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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE  ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission file number: 000-52158


                            SMOKY MARKET FOODS, INC.

             (Exact name of registrant as specified in its charter)


             NEVADA                                              20-4748589
  (State or other jurisdiction                                 (IRS Employer
of incorporation or organization)                            Identification No.)


                           804 ESTATES DR., SUITE 100
                             APTOS, CALIFORNIA 95003

          (Address of principal executive offices, including zip code)

Registrant's telephone number, including area code:  (866) 851-7787

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Shares, par
value $.001

         Indicate by check mark whether the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
                                                                 YES [ ] NO [X]

         Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.
                                                                 YES [ ] NO [X]

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) 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 during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
                                                                 YES [ ] NO [X]

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]


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         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 (Check one):

          [ ] Large Accelerated filer              [ ] Accelerated filer

          [ ] Non-accelerated filer                [X] Smaller reporting company
          (Do not check if a smaller reporting
          company)

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act):                                YES [ ] NO [X]

         The aggregate market value of approximately 14,909,944 shares held by
nonaffiliates of the registrant on June 30, 2008, based upon the average bid and
asked price of the common shares on the OTC Bulletin Board of $0.07 per share on
June 30, 2008, was approximately $1,043,696. Common Shares held by each officer
and director and by each other person who may be deemed to be an affiliate of
the registrant have been excluded.

         As of March 31, 2009, the registrant had 70,850,820 common shares
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

None.
================================================================================


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                                TABLE OF CONTENTS

PART I.....................................................................    1

Item 1.  Business..........................................................    1

Item 1A. Risk Factors......................................................    8

Item 1B. Unresolved Staff Comments.........................................   17

Item 2.  Properties........................................................   17

Item 3.  Legal Proceedings.................................................   17

Item 4.  Submission of Matters to a Vote of Security Holders...............   17

PART II....................................................................   17

Item 5.  Market for Registrant's Common Equity, Related Stockholder
         Matters and Issuer Purchases of Equity Securities.................   17

Item 6.  Selected Financial Data...........................................   19

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.........................................   19

Revenue Recognition........................................................   24

Item 7A. Quantitative and Qualitative Disclosures About Market Risk........   25

Item 8.  Financial Statements..............................................   25

Item 9.  Changes In and Disagreements with Accountants on Accounting and
         Financial Disclosure..............................................   25

Item 9A(T). Controls and Procedures........................................   25

Item 9B. Other Information.................................................   26

PART III...................................................................   27

Item 10. Directors, Executive Officers and Corporate Governance............   27

Item 11. Executive Compensation............................................   28

Item 12. Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters...................................   31

Item 13. Certain Relationships and Related Transactions, and Director
         Independence......................................................   32

Item 14. Principal Accountant Fees and Services............................   33

Item 15. Exhibits and Financial Statement Schedules........................   34


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                           FORWARD LOOKING STATEMENTS

         This Annual Report on Form 10-K (this "Report") contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such
statements can be identified by the use of forward-looking words such as
"anticipate," "estimate," "project," "likely," "believe," "intend," "expect," or
similar words. These statements relate to our, and, in some cases, our clients'
or business partners' future plans, objectives, expectations, intentions and
financial performance and the assumptions that underlie these statements. All
forward-looking statements included in this Report are made as of the date
hereof, based on information available to us as of such date, and we assume no
obligation to update any forward-looking statements. It is important to note
that such statements may not prove to be accurate and that our actual results
and future events will differ, and could differ materially, from those
anticipated in such statements. Among the factors that could cause actual
results to differ materially from our expectations are those described under
"Item 1A. Risk Factors." You are also encouraged to review our other filings
with the Securities and Exchange Commission (the "SEC") describing other factors
that may affect our future results. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by this section and other factors
included elsewhere in this Report.

                                     PART I

ITEM 1.  BUSINESS.

OVERVIEW

         ORGANIZATION & BUSINESS MODEL

         We are a Nevada corporation incorporated in April 2006, with our
principal office at 804 Estates Dr., Suite 100, Aptos, CA 95003. Our telephone
number is (866) 851-7787. We are a development stage company that is in the
process of securing capital to start revenue-producing operations.

         We use USDA-approved, custom-engineered, proprietary wood-burning oven
technology to produce a complete line of Smoke-BakedTM meat and fish. We plan to
sell smoked foods through the development of a national chain of stand-alone
Smoky Market restaurant-stores and numerous self-contained kiosks that operate
inside qualified high-traffic venues such as shopping malls, sports arenas,
college campuses, corporate dining areas and airports. We plan to produce
principal menu items in bulk at a centralized location. We expect to be able to
deliver food of consistent size, taste and quality without the need to construct
expensive on-site ovens or to train skilled cooks to handle raw product at
numerous locations. We believe this will permit our development of a national
chain operation while keeping our in-store costs down.

         Assuming that we are successful in expanding our retail operations into
all regions of the U.S., we plan to begin directly marketing and selling our
smoke-baked products on the internet. In addition to offering customers at our
Smoky Market restaurant-stores access to on-line ordering for gifts and event
catering, we plan to create marketing operations with selected e-commerce
affiliates that are large internet retail companies with substantial numbers of
customer visits and certain consumer goods organizations such as the RV
industry.

                                       1

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         We have developed the core smoked-meat recipes for our proposed
business, entered into an agreement with a commercial meat processor at which we
have placed a proprietary oven capable of producing approximately 100,000 pounds
of smoked meat per month, tested the re-heating process for our menu items and
completed concept designs for our proposed restaurant-stores and kiosks. We do
not yet have any restaurant-stores or kiosks in service, but we successfully
tested the applications for preparation of our food products in a restaurant
located in Los Gatos, California for three months from October through December
2006. We have acquired the assets and leasehold rights of this Los Gatos
restaurant and are remodeling the site into a prototype Smoky Market
restaurant-store with expected completion in the summer of 2009. Beginning in
2010, and assuming the availability of capital, we plan to open additional
stores in the Western region toward our goal of opening three restaurant-stores
in each of our five regional operating territories during 2010. We also have
built our prototype kiosk for installation into a mall located in Southern
California, which is expected to be installed during the summer of 2009. We
expect this plan for development will enable us to maximize the operating and
financial efficiencies of our production capacity.

         MARKET OPPORTUNITY

         Our goal is to build a national chain of Smoky Market restaurant-stores
and kiosks featuring a selection of meat and fish entrees and one-dish meal
recipes that are prepared without the use of sodium, sugar, and chemical
preservatives by our proprietary Smoke-Baking technique. Unlike other popular
restaurant categories, the smoked-food/barbecue segment in which we compete does
not include a widely recognized national chain. Where foodservice categories
like pizza, subs, chicken, Mexican, Chinese, and burgers have total chain brand
units numbering into the thousands, the largest barbecue restaurant chain in the
country, Sonny's Barbecue, has approximately 200 stores. We believe that there
is no large national chain in the smoked-food/barbecue restaurant segment
primarily for two reasons: first, barbecue remains highly regionalized with
respective regions having demographic preferences for barbecue flavor, and
second, quality consistency within chain brands is a serious obstacle.

         We believe that we can succeed where others have not because of our
plans to address these two issues. We plan to address the regionalization of
tastes by creating different recipes, with different sauces and flavors, for
each of five regions within the United States. As we expand, each region will be
headed by a regional officer charged with customizing the recipes, marketing
program and other aspects of our business in order to meet the tastes of that
region. We plan to address issues of quality and consistency by having all of
our meat prepared in our smoker-over system at a centralized location and also
centralizing, or regionalizing, the preparation of side dishes and other
offerings. Food handlers at local restaurant-stores and kiosks will merely need
to unpackage and heat most items on the menu, resulting in a consistently
healthful and tasty offering throughout the country.

FOOD PRODUCTION & DISTRIBUTION

         PROPRIETARY SMOKING TECHNOLOGY

         The wood-burning smoker-oven system used to produce Smoky Market brand
foods Smoke-BakesTM meat and fish with a smoke-heat-vapor that is generated by
the slow burning of hickory and apple timber, after which the fully-cooked
smoked foods are portion-cut and vacuum-packaged for freshness. The
smoke-heat-vapor infuses the meat and fish with an authentic smoked taste. No
additives (water, sugar, high amounts of sodium, liquid smoke, etc.) and no
preservatives are used in the process; only garlic, natural spices, and very
little sea salt are applied as seasoning.

                                       2

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         USDA-INSPECTED MEAT PRODUCTION AND AVAILABILITY OF RAW MATERIALS

         We presently outsource, and for the foreseeable future, expect to
continue to outsource, our commercial smoked food processing to Mary Ann's
Specialty Foods ("Specialty Foods"). Specialty Foods is a USDA-approved contract
food processing company located in Webster City, Iowa and operates an 80,000
square foot processing facility, which sits on 15 acres of family-owned land,
and is expected to be responsible for our food production and distribution
requirements. In order to establish production capability and complete the
development of our smoked food products, we entered into an Amended and Restated
Processing Agreement dated July 1, 2006 with Specialty Foods.

