deficit of $5,141,046.  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.





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.


19





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 of 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.







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.


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The
Company’s management, under the supervision and with the participation of our
Chief Executive Officer/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 March 31, 2010.  Based upon that evaluation and
the identification of the material weakness in the Company’s internal control
over financial reporting, the Chief Executive Officer/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 March 31,
2010 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




None.





ITEM 4 – REMOVED AND
RESERVED.





ITEM
5 – OTHER INFORMATION





None.





ITEM
6 - EXHIBITS





Item
              No.
            
            Description31.1
            
            Certification
      of  Robert Babkie, Chief Executive Officer and Chief Financial
      Officer of Zevotek, Inc. pursuant to Rule 13a-14(a)32.1
            
            Certification
      of Robert Babkie, 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





21





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.May
      17, 2010
            /s/
      Robert BabkieRobert
      BabkiePresident,
      Chief Executive Officer and Chief Financial Officer(Principal
      Executive and Financial and Accounting
Officer)


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