8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 8, 2008

DIEDRICH COFFEE, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-21203	33-0086628
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

28 Executive Park, Suite 200

Irvine, California 92614

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (949) 260-1600

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry Into a Material Definite Agreement

On October 8, 2008, Diedrich Coffee, Inc. (the “Company”) obtained commitments (the “Commitment Letter”) from Sequoia Enterprises, L.P. (“Sequoia”) and Vessel Partners, L.P. (with Sequoia, the “Lenders”), which are both limited partnerships whose general partner also servers as the chairman of the Board of Directors of the Company, to, among other things, extend the maturity of a $2,000,000 note due under a $5,000,000 contingent convertible note purchase agreement with Sequoia and to provide additional financing as described in the Commitment Letter. The Lenders will enter into a $5,000,000 commitment letter or note agreement with the Company not later than 15 days from the date of the Commitment Letter. A copy of the Commitment Letter is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing

On October 10, 2008, the Company received a staff deficiency letter from The NASDAQ Stock Market indicating that based on the Company’s stockholders’ equity as reported in its Annual Report on Form 10-K for the year ended June 25, 2008, the Company does not comply with the minimum stockholders’ equity requirement of $10 million for continued listing on The NASDAQ Global Market as set forth in NASDAQ Marketplace Rule 4450(a)(3). The NASDAQ staff is reviewing the Company’s eligibility for continued listing on The NASDAQ Global Market and has asked the Company to provide a specific plan to achieve and sustain compliance with all of the NASDAQ Global Market listing requirements, including a time frame for completion of the plan. The Company is in the process of preparing a response to NASDAQ’s request for a plan.

On October 15, 2008, the Company issued the press release, attached hereto as Exhibit 99.1, relating to the matters described above.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
10.1	Commitment Letter dated October 8, 2008, by Sequoia Enterprises, L.P. and Vessel Partners, L.P.
99.1	Press Release dated October 15, 2008, furnished herewith

2

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 hereunto duly authorized.

Date: October 15, 2008	DIEDRICH COFFEE, INC.
	By:	/s/ Sean M. McCarthy
		Sean M. McCarthy
		Chief Financial Officer

3

EXHIBIT INDEX

Exhibit No.	Description
10.1	Commitment Letter dated October 8, 2008, by Sequoia Enterprises, L.P. and Vessel Partners, L.P.
99.1	Press Release dated October 15, 2008, furnished herewith

4

EX-10.1

Exhibit 10.1

SEQUOIA ENTERPRISES, L.P.

VESSEL PARTNERS, L.P.

October 8, 2008

BDO Seidman, LLP

Ladies and gentlemen

In connection with BDO Seidman, LLP’s audit of the consolidated financial statements of Diedrich Coffee, Inc. (the “Company”) as of and for the year ended June 25, 2008, Sequoia Enterprises, L.P. (“Sequoia”) and Vessel Partners, L.P. (“Vessel” and collectively with Sequoia, the “Lenders”) make the following commitments:

1. The Lenders commit to provide additional financial support to the Company on commercially acceptable terms not to exceed $5 million over the course of 18 months from the date of this letter. Such amount will provide cash flow sufficient to operate the Company on a going concern basis during that period.

2. To evidence the commitment in the paragraph above, the Lenders will enter into a $5 million commitment letter or note agreement with the Company as soon as possible and no later than 15 days from the date of this letter.

3. In addition to the above, Sequoia will also extend the maturity date on commercially acceptable terms on the $2 million note purchase agreement with the Company that is set to expire on March 31, 2009. The maturity of the note will be extended to at least March 31, 2010.

4. The Lenders will not require that the Company agree to any covenants more onerous than those presently existing in the agreements between the Company and Sequoia.

5. The Lenders have the intent and the ability to fully fund the financial commitments that are outlined in this letter.

6. I have the authority as the General Partner of each of Sequoia Enterprises, L.P. and Vessel Partners, L.P. to make investment decisions and financial commitments outlined in this letter.

7. The Lenders’ commitments set forth in this letter shall immediately cease and terminate if the Company receives gross proceeds from any transaction of $5 million or more or enters into a credit or loan agreement with a party other than the Lenders for at least $5 million.

Sincerely,

/s/ Paul Heeschen

Paul Heeschen

General Partner, Sequoia Enterprises, L.P.

General Partner, Vessel Partners, L.P.

EX-99.1

Exhibit 99.1

Diedrich Coffee Receives Deficiency Letter from NASDAQ

Irvine, Calif. — October 15, 2008 — Diedrich Coffee, Inc. (NASDAQ: DDRX) today announced that it received a NASDAQ Staff Deficiency Letter on October 10, 2008 indicating that based on the Company’s stockholders’ equity as reported in its Annual Report on Form 10-K for the year ended June 25, 2008, the Company does not comply with the minimum stockholders’ equity requirement of $10 million for continued listing on The NASDAQ Global Market as set forth in NASDAQ Marketplace Rule 4450(a)(3). The NASDAQ staff is reviewing the Company’s eligibility for continued listing on The NASDAQ Global Market and has asked the Company to provide a specific plan to achieve and sustain compliance with all of the NASDAQ Global Market listing requirements, including a time frame for completion of the plan. The Company is in the process of preparing a response to NASDAQ’s request for a plan.

About Diedrich Coffee

With headquarters in Irvine, California, Diedrich Coffee specializes in sourcing, roasting and selling the world’s highest quality coffees. The Company’s three brands are Diedrich Coffee, Gloria Jean’s Coffees and Coffee People. Diedrich Coffee sells its coffees through wholesale accounts including office coffee service distributors, restaurants and specialty retailers, and via the Company’s web stores. As of June 25, 2008, the Company also has 123 retail outlets, the majority of which are franchised, located in 28 states. For more information about Diedrich Coffee, call (800) 354-5282, or visit the Company’s web sites at www.diedrich.com or www.gloriajeans.com.

Forward Looking Statements

Statements in this news release that relate to future plans, financial results or projections, events or performance are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and fall under the safe harbor. Actual results and financial position could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including, but not limited to, the financial and operating performance of the Company’s wholesale operations, the Company’s ability to maintain profitability over time, the successful execution of the Company’s growth strategies, franchisee’s adherence to the Company’s practices, policies and procedures, the impact of competition, the availability of working capital, and other risks and uncertainties described in detail under “Risk Factors and Trends Affecting Diedrich Coffee and its Business” in the Company’s annual report on Form 10-K for the fiscal year ended June 25, 2008.

Information contact:

Sean McCarthy

Chief Financial Officer

(949) 260-6734

1