         Pursuant to the processing agreement, Specialty Foods has agreed to
process the smoked meats for our business in return for a processing fee equal
to its actual costs of production, including allocable overhead, plus a fixed
fee designed to give Specialty Foods a net profit of not less than $35,000 per
month from the operation of two 10-hour shifts of processing for us. The
agreement is based upon a single oven capable of producing at least 100,000
pounds of smoked meat per month or more depending upon the production item mix.
The term of the agreement is ten years, with an option to extend the agreement
for three additional 10-year periods (subject to early termination in the event
of default).

         As we expand and need to add additional smoker ovens, we will be
required to expand our relationship with Specialty Foods (or other processors)
on such terms as are mutually agreed upon by the parties. Considering the size
of Specialty Food's surrounding 15-acre area, we believe that it would be in our
best interests to enter into agreements with Specialty Foods with respect to the
expansion of production at this location. If this expansion occurs, we expect to
include the construction of a kosher facility.

         With respect to meat, fish and other raw materials used to make our
products, we require that all of our raw beef, pork, lamb and poultry be raised
without growth hormones, steroids and antibiotics, and our salmon is "open-pen"
farmed naturally from Canadian rivers. Market prices for meat, fish and other
food items are subject to constant fluctuation and frequent shortages of item
availability, which we expect to mitigate through contract purchasing. We have
established strategic supply relationships with Special Foods and LandLock Sea
Foods, a supplier of fish products, that we believe will enable lower market
prices as we grow and achieve economies-of-scale.

         CO-PACK PRODUCTION

         We plan to use co-packing affiliates to produce a selection of
specialty gourmet items, including one-dish meals of smoked meat/fish pasta,
casseroles, quiches, and pizzas. We have not entered into agreements with any
co-packing facilities, but have entered into discussions with several and
believe that suitable arrangements can be reached when we commence operations.
Our plan is to cause Specialty Foods to bulk-ship smoked meat and fish
ingredients to the co-packers. There, the various menu items will be packaged,
and shipped to our planned regional distribution centers.

         PROCESS & PRICE VALUE

         Our wood-smoking process is expensive. Costs include obtaining freshly
cut timber, labor associated with the smoking process, and having to absorb a
25% to 30% cook shrinkage loss in the process. Consequently, Smoky Market brand
smoked foods cost more to produce and have higher price points than many
competing smoked food products. However, the existence of a market for
higher-priced organic foods and other prepared foods that are advertised as 100%
natural, low-sodium and/or free of additives suggests that customers will pay
slightly more for products they know to be of premium quality, especially
prepared foods that are natural, tasty, and convenient. Based upon our review of
the nutritional labels of our competitors, we believe that the absence of any
preservatives, brining solutions, liquid smoke and similar additives in Smoky
Market brand smoked meats foods distinguishes our product from smoked meat
products currently on the market.

                                       3

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         SMOKED FOOD PRODUCTS

         Below is our line of smoked foods that we expect to produce under the
Smoky Market brand. We expect that certain of these items will be featured on
the menus at Smoky Market restaurant-stores, with a selection of these items to
be retail packaged and featured for take-home consumption.

         Our line of wood-smoked foods presently includes the follow:

         ENTREE ITEMS (Individual serving portions that are ready to "heat'n
         serve")

         o        Pork Loin Baby Back Ribs
         o        Pork Country-Style Ribs
         o        Pork Loin Chop
         o        Carved Boneless Chicken Breast
         o        Jumbo Chicken Thigh
         o        Cornish Game Hen
         o        Turkey Breast, Thigh & Leg
         o        Rack Of Lamb & Lamb Chops
         o        Duck
         o        Salmon & Trout

         SLICED, PULLED OR CUT SMOKED FOODS (Sliced, pulled or cut from the bone
         and packaged in portion servings for sandwiches, or to add to salads,
         tacos, casseroles & soups)

         o        Beef Sirloin Tri-Tip
         o        Beef Brisket
         o        Corned Beef Brisket
         o        Pork Loin Roast
         o        Pork Shoulder
         o        Boneless Pork Leg
         o        Carved Chicken Strips
         o        Turkey Breast

         SMOKED FINGER FOODS (Delicate smoky treats for snacking fun &
         entertainment)

         o        Beef & Pork Meatballs
         o        Pork Country Rib Strips
         o        Pork Ribletts
         o        Carved Chicken Strips
         o        Chicken Drummies (Regular & Teriyaki)
         o        Lamb Ribletts Teriyaki

         SIDE ORDER FOODS

         o        Hickory Smoke-Baked(TM) Beans
         o        Sweet Butter-Creamed Corn
         o        Creamy-Garlic Coleslaw Dressing & Veggie Dip
         o        Southern-Style Barbecue Dipping Sauce
         o        Cornbread Muffins

                                       4

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         We anticipate that Smoky Market restaurant-stores and kiosks will
feature a selection of the items listed above and include sandwiches,
quesadillas, quiches and recipe dishes. Items will be available for menu
foodservice and for packaged sales. In time, as our brand concept develops, we
expect that the complete line of our smoked foods will be available for purchase
from our internet website at www.smokymarket.com.

MARKETING & OPERATIONS

         SMOKY MARKET RESTAURANT-STORES

         The Smoky Market "restaurant-store" concept falls under the category of
fast-casual, a relatively new and fast-growing segment in the restaurant
industry. Our theme concept is a rustic, old-style - but sophisticated - motif
of warm, light-colored wood with an inviting decor and designed to accommodate a
full-service restaurant operation, seating 40 to 90 customers. We also plan to
have each Smoky Market restaurant-store include an area of refrigerated and
frozen display cases that feature our packaged foods, including entrees,
finger-foods, and recipe dish items for take-home sales.

         The larger Smoky Market restaurant-stores will also feature an internet
ordering station for spontaneous on-line ordering by customers of our foods for
gifts. The distinguishing feature and key operating advantage of our Smoky
Market restaurant-store concept is the absence of handling or cooking of raw
products on site; our entire menu will be fully cooked and portion-packaged for
quick and easy heating. We believe this operating aspect to be unique in the
restaurant industry and will provide an assurance of quality consistency with
substantially decreased reliance upon the need for heavily trained and skilled
cooks.

         The principal heating equipment for all menu items to be served hot
will be special ovens that incorporate functional elements of infra-red heating,
impinged air velocity and microwave. These ovens require no exhaust hood system
in 48 out of 50 states, which substantially reduces typical investment costs,
and the speed of their heating application will enable Smoky Market entrees to
be served as if the restaurant-market were a quick-service business. We expect
the entire preparation process for a Smoky Market meal will require only minutes
to heat for serving.

         FRANSHIP(TM) PROGRAM

         The franchise industry is successful largely because of the dedicated
managers and assistant managers who work much longer than typical 40-hour weeks,
at fixed salary pay scales that yield in most cases an amount of net pay
effectively not much greater than the hourly pay of general employees. The
franchise industry is also successful largely because many franchisees are
full-time owner-operators of their franchise.

         We plan to create a relationship with our local managers we call
"Franship." At this time, the structure and application for our Franship program
are still being formalized and research is being conducted relative to certain
legal definitions and federal/state filing requirements. However, the basic
opportunity being proposed for a Franship candidate is a unique blend of the
concepts of franchising and employment. We would retain majority ownership and
control of each restaurant-store and kiosk and the Franship manager would, in
most cases, be an employee of our company or a joint venture. The Franship
candidate would make a cash investment for the right to share in 10% of his or
her respective Smoky Market concept (either a restaurant-store or kiosk). This
profit-sharing right will become vested and transferable as the Franship income
right appreciates in value. We expect that this will provide substantial
motivation for the local manager to maximize profitability but permit us to
retain ownership and ultimate control.

                                       5

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         DISTRIBUTION

         Processed smoked foods will be bulk-packaged at our processing facility
and shipped initially to smaller localized food distributors that will service
our Smoky Market restaurant-stores within respective market areas; as we grow
nationally, we may also consider placing our distribution needs with a large
national foodservice distributor. In northern California, we have an informal
commitment from InterState Refrigerated Distributing Company for fee-based order
drops and if this program is successful, we intend to offer this distribution
plan to local distributors in markets throughout all regional territories.

         DESIGN, MARKETING, HUMAN RESOURCES AND OPERATIONS ASSISTANCE

         As we execute our business plan, we intend to engage the services of
Tartan Marketing, a well-established advertising and marketing agency based in
Minneapolis, MN that will complete the designs of our restaurant-store and kiosk
concepts, develop programs for recruitment of key management employees and
Franship candidates, coordinate our program for site acquisitions on a national
scale, assist in the formation and implementation of operating systems, and
create our media and public relations campaign for brand development in each
region to be penetrated.

GENERAL INFORMATION

         INTELLECTUAL PROPERTY

         We do not own any intellectual property that is material to our
business.

         We license the recipes for substantially all of our products, certain
trademarks and tradenames, including Smoky Market(R) and Smoke-Baked,(TM) and
design features related to the ovens used for smoking our products from Smoky
Systems, LLC, pursuant to an exclusive license agreement. Under the license
agreement, we issued Smoky Systems 40,000,000 shares of our common stock as
consideration for the licensed rights. The license agreement is for a fixed term
of 10 years, with renewal options for four additional 10-year terms, but is
terminable 90 days following breach or in connection with a bankruptcy or
similar event. In addition, our license to such rights ceases to be exclusive if
our annual revenues from licensed products does not equal or exceed $30 million
by 2011.

         Neither we nor Smoky Systems have registered any patents, but we expect
to be able to secure certain patent rights for the diffusing system attached to
our smoker-oven from the firebox.

         GOVERNMENT REGULATION

         As a distributor of food products and planned restaurant operator, we
are subject to regulation by the U.S. Food and Drug Administration, or FDA, the
U.S. Department of Agriculture, or USDA, and to licensing and regulation by
state and local health, sanitation, building, zoning, safety, fire and other
authorities. In addition, the operations of our food processor are subject to
regulation under the Federal Food, Drug and Cosmetic Act, the Federal Meat
Inspection Act, the Poultry Products Inspection Act, the Perishable Agricultural
Commodities Act, the Nutrition Labeling and Education Act of 1990, and the rules
issued under these laws. The FDA regulates standards of identity for specified
foods and prescribes the format and content of information on food product
labels. The USDA imposes standards for product quality and sanitation including
the inspection, labeling and compliance of meat and poultry products and the
grading and commercial acceptance of shipments from our suppliers.

                                       6

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         Costs of compliance with such laws and regulations are presently
insignificant. If we or our food processor were to be found to be out of
compliance with such laws, particularly those related to the production,
labeling and handling of food, we could be subject to significant fines and
forced to discontinue our operations until all material violations were
addressed. Were our relationship with our food processor to terminate, we would
have to find another USDA-approved meat processor or qualify as such ourselves.
There are a limited number of USDA-approved meat processors and barriers to
entry are significant (with an estimated start-up cost of not less than $2
million dollars and required time of at least one year for qualification).

         ENVIRONMENTAL LAWS

         We are not required to obtain any environmental permits and do not use
any hazardous materials in connection with the operation of our business.
Accordingly, we have not incurred, and do not expect to incur, any material
expenses associated with environmental compliance.

         COMPETITION

         Generally, most smoked-food or barbeque restaurants use burning wood in
a barbeque pit or smoker to cook their meat, which yields a natural, penetrating
smoky flavor to varying degrees, depending on smoking technique and wood
quality. The moisture content of the smoked meats will also vary from concept to
concept, and even from unit to unit within the same concept brand, depending on
a number of variables. For these reasons, the vast majority of smoked-food or
restaurants have remained single to small multi-unit concepts, and the largest
barbecue chain in the country, Sonny's Barbeque, has only approximately 200
stores. However, more barbeque or smoked-food concepts are opening, and we
believe that existing concepts are planning aggressive expansions as they
acquire improved smoking equipment and devise improved foodservice systems.

         We plan to compete principally in the retail packaged food industry and
in the fast-casual and quick-service segment of the restaurant industry. In the
retail packaged food segment, we expect that our principal competitors will
include well known retails chains such as Costco Club Stores, specialty foods
stores such as Barney Greengrass or Dean & DeLuca, commercial smokehouses, and
numerous other packaged food enterprises. We expect to compete based upon
quality, flavor, healthfulness, variety and price. As a new entrant into the
market, we are uncertain how we will compare to our competitors on most of those
factors, but expect that our additive-free naturally-smoked foods will compete
in terms of quality, flavor and healthfulness. As a new market entrant, our
variety is limited, and we expect that our price will be below that of specialty
stores and internet sellers, but above that of major retail chains.

         The fast-casual segment of the restaurant industry is characterized by
a large number of participants, both individual stores and large chains, and is
extremely competitive. Because of the localized nature of the business, we will
be competing with different restaurants in each geographic market. We expect to
compete based upon quality of food and service, ambience, flavor, variety and
price. As a new entrant into the market, we are uncertain how we will compare to
our competitors on most of those factors. Many of our existing and potential
competitors have longer operating histories, a large existing customer base,
greater financial strength, and more recognized brands than we do. These
competitors may be able to attract and retain customers more easily because of
their brand names and their larger marketing budgets and sales forces. Our
larger competitors can also devote substantially more resources to product
development and may adopt more aggressive pricing policies.

                                       7

<PAGE>

         RESEARCH AND DEVELOPMENT

         We are recently formed and do not have any historical research and
development expenses. We plan to add products to our lines as our business
develops and expect that research, developing and testing of new or improved
recipes and products will be an ongoing part of our business.

EMPLOYEES

         We currently have a total of two paid full-time employees and one paid
full-time contractor, which includes two officers (Edward C. Feintech, our CEO
and Toni L. Adams, our Secretary) and a quality-control operator of our
smoker-oven system. We also have two executives, our Chief Financial Officer and
our Chief Information Officer, providing services on a part-time basis as
consultants.

         Execution of our business plan as set forth above would, we believe,
require the hiring of approximately 30 people over the next three years to staff
our corporate management team, our regional offices and those responsible for
overseeing the process of procuring real estate (fee simple or lease) and
arranging for the construction or placements of our Smoky Market outlets, and
the hiring of initial management. This number excludes management and staffing
at the Smoky Market restaurant-markets and kiosks. The actual number of
employees we will hire in the next 12 months depends upon our success in
obtaining capital and how rapidly we can expand our operations.

ITEM 1A.  RISK FACTORS.

         INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW, AND ALL OF THE OTHER
INFORMATION SET FORTH IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN SHARES OF
OUR COMMON STOCK. IN ADDITION TO HISTORICAL INFORMATION, THE INFORMATION IN THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS ABOUT OUR FUTURE BUSINESS AND
PERFORMANCE. OUR ACTUAL OPERATING RESULTS AND FINANCIAL PERFORMANCE MAY BE
DIFFERENT FROM WHAT WE EXPECT AS OF THE DATE OF THIS PROSPECTUS. THE RISKS
DESCRIBED IN THIS PROSPECTUS REPRESENT THE RISKS THAT MANAGEMENT HAS IDENTIFIED
AND DETERMINED TO BE MATERIAL TO OUR COMPANY. ADDITIONAL RISKS AND UNCERTAINTIES
NOT CURRENTLY KNOWN TO US, OR THAT WE CURRENTLY DEEM TO BE IMMATERIAL, MAY ALSO
MATERIALLY HARM OUR BUSINESS OPERATIONS AND FINANCIAL CONDITION.

         WE HAVE GENERATED ONLY A NOMINAL AMOUNT OF REVENUE AND MAY BE UNABLE TO
GENERATE SIGNIFICANT REVENUE IN THE FUTURE.

         We were incorporated in April 2006 and are in the process of commencing
operations. As a result, we have generated only a nominal amount of revenue, and
all of our plans are speculative. We may be unable to generate or expand revenue
at the rate anticipated. If we do not generate significant revenue in the
future, or if costs of expansion and operation exceed revenues, we will not be
profitable. We may be unable to execute our business plan, generate significant
revenue or be profitable.

         OUR PREDECESSOR AND AFFILIATE, SMOKY SYSTEMS WAS UNABLE TO GENERATE
SIGNIFICANT REVENUES OR PROFITS FROM ITS EFFORTS TO FOLLOW A BUSINESS PLAN
SIMILAR TO OURS.

         Smoky Systems, LLC was established in 2000 and attempted to create a
national smoked good business similar to that which we are attempting to
establish. Smoky Systems was unable to generate significant revenues or profits,
principally because it was not able to secure financing as a private company to
formally launch operations. We have licensed our recipes, trademarks, basic
modular restaurant design, and other intellectual property for our smoked-foods
processing, marketing, branding and operations from Smoky Systems and are
attempting to successfully implement a similar business plan under the same
management team. We are subject to the same risks, including risks related to
the raising of capital and the attractiveness of our business plan, as Smoky
Systems, and may similarly be unable to generate significant revenues or
profits.

                                       8

<PAGE>

         THE INEXPERIENCE OF OUR KEY MANAGEMENT, AND OUR LIMITED OPERATING
HISTORY AND EVOLVING BUSINESS PLAN, MAKE IT DIFFICULT TO EVALUATE OUR
PERFORMANCE AND FORECAST OUR FUTURE.

         We were formed in April 2006. Our key management individuals have
experience in the restaurant industry, but have limited or no experience in
internet retailing, establishing a national food service business (directly or
through franchise arrangements) or operating a reporting issuer. Our limited
operating history and limited experience make it difficult to evaluate our
ability to generate revenues, manage growth, obtain necessary capital, manage
costs, create profits, and generate cash from operations. Specifically, our
ability to do the following may be impaired:

         o        implement our business plan (which may be based upon faulty
                  assumptions and expectations arising from our limited
                  experience);
         o        obtain capital necessary to continue operations and implement
                  our business plan;
         o        comply with SEC rules and regulations and manage market
                  expectations;
         o        differentiate ourselves from our competitors; or
         o        establish a significant retail and restaurant customer base.

         If we fail to successfully manage these risks, we may never expand our
business or become profitable and our business may fail.

         WE WILL BE UNABLE TO IMPLEMENT OUR BUSINESS PLAN IF WE CANNOT RAISE
SUFFICIENT CAPITAL AND MAY BE REQUIRED TO PAY A HIGH PRICE FOR CAPITAL.

         As of December 31, 2008, we had $282 in cash and cash equivalents. We
need to obtain a significant amount of additional capital to implement our
business plan and meet our financial obligations as they become due. We may not
be able to raise the additional capital needed or may be required to pay a high
price for capital. Factors affecting the availability and price of capital may
include the following:

         o        the availability and cost of capital generally;
         o        our financial results;
         o        the experience and reputation of our management team;
         o        market interest, or lack of interest, in our industry and
                  business plan;
         o        the trading volume of, and volatility in, the market for our
                  common stock;
         o        our ongoing success, or failure, in executing our business
                  plan;
         o        the amount of our capital needs; and
         o        the amount of debt, options, warrants and convertible
                  securities we have outstanding.

         We may be unable to meet our current or future obligations or to
adequately exploit existing or future opportunities if we cannot raise
sufficient capital. If we are unable to obtain capital for an extended period of
time, we may be forced to discontinue operations.

         OUR AUDITORS HAVE INCLUDED AN EXPLANATORY PARAGRAPH IN OUR FINANCIAL
STATEMENTS REGARDING OUR STATUS AS A GOING CONCERN.

         Our audited financial statements included in this prospectus were
prepared on the assumption that we will continue as a going concern. Our
independent registered public accounting firm has stated that it substantially
doubts our ability to continue as a going concern in a report dated May 7,
2009. This doubt is based on the fact that we have had losses since inception,
have a working capital deficit and have had no material revenue generating
operations since inception.

                                       9

<PAGE>

         IF WE FAIL TO DEVELOP OUR BRAND RECOGNITION, OUR ABILITY TO COMPETE IN
A HIGHLY FUNGIBLE RESTAURANT MARKET WILL BE IMPAIRED.

         The foodservice industry is intensely competitive with respect to the
quality and value of food products, service, price, dining experience and
location. We compete with major restaurant chains, some of which dominate the
industry. Our competitors also include a variety of mid-price, full-service
casual-dining restaurants, health and nutrition-oriented restaurants,
delicatessens and prepared food restaurants, as well as supermarkets and
convenience stores. Our competitors have substantially greater brand
recognition, as well as greater financial, marketing, operating and other
resources than we have, which may give them competitive advantages. The
fast-casual and quick-services restaurant segments are growing rapidly with
numerous restaurant chains competing for quality site locations. Suitable
locations for our restaurants may be difficult to locate, or we may be unable to
finance the acquisition of such locations. Our competitors could also make
changes to pricing or other marketing strategies which may impact us
detrimentally. As our competitors expand operations, we expect competition to
intensify. Such competition could prevent us from generating significant
revenue, which is necessary to sustain our operations in the long term.

         THE PACKAGED FOOD MARKET IS COMPETITIVE, AND WE MAY BE UNABLE TO
SUCCESSFULLY CAPTURE RETAIL CUSTOMERS.

         The market for packaged meat products, and competing packaged products,
is highly competitive. We propose to sell packaged meat products over the
Internet and at retail locations. We may be unable to differentiate ourselves in
the marketplace and compete successfully against existing or future competitors
of our business. In order to succeed, we will be required to take customers away
from established smoked meat and fish brands and alternative food products sold
over the Internet or at retail stores. Our retail products will be sold at
higher prices than some of our competitor's products, and consumers may not
differentiate the quality of our products or may not be willing to pay higher
prices. If we fail to establish customers for our packaged food business, it is
unlikely that we will generate significant revenue or become profitable, and in
the long run our business will likely fail.

         WE MAY BE UNABLE TO ESTABLISH A SIGNIFICANT NUMBER OF RESTAURANT-STORES
OR KIOSKS.

         Many factors may affect our ability to establish new restaurant-stores
and kiosks, including:

         o        identification and availability of suitable locations;
         o        negotiation of favorable lease or purchase arrangements;
         o        management of the costs of construction and development;
         o        securing required governmental approvals and permits and
                  complying with governmental regulations;
         o        recruitment of qualified operating personnel;
         o        labor disputes;
         o        shortages of materials and skilled labor;
         o        environmental concerns; and
         o        other increases in costs, any of which could give rise to
                  delays or cost overruns.

         If we are not able to establish and expand our restaurant-store or
kiosk business, our revenues will not grow as expected, which would inhibit our
ability to continue operations in the long term.

                                       10

<PAGE>

         WE ARE DEPENDENT UPON RECIPES AND OTHER PROPRIETARY INFORMATION
LICENSED TO US BY SMOKY SYSTEMS, LLC AND MAY NOT BE ABLE TO CONTINUE OUR CURRENT
OPERATIONS WITHOUT SUCH INTELLECTUAL PROPERTY.

         We rely on Smoky Systems, LLC to provide the recipes, trademarks, basic
modular restaurant-market design, and other intellectual property for our
smoked-foods processing, marketing, branding and operations. The agreement under
which we license this intellectual property is effective for the term of the
license agreement, which has limited terms and may be terminated early following
an uncured material breach or may not be renewed upon expiration. The license
agreement is for a fixed term of 10 years with renewal options for four
additional 10-year terms, but is terminable 90 days following any uncured breach
or in connection with a bankruptcy or similar event. In addition, our license to
such rights ceases to be exclusive if our annual revenues from licensed products
does not equal or exceed $30 million by 2011. A termination or nonrenewal of the
license agreement, or even a loss of our exclusivity, would result in a
substantial decrease in revenue, cause significant harm to our business, and
possibly force us to discontinue operations. In the future, irrespective of our
license with Smoky Systems, we may be unable to continue to obtain needed
services or licenses for needed intellectual property on commercially reasonable
terms, or at all, which would harm our ability to continue production, our cost
structure and the quality of our products or services.

         THE RISK OF PRODUCT CONTAMINATION AND RECALL MAY HARM OUR PUBLIC IMAGE
AND RESULT IN DECREASED REVENUES AND HARM TO OUR BUSINESS.

         There is a risk that our food processor could produce contaminated meat
or other products that we would ship or serve at our restaurant-markets or
kiosks. If such an event occurs, we may be required to recall our products from
retail stores, affiliate warehouses and from the restaurant outlets being
served. A product recall would increase costs, result in lost revenues and harm
our public relations image, in addition to exposing us to liability for any
personal injury resulting from such contamination.

         THE AVAILABILITY OF RAW MEAT AND FISH MAY CHANGE WITHOUT NOTICE, AND
THE FLUCTUATING COST OF THESE PRODUCTS MAY UNEXPECTEDLY INCREASE OUR OPERATING
COSTS AND HARM OUR BUSINESS.

         The costs of obtaining the meat and fish required for our products are
subject to constant fluctuations and frequent shortages of item availability.
Adequate supplies of raw meat and fish may not always be available, and the
price of raw meat and fish may rise unexpectedly, resulting in increased
operating costs, potential interruptions in our supply chain, and harm to our
business.

         ADVERSE PUBLICITY REGARDING FISH, POULTRY OR BEEF COULD NEGATIVELY
IMPACT OUR BUSINESS.

         Our business can be adversely affected by reports regarding mad cow
disease, Asian bird flu, meat contamination within the U.S. generally or food
contamination generally. In addition, concerns regarding hormones, steroids and
antibiotics may cause consumers to reduce or avoid consumption of fish, poultry,
or beef. Any reduction in consumption of fish, poultry, or beef by consumers,
would harm our revenues, financial condition and results of operations.

         OUR SUPPLY CHAIN MAY BE SUBJECT TO SHIPPING LOSSES, VARIOUS ACCIDENTS,
OR SPOILAGE, WHICH WOULD DECREASE REVENUES AND POTENTIALLY LEAD TO A LOSS OF
CUSTOMERS.

         We have contracted with a food processor that will be responsible for
shipping our processed products, restaurant-stores or consumers to distribution
centers or marketing affiliates. Shipping losses, various accidents and product
spoilage during this process may lead to decreased sales, potentially
disgruntled commercial customers and possible shortages at our distribution
centers and retail locations. Repeated or extensive problems of this nature
would harm our reputation and revenues.

                                       11

<PAGE>

         WE MAY LOSE OUR PROCESSOR AFFILIATION OR EXPERIENCE A BREAKDOWN IN OUR
SINGLE PROCESSING OVEN SYSTEM, SUBSTANTIALLY HARMING OUR ABILITY TO GENERATE
REVENUES UNTIL ANOTHER PROCESSOR IS LOCATED.

         We are completely dependent upon Mary Ann's Specialty Foods, Inc., and
upon a single oven-system located at Specialty Foods, to produce our smoked
foods in order to operate the business and generate revenue. If our oven systems
break down, become contaminated or are removed from Specialty Foods' facility,
we would experience an interruption in our ability to supply products to
customers. This would harm our relationships with our customers and internet
affiliates, and harm our revenues in the short run. Any long-term interruptions
in our ability to produce smoked foods would significantly limit our ability to
continue operations.

         WE ARE DEPENDENT UPON KEY PERSONNEL TO MANAGE BUSINESS, AND THE LOSS OF
SUCH PERSONNEL COULD SIGNIFICANTLY IMPAIR OUR ABILITY TO IMPLEMENT OUR BUSINESS
PLAN.

         We are highly dependent upon the efforts of management, particularly
Edward C. Feintech, our Chairman, President and Chief Executive Officer. The
number of qualified managers in the smoked-food industry is limited. As our
business grows, we will need to recruit executive and regional managers who are
capable of implementing our business plan. The e-commerce and restaurant
industries are highly competitive, and we may be unable to attract qualified
management personnel. If we are unsuccessful in retaining or attracting such
employees, our ability to grow and service capacity will be harmed.

         In addition, the success of each Smoky Market foodservice concept will
be largely dependent upon the efforts of local management. We may be unable to
locate qualified persons willing to manage local stores under the terms we
expect to offer. We may be required to increase salaries, benefits, and
ownership beyond that anticipated, or management personnel we hire may have
limited qualifications and may not perform as anticipated. We may also
experience rapid turnover and unexpected legal and other costs associated with
our compensation and/or ownership programs for local management. If we are
unable to hire and maintain qualified, capable local management, we may
experience lower revenues and higher costs than expected.

         CERTAIN DIRECTORS OF OUR COMPANY ARE ALSO EXECUTIVES OF OUR AFFILIATE,
SMOKY SYSTEMS, WHICH MAY LEAD TO A CONFLICT OF INTEREST.

         Our Chairman, President and Chief Executive Officer, Edward C.
Feintech, our Chief Information Officer, Dennis Harrison, and our Chief
Financial Officer, Shane Campbell, are all affiliated with our majority
shareholder, Smoky Systems, LLC. Mr. Feintech is the current manager of Smoky
Systems. In addition, Scott Bargfrede, an "independent" director, holds a minor
interest (less than 1%) in Smoky Systems. We may be required to renegotiate our
relationship with Smoky Systems, may experience disputes and litigation with
Smoky Systems or otherwise have the interests of our shareholders generally be
adverse to the interests of Smoky Systems. If a conflict arises, the overlap in
management and conflicts may inhibit fair and equitable resolution of any issues
and leave our company vulnerable to shareholders derivative suits.

                                       12

<PAGE>

         WE EXPECT TO BE DEPENDENT ON A THIRD PARTY TO PROVIDE DESIGN AND
MARKETING MATERIALS IN RELATION TO OUR RESTAURANT-MARKETS AND KIOSKS AND TO
ASSIST IN DEVELOPMENT OF OUR GENERAL OPERATING AND MARKETING PLAN.

         We intend to engage Tartan Marketing, Inc. to assist with the design of
our restaurant-stores and with the creation and execution of a formal business
plan. As we roll out our business plan, we will rely upon Tartan Marketing to
assist in the development and execution of our operating and marketing plans to
launch and grow the Smoky Market foodservice brand on a national scale. We
expect to rely upon Tartan Marketing for development of internal and external
operating system control and reporting, our human resource program, senior and
executive level management recruitment and expansion strategy planning and
implementation. If we are unable to sustain a long-term agreement with Tartan
Marketing, or if this agency fails to fulfill its obligations under specific
project agreements that are signed, our ability to generate revenue will be
delayed or reduced, and we will incur substantial costs in obtaining the
necessary services to execute the roll out for our restaurant-stores and kiosks.

         LABOR DISPUTES AFFECTING COMMON CARRIERS AND FOODSERVICE DISTRIBUTORS
MAY HAMPER OUR ABILITY TO DELIVER OUR PRODUCT TO CUSTOMERS AND HARM OUR
BUSINESS.

         We will be dependent upon UPS and other package delivery contractors
and foodservice distributors to ship internet orders to customers and products
to our foodservice concept outlets. Labor disputes involving package delivery
contractors, or other events creating delays, unpredictability or lost increases
in the express delivery market may significantly damage our shipping and
delivery capability. This would increase our costs, likely cause us to fail to
comply with delivery commitments to our customers, and eventually harm our
ability to generate revenues.

         OUR BUSINESS MAY BE AFFECTED BY INCREASED COMPENSATION AND BENEFITS
COSTS.

         We expect labor costs to be a significant expense for our business. We
may be negatively affected by increases in workers' wages and costs associated
with providing benefits, particularly healthcare costs. Such increases can occur
unexpectedly and without regard to our efforts to limit them. If such increases
occur, we may be unable to pass them along to the consumer through product price
increases, resulting in decreased operating results.

         CHANGES IN GENERAL ECONOMIC AND POLITICAL CONDITIONS AFFECT CONSUMER
SPENDING AND MAY HARM OUR REVENUES AND OPERATING RESULTS.

         Our country's economic condition affects our customers' levels of
discretionary spending. A decrease in discretionary spending due to a recession
or decreases in consumer confidence in the economy could affect the frequency
with which our customers choose to purchase smoked-foods or dine out or the
amount they spend on smoked-food or meals while dining out. This would likely
decrease our revenues and operating results.

         FAILURE TO COMPLY WITH GOVERNMENTAL REGULATIONS COULD HARM OUR BUSINESS
AND OUR REPUTATION.

         We will be subject to regulation by federal agencies and regulation by
state and local health, sanitation, building, zoning, safety, fire and other
departments relating to the development and operation of restaurant-markets.
These regulations include matters relating to:

         o        the environment;
         o        building construction;
         o        zoning requirements;
         o        worker safety;
         o        the preparation and sale of food and alcoholic beverages; and
         o        employment.

                                       13

<PAGE>

         Our facilities will need to be licensed and will be subject to
regulation under state and local fire, health and safety codes. The construction
of modular restaurant-markets will be subject to compliance with applicable
zoning, land use, and environmental regulations. We may not be able to obtain
necessary licenses or other approvals on a cost-effective and timely basis in
order to construct and develop modular restaurant-markets in the future.

         Various federal and state labor laws will govern our operations and our
relationship with our employees, including minimum wage, overtime, working
conditions, fringe benefit, and work authorization or immigration requirements.

         If we elect to serve alcohol to our customers, we will be required to
comply with the alcohol licensing requirements of the federal, state, and
municipal governments having jurisdiction where our restaurant-markets are
located. Alcoholic beverage control regulations require applications to state
authorities and, in certain locations, county and municipal authorities for a
license and permit to sell alcoholic beverages. Typically, licenses must be
renewed annually and may be revoked or suspended for cause at any time.
Alcoholic beverage control regulations relate to numerous aspects of the daily
operations of restaurant-markets, including minimum age of guests and employees,
hours of operation, advertising, wholesale purchasing, inventory control and
handling, storage and dispensing of alcoholic beverages. If we fail to comply
with federal, state, or local regulations, our licenses may be revoked and we
may be forced to terminate the sale of alcoholic beverages at one or more of our
restaurant-markets.

         The Americans with Disabilities Act prohibits discrimination on the
basis of disability in public accommodations and employment. We will likely be
required to comply with the Americans with Disabilities Act and regulations
relating to accommodating the needs of the disabled in connection with the
construction of new facilities and with significant renovations of existing
facilities.

         Failure to comply with these and other regulations could increase our
cost structure, slow our expansion, and harm our reputation, any of which would
harm our operating results.

         COMPLIANCE WITH EXISTING AND NEW REGULATIONS OF CORPORATE GOVERNANCE
AND PUBLIC DISCLOSURE MAY RESULT IN ADDITIONAL EXPENSES.

         Compliance with changing laws, regulations, and standards relating to
corporate governance and public disclosure, including the Sarbanes-Oxley Act of
2002 and other SEC regulations, requires large amounts of management attention
and external resources. This may result in increased general and administrative
expenses and a diversion of management time and attention from
revenue-generating activities to compliance activities.

         OUR DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS HAVE
EFFECTIVE CONTROL OF THE COMPANY, PREVENTING NON-AFFILIATE STOCKHOLDERS FROM
SIGNIFICANTLY INFLUENCING OUR DIRECTION AND FUTURE.

         Our directors, officers, and 5% stockholders and their affiliates
control in excess of 63% of our outstanding shares of common stock and are
expected to continue to control a majority of our outstanding common stock
following any financing transactions projected for the foreseeable future. These
directors, officers and affiliates effectively control all matters requiring
approval by the stockholders, including any determination with respect to the
acquisition or disposition of assets, future issuances of securities,
declarations of dividends and the election of directors. This concentration of
ownership may also delay, defer, or prevent a change in control and otherwise
prevent stockholders other than our affiliates from influencing our direction
and future.

                                       14

<PAGE>

         THERE IS A PUBLIC MARKET FOR OUR STOCK, BUT IT IS THIN AND SUBJECT TO
MANIPULATION.

         The volume of trading in our common stock is limited and can be
dominated by a few individuals. The limited volume can make the price of our
common stock subject to manipulation by one or more stockholders and will
significantly limit the number of shares that one can purchase or sell in a
short period of time. An investor may find it difficult to dispose of shares of
our common stock or obtain a fair price for our common stock in the market.

         THE MARKET PRICE OF OUR COMMON STOCK MAY BE HARMED BY OUR NEED TO RAISE
CAPITAL.

         We need to raise additional capital in order to roll out our business
plan and expect to raise such capital through the issuance of common stock
and/or convertible debt. Because securities in private placements and other
transactions by a company are often sold at a discount to market prices, this
need to raise additional capital may harm the market price of our common stock.
In addition, the re-sale of securities issued in such capital-raising
transactions, whether under Rule 144 or a re-sale registration statement, may
harm the market price of our common stock.

         THE MARKET PRICE FOR OUR COMMON STOCK IS VOLATILE AND MAY CHANGE
DRAMATICALLY AT ANY TIME.

         The market price of our common stock, like that of the securities of
other early-stage companies, is highly volatile. Our stock price may change
dramatically as the result of announcements of our quarterly results, the rate
of our expansion, significant litigation or other factors or events that would
be expected to affect our business or financial condition, results of operations
and other factors specific to our business and future prospects. In addition,
the market price for our common stock may be affected by various factors not
directly related to our business, including the following:

         o        intentional manipulation of our stock price by existing or
                  future stockholders;
         o        short selling of our common stock or related derivative
                  securities;
         o        a single acquisition or disposition, or several related
                  acquisitions or dispositions, of a large number of our shares;
         o        the interest, or lack of interest, of the market in our
                  business sector, without regard to our financial condition or
                  results of operations;
         o        the adoption of governmental regulations and similar
                  developments in the United States or abroad that may affect
                  our ability to offer our products and services or affect our
                  cost structure;
         o        developments in the businesses of companies that purchase our
                  products; or
         o        economic and other external market factors, such as a general
                  decline in market prices due to poor economic indicators or
                  investor distrust.

         OUR ABILITY TO ISSUE PREFERRED STOCK AND COMMON STOCK MAY SIGNIFICANTLY
DILUTE OWNERSHIP AND VOTING POWER, NEGATIVELY AFFECT THE PRICE OF OUR COMMON
STOCK AND INHIBIT HOSTILE TAKEOVERS.

         Under our Articles of Incorporation, as amended, we are authorized to
issue up to 10 million shares of preferred stock and 200 million shares of
common stock without seeking stockholder approval. Our board of directors has
the authority to create various series of preferred stock with such voting and
other rights superior to those of our common stock and to issue such stock
without stockholder approval. Any issuance of such preferred stock or common
stock would dilute the ownership and voting power of existing holders of our
common stock and may have a negative effect on the price of our common stock.
The issuance of preferred stock without stockholder approval may also be used by
management to stop or delay a change of control, or might discourage third
parties from seeking a change of control of our company, even though some
stockholders or potential investors may view possible takeover attempts as
potentially beneficial to our stockholders.

                                       15

<PAGE>

         WE ARE UNLIKELY TO PAY DIVIDENDS ON OUR COMMON STOCK IN THE FORESEEABLE
FUTURE.

         We have never declared or paid dividends on our stock. We currently
intend to retain all available funds and any future earnings for use in the
operation and expansion of our business. We do not anticipate paying any cash
dividends in the foreseeable future, and it is unlikely that investors will
derive any current income from ownership of our stock. This means that your
potential for economic gain from ownership of our stock depends on appreciation
of our stock price and will only be realized by a sale of the stock at a price
higher than your purchase price.

         OUR COMMON STOCK IS A "LOW-PRICED STOCK" AND SUBJECT TO REGULATION THAT
LIMITS OR RESTRICTS THE POTENTIAL MARKET FOR OUR STOCK.

         Shares of our common stock are "low-priced" or "penny stock," resulting
in increased risks to our investors and certain requirements being imposed on
some brokers who execute transactions in our common stock. In general, a
low-priced stock is an equity security that:

         o        Is priced under five dollars;
         o        Is not traded on a national stock exchange, the Nasdaq Global
                  Market or the Nasdaq Capital Market;
         o        Is issued by a company that has less than $5 million in net
                  tangible assets (if it has been in business less than three
                  years) or has less than $2 million in net tangible assets (if
                  it has been in business for at least three years); and
         o        Is issued by a company that has average revenues of less than
                  $6 million for the past three years.

         We believe that our common stock is presently a "penny stock." At any
time the common stock qualifies as a penny stock, the following requirements,
among others, will generally apply:

         o        Certain broker-dealers who recommend penny stock to persons
                  other than established customers and accredited investors must
                  make a special written suitability determination for the
                  purchaser and receive the purchaser's written agreement to a
                  transaction prior to sale.
         o        Prior to executing any transaction involving a penny stock,
                  certain broker-dealers must deliver to certain purchasers a
                  disclosure schedule explaining the risks involved in owning
                  penny stock, the broker-dealer's duties to the customer, a
                  toll-free telephone number for inquiries about the
                  broker-dealer's disciplinary history and the customer's rights
                  and remedies in case of fraud or abuse in the sale.
         o        In connection with the execution of any transaction involving
                  a penny stock, certain broker-dealers must deliver to certain
                  purchasers the following:
                  o        bid and offer price quotes and volume information;
                  o        the broker-dealer's compensation for the trade;
                  o        the compensation received by certain salespersons for
                           the trade;
                  o        monthly accounts statements; and
                  o        a written statement of the customer's financial
                           situation and investment goals.

                                       16

<PAGE>

ITEM 1B.  UNRESOLVED STAFF COMMENTS.

         None.

ITEM 2.  PROPERTIES.

         We do not currently have fee ownership of any property. We lease a
5,000 square foot warehouse and office located in Aptos, California. The term of
the lease is month-to-month, and our monthly rent under the lease is $2,800. We
use office and cold storage warehouse space in the facility of Specialty Foods
for free. We have no lease with respect to such space, and our informal
arrangement could be terminated at any time. When and if financing is secured
and formal operations begin, we expect to formalize our arrangements with
Specialty Foods and begin paying rent.

         In January 2008, we entered into an agreement relating to the 29 East
Main Cafe, located at 29 East Main Street, Los Gatos, California 95030. Under
the terms of the purchase agreement, we acquired the existing leasehold
improvements and equipment and assumed the existing lease for a total purchase
price of $150,000. Under the terms of the lease, our monthly rent is $6,000 and
increases 3.5% annually.

         Subject to the availability of capital, we intend to enter into leases
for cold storage and warehouse fulfillment of our internet orders and for
additional office space in northern California and in Georgia.

ITEM 3.  LEGAL PROCEEDINGS.

         We are not engaged in any legal proceedings, nor are we aware of any
pending or threatened legal proceedings that, singly or in the aggregate, would
reasonably be expected to have a material adverse effect on our business,
financial condition or results of operations.

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

         No matter was submitted to a vote of the security holders during the
fourth quarter of the fiscal year covered by this report.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.

MARKET PRICE

         The table below sets forth the high and low bid quotations for our
common stock as reported on the OTC Bulletin Board for the periods indicated.
Our common stock is quoted on the OTC Bulletin Board under the symbol SMKY.

                                                       HIGH              LOW
         FISCAL YEAR ENDED DECEMBER 31, 2008
            Quarter ended December 31, 2008            $0.07            $0.03
            Quarter ended September 30, 2008           $0.15            $0.04
            Quarter ended June 30, 2008                $0.36            $0.02
            Quarter ended March 31, 2008               $0.65            $0.16

         FISCAL YEAR ENDED DECEMBER 31, 2007
            Quarter ended December 31, 2007            $0.98            $0.25
            Quarter ended September 30, 2007           $1.10            $0.07
            Quarter ended June 30, 2007                 N/A              N/A
            Quarter ended March 31, 2007                N/A              N/A

                                       17

<PAGE>


         The quotations set forth above reflect inter-dealer prices, without
retail mark-up, mark-down or commission, and may not represent actual
transactions. Our common stock began quotation on the OTC Bulletin Board on
September 11, 2007.

OUTSTANDING SHARES AND NUMBER OF STOCKHOLDERS

         As of March 31, 2009, there were 70,850,820 shares of common stock
issued and outstanding, which were held by approximately 107 holders of record
and no shares of preferred stock outstanding.

DIVIDENDS

         We have never declared or paid dividends on any class of equity
securities, and we currently intend to retain any future earnings for use in our
business and do not anticipate paying any dividends on our outstanding common
stock in the foreseeable future.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets forth information with respect to compensation plans
(including individual compensation arrangements) under which equity securities
of the company are authorized for issuance as of December 31, 2008:

<TABLE>
<S>     <C>

              PLAN CATEGORY
              -------------                                                                   NUMBER OF SECURITIES
                                                                                             REMAINING AVAILABLE FOR
                                             NUMBER OF SECURITIES                            FUTURE ISSUANCE UNDER
                                              TO BE ISSUED UPON       WEIGHTED-AVERAGE        EQUITY COMPENSATION
                                                 EXERCISE OF          EXERCISE PRICE OF         PLANS (EXCLUDING
                                            OUTSTANDING OPTIONS,     OUTSTANDING OPTIONS,    SECURITIES REFLECTED IN
                                             WARRANTS AND RIGHTS     WARRANTS AND RIGHTS           COLUMN (a))
                                             -------------------     --------------------          -----------
                                                     (a)                     (b)                        (c)
Equity compensation plans approved by
security holders                                  1,887,500                 $0.10                    817,500
Equity compensation plans not approved
by security holders                                  N/A                     N/A                        N/A

                                    TOTAL         1,887,500                  0.10                    817,500
</TABLE>

RECENT SALES OF UNREGISTERED SECURITIES

         Other than transactions previously reported and except as set forth in
the following paragraphs, there were no securities sold during the year ended
December 31, 2008 without being registered under the Securities Act.

         In October 2008, we offered and sold an aggregate of 40,000 shares of
common stock to two unrelated service providers in exchange for financial
services with a fair market value of $1,600 (or $.04 per share). The offer and
sale of such shares of our common stock were effected in reliance upon the
exemptions for sales of securities not involving a public offering, as set forth
in Section 4(2) of the Securities Act, based upon the following: (a) the


                                       18

<PAGE>

investor, confirmed to us that the investor was an "accredited investor," as
defined in Rule 501 of Regulation D promulgated under the Securities Act and had
such background, education and experience in financial and business matters as
to be able to evaluate the merits and risks of an investment in the securities;
(b) there was no public offering or general solicitation with respect to each
offering; (c) the investor was provided with certain disclosure materials and
all other information requested with respect to our company; (d) the investor
acknowledged that all securities being purchased were "restricted securities"
for purposes of the Securities Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the Securities Act; and (e) a legend was placed on the certificates
representing each such security stating that it was restricted and could only be
transferred if subsequently registered under the Securities Act or transferred
in a transaction exempt from registration under the Securities Act.

         In December 2008, (i) we offered and sold 40,000 shares of common stock
to an individual service provider in exchange for employee benefit services with
a fair market value of $1,600 (or $.04 per share); (ii) we offered and sold
30,000 shares of common stock to an individual in exchange for inventory
supplies with a fair market value of $1,200 (or $.04 per share); (iii) we
offered and sold 500,000 shares of common stock to an individual in exchange for
services with a fair market value of $20,000 (or $.04 per share); (iv) we
offered and sold to a service provider 300,000 shares of common stock in
exchange for investor relations services with a fair market value of $12,000 (or
$.04 per share); and (v) we offered and sold to an individual service provider
35,000 shares of common stock in exchange for investor relations services with a
fair market value of $1,400 (or $.04 per share). The offer and sale of such
shares of our common stock were effected in reliance upon the exemptions for
sales of securities not involving a public offering, as set forth in Section
4(2) of the Securities Act, based upon the following: (a) the investors,
confirmed to us that the investor was an "accredited investor," as defined in
Rule 501 of Regulation D promulgated under the Securities Act and had such
background, education and experience in financial and business matters as to be
able to evaluate the merits and risks of an investment in the securities; (b)
there was no public offering or general solicitation with respect to each
offering; (c) the investors were provided with certain disclosure materials and
all other information requested with respect to our company; (d) the investors
acknowledged that all securities being purchased were "restricted securities"
for purposes of the Securities Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the Securities Act; and (e) a legend was placed on the certificates
representing each such security stating that it was restricted and could only be
transferred if subsequently registered under the Securities Act or transferred
in a transaction exempt from registration under the Securities Act.

ITEM 6.  SELECTED FINANCIAL DATA.

         Because we are a smaller reporting company, we are not required to
provide the information called for by this item.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
 OF OPERATIONS.

         The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
consolidated financial statements and notes thereto. This section may include
projections and other forward-looking statements regarding management's
expectations regarding our performance. You should not place undue reliance on
such projections and forward looking statements, and, when considering such
projections and forward-looking statements, you should keep in mind the risk
factors noted throughout this prospectus. You should also keep in mind that all
projections and forward-looking statements are based on management's existing
beliefs about present and future events outside of management's control and on
assumptions that may prove to be incorrect. See "Item 1A. Risk Factors."

                                       19

<PAGE>

OVERVIEW

         We use USDA-approved, custom-engineered, proprietary wood-burning oven
technology to produce a complete line of Smoke-BakedTM meat and fish. We plan to
sell smoked foods through the development of a national chain of stand-alone
Smoky Market restaurant-stores and numerous self-contained kiosks that operate
inside qualified high-traffic venues such as shopping malls, sports arenas,
college campuses, corporate dining areas and airports. We plan to produce
principal menu items in bulk at a centralized location. We expect to be able to
deliver food of consistent size, taste and quality without the need to construct
expensive on-site ovens or to train skilled cooks to handle raw product at
numerous locations. We believe this will permit our development of a national
chain operation while keeping our in-store costs down.

         Assuming that we are successful in expanding our retail operations into
all regions of the U.S., we plan to begin directly marketing and selling our
smoke-baked products on the internet. In addition to offering customers at our
Smoky Market restaurant-stores access to on-line ordering for gifts and event
catering, we plan to create marketing operations with selected e-commerce
affiliates that are large internet retail companies with substantial numbers of
customer visits and certain consumer goods organizations such as the RV
industry.

         We have developed the core smoked-meat recipes for our proposed
business, entered into an agreement with a commercial meat processor at which we
have placed a proprietary oven capable of producing approximately 100,000 pounds
of smoked meat per month, tested the re-heating process for our menu items and
completed concept designs for our proposed restaurant-stores and kiosks. We do
not yet have any restaurant-stores or kiosks in service, but we successfully
tested the applications for preparation of our food products in a restaurant
located in Los Gatos, California for three months from October through December
2006. We have acquired the assets and leasehold rights of this Los Gatos
restaurant and are remodeling the site into a prototype Smoky Market
restaurant-store with expected completion in the summer of 2009. Beginning in
2010, and assuming the availability of capital, we plan to open additional
stores in the Western region toward our goal of opening three restaurant-stores
in each of our five regional operating territories during 2010. We also have
built our prototype kiosk for installation into a mall located in Southern
California, which is expected to be installed during the summer of 2009. We
expect this plan for development will enable us to maximize the operating and
financial efficiencies of our production capacity.

         We have generated net losses in each fiscal year since our inception.
Our current focus is on generating sales of food products under the Smoky
Market(R) brand principally through company-owned restaurant-stores & kiosks,
and in time, through internet sales. As discussed in "Liquidity and Capital
Resources" below, we estimate that we will need approximately $1.5 million of
financing to commence our business plan and begin to generate revenue, with
expected capital expenditures of approximately $900,000 to complete the
build-out of our restaurant-store, kiosks, and brand development costs related
to marketing and collateral materials, and internet operations during the
remainder of 2009.

LIQUIDITY AND CAPITAL RESOURCES

         As of December 31, 2008, we had cash and cash equivalents of $282 and a
working capital deficit of $716,046, as compared to cash and cash equivalents of
$16,235 and a working capital deficit of $507,199 as of December 31, 2007. Given
the working capital deficit, we need additional cash in order to continue our
limited day-to-day operations in the immediate term. To finance the launch of
our foodservice concept operations, we will be required to raise additional
capital, which we expect to raise through the issuance of debt, equity
securities and/or warrants during the second quarter of 2009. We believe that a
minimum of approximately $1.5 million of financing would be required to commence
our business plan and begin to generate revenue. We believe that a minimum of
$3.5 million of additional financing would be required in order to execute the
initial expansion phase of our business plan.

                                       20

<PAGE>

         Expected capital expenditures during the remainder of 2009 include
principally the completion of our Los Gatos restaurant-store at an approximate
cost of $200,000, the completion payment and installation of our prototype kiosk
for placement inside a high-traffic mall venue at a cost of $75,000, a minimum
of four additional kiosks at a cost of $425,000, and brand development costs
related to marketing and collateral materials, and internet operations of
approximately $200,000. Depending upon the level of capital available, we plan
to open additional stores in the Western region toward our goal of opening three
stores in each of our five regional operating territories.

         In addition, if our initial expansion plans are successful, we may need
to make investments in additional production capacity; this will likely require
the purchase of an existing food processing facility (possibly with a leaseback
arrangement with the operator) in order that we may add additional space, ovens
and/or buildings. We expect that this would require approximately $5.5 million
in cash including acquisition of the property and the building additions. We
would expect to be able to fund a significant portion of such purchase price
with secured debt, but would be required to raise capital through the issuance
of equity securities for at least twenty-five percent, and possibly a larger
percentage, of the purchase price.

         We do not presently have any binding commitments to provide financing.
We are in discussions with various potential investors, brokers, agents, finders
and others regarding private financings. In light of our absence of revenue and
the early stage of development of our business plan, it is uncertain that we
will be able to raise significant capital through the sale of our debt or equity
securities, and it is unlikely that we would qualify for commercial debt
financing. If we are unable to obtain additional equity financing, we will be
forced to significantly curtail our operations and proposed expansion, and our
ability to continue as a going concern will be uncertain.

RESULTS OF OPERATIONS

         Our revenues from operations decreased while our operating expenses
increased in 2008. The revenue decrease was due primarily to a decrease in
products sold between 2007 and 2008. The operating expense increase was due to
increases in rent and stock-based compensation in the payment of salaries,
professional services, and financing activities, as summarized and discussed
below. Also, our working capital deficiency increased from 2007 to 2008 as
summarized and discussed below.

         REVENUES AND EXPENSES. Our operating results for the years ended
December 31, 2007 and 2008 are summarized as follows:

                                                FOR THE YEARS ENDED
                                       DECEMBER 31, 2008  DECEMBER 31, 2007
                                       -----------------  -----------------
REVENUE                                   $       287        $     6,947
COST OF GOODS SOLD                                 --        $    12,425
GROSS PROFIT (LOSS)                       $       287        $    (5,478)
OPERATING EXPENSES
    SALARIES, WAGES & BENEFITS            $   283,603        $   359,122
    MARKETING                             $    87,355        $   116,296
    RENT                                  $   107,853        $    41,046
    PROFESSIONAL FEES                     $   102,390        $   158,483
    DEPRECIATION/AMORTIZATION             $    38,405        $    41,072
    STOCK BASED COMPENSATION
      SALARIES, WAGES & BENEFITS          $   119,780        $   189,369
      PROFESSIONAL                        $ 1,818,983        $   159,900
      FINANCING                           $   617,292        $   645,175
    OTHER                                 $   155,155        $   212,163
OPERATING LOSS                            $(3,330,529)       $(1,928,104)
OTHER EXPENSE - NET                       $   (12,601)       $   (55,693)
NET (LOSS)                                $(3,343,130)       $(1,983,797)

                                       21

<PAGE>

         Revenues decreased by $6,660 from $6,947 in 2007 to $287 in 2008, while
operating expenses increased by $1,408,190 from $1,922,626 in 2007 to $3,330,816
in 2008. As a result, our operating loss increased by $1,402,425, from
$1,928,104 in 2007 to $3,330,529 in 2008.

         The increase in operating expenses was due primarily to increases in
rent and stock-based compensation. Our rent expense increased by $66,807, from
$41,046 in 2007 to $107,853 in 2008. The increase in rent is primarily due to
our acquisition of the lease of a restaurant location in Los Gatos, California.
Under the terms of the lease, our monthly rent is $6,000.

         Stock-based compensation in the category of professional services
increased by $1,659,083 from $159,900 in 2007 to $1,818,983 in 2008 and
stock-based compensation in the category of financing activities decreased by
$27,883, from $645,175 in 2007 to $617,292 in 2008, while stock-based
compensation in the category of salaries, wages and benefits decreased by
$69,589 from $189,369 in 2007 to $119,780 in 2008. Overall, stock-based
compensation expense increased by $1,561,611, from $994,444 in 2007 to
$2,556,055 in 2008. The overall increase in stock-based compensation expense is
due to the Company exchanging stock for services as cash balances needed to be
preserved for the current recessionary economy. In addition, our marketing
expenses decreased to $87,355 in 2008 from $116,296 in 2007.

         In the opinion of our management, inflation has not and will not have a
material effect on our operations in the immediate future. Management will
continue to monitor inflation and evaluate the possible future effects of
inflation on our business and operations.

         WORKING CAPITAL. Our working capital for the years ended December 31,
2007 and 2008 is summarized in the table below. For the categories of current
assets and current liabilities, the line items included in the table below
represent selected components of each category that are material to an
understanding of our working capital deficiency. For a complete listing of all
components of each category please refer to the financial statements
accompanying this Report.

                                                 FOR THE YEARS ENDED
                                         DECEMBER 31, 2008  DECEMBER 31, 2007
                                         -----------------  -----------------
CURRENT ASSETS
    Cash                                     $     282         $  16,235
    Inventory                                $  22,126         $   4,250
    Total Current Assets                     $  22,558         $  20,485

CURRENT LIABILITIES
    Accounts payable                         $ 256,884         $ 202,206
    Accrued payroll costs                    $ 264,771         $ 191,728
    Short-term advance                       $  75,000         $  40,000
    Bank overdraft                           $  39,353                --
    Total Current Liabilities                $ 738,604         $ 527,684

WORKING CAPITAL DEFICIENCY                   $(716,046)        $(507,199)

                                       22

<PAGE>

         Our working capital deficiency increased by $208,847, from $507,199 in
2007 to $716,046 in 2008. The increase in our working capital deficiency was
primarily due to (i) an increase in our accounts payable of $54,678, from
$202,206 on 2007 to $256,884 in 2008, (ii) an increase in our accrued payroll
costs of $73,043, from $191,728 in 2007 to $264,771 in 2008, (iii) an increase
in short-term advances of $35,000, from $40,000 in 2007 to $75,000 in 2008, and
(iv) a bank overdraft of $39,353 in 2008. These increases are due primarily to
the Company's challenged operating results and insufficient capitalization.

         CASH FLOWS. Our cash flows for the years ended December 31, 2007 and
2008 are summarized as follows:

                                                       FOR THE YEARS ENDED
                                           DECEMBER 31, 2008  DECEMBER 31, 2007
                                           ----------------- ------------------
NET CASH USED IN OPERATING ACTIVITIES          $(535,630)       $(655,458)
NET CASH USED BY INVESTING ACTIVITIES          $(208,092)       $ (67,520)
CASH PROVIDED BY FINANCING ACTIVITIES          $ 727,768        $ 631,093
NET DECREASE IN CASH                           $ (15,954)       $ (91,885)

CASH, BEGINNING OF PERIOD                      $  16,235        $ 108,120
CASH, END OF PERIOD                            $     282        $  16,235

         We utilized less cash in our operating activities in 2008, from
$655,458 in 2007 to $535,629 in 2008, primarily due to more use of stock-based
financing and compensation and the increase in compensation accrued but unpaid
to employees. We used more cash in our investing activities, from $67,520 in
2007 to $208,092 in 2008, primarily due to the purchase of restaurant leasehold
improvements and equipment. We were able to generate more cash from financing
activities, from $631,093 in 2007 to $727,768 in 2008, primarily due to proceeds
from the sale of a $500,000 promissory note.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         Our discussion and analysis of our financial condition and results of
operations are based upon financial statements which have been prepared in
accordance with generally accepted accounting principles in the United States.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amount of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. On an
on-going basis, we evaluate our critical accounting policies and estimates,
including those related to long-lived assets, share-based compensation, revenue
recognition, overhead allocation, allowance for doubtful accounts, inventory,
and deferred income tax. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

         We believe the following critical accounting policies affect the more
significant judgments and estimates used in the preparation of our consolidated
financial statements. These judgments and estimates affect the reported amounts
of assets and liabilities and the reported amounts of revenues and expenses
during the reporting periods. Changes to these judgments and estimates could
adversely affect the Company's future results of operations and cash flows.

                                       23

<PAGE>

         IMPAIRMENT OF LONG-LIVED ASSETS

         The Company periodically reviews the carrying amount of property and
equipment and its identifiable intangible assets to determine whether current
events or circumstances warrant adjustments to such carrying amounts. If an
impairment adjustment is deemed necessary, such loss is measured by the amount
that the carrying value of such assets exceeds their fair value. Considerable
management judgment is necessary to estimate the fair value of assets;
accordingly, actual results could vary significantly from such estimates. As of
December 31, 2008, management believes that there is no impairment of long-lived
assets.

         REVENUE RECOGNITION

         As of December 31, 2008, the Company was still in the development
stage. As such, the only revenue consisted of minimal amounts of ecommerce
sales. Such sales are recognized at the time of shipment.

         NET (LOSS) PER COMMON SHARE

         The Company follows SFAS 128, "Earnings per Share." Basic earnings
(loss) per common share calculations are determined by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period. Diluted earnings (loss) per common share calculations are determined by
dividing net income (loss) by the weighted average number of common shares,
outstanding stock options, and the equivalent number of common shares that would
have been outstanding had the convertible debt holders converted their debt
instruments to common stock. All potential dilutive securities have been
excluded from the computation, as their effect is anti-dilutive.

         STOCK-BASED COMPENSATION

         The Company has issued its common shares as compensation to directors,
officers, and non-employees ("recipients"). The Company measures the amount of
stock-based compensation based on the fair value of the equity instrument issued
or the services or goods provided as of the earlier of (1) the date at which an
agreement is reached with the recipient as to the number of shares to be issued
for performance, or (2) the date at which the recipient's performance is
complete.

         INCOME TAXES

         The Company provides for income taxes under Statement of Financial
Accounting Standards Number 109, "Accounting for Income Taxes." SFAS No. 109
requires the use of an asset and liability approach in accounting for income
taxes. SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. No
provision for income taxes is included in the statement due to its immaterial
amount, net of the allowance account, based on the likelihood of the Company
utilizing the loss carry-forward.

OFF-BALANCE SHEET ARRANGEMENTS

         We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
investors.

                                       24

<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Because we are a smaller reporting company, we are not required to
provide the information called for by this item.

ITEM 8.  FINANCIAL STATEMENTS.

         Our financial statements and associated notes are set forth following
the signature page beginning on Page F-1.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

         The information required by this Item was previously reported.

ITEM 9A(T).  CONTROLS AND PROCEDURES.

         Disclosure Controls and Procedures
         ----------------------------------

         Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
conducted an evaluation of our disclosure controls and procedures, as such term
is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of
1934 as of December 31, 2008. Based on this evaluation, our principal executive
officer and principal financial officer concluded that our disclosure controls
and procedures are effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commission's rules and forms.

         Internal Controls
         -----------------

         Our management is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act). In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
control procedures. The objectives of internal control include providing
management with reasonable, but not absolute, assurance that the records of the
Company accurately and fairly reflect the transactions and dispositions of the
Company's assets; assets are safeguarded against loss from unauthorized use or
disposition; and that transactions are executed in accordance with management's
authorization and recorded properly to permit the preparation of consolidated
financial statements in conformity with United States generally accepted
accounting principles. Our management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2008. Our management has
concluded that, as of December 31, 2008, our internal control over financial
reporting is not effective in providing reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with United States generally accepted
accounting principles. Our management's finding of ineffective internal control
over financial reporting results primarily from the fact that the Company has
only two full time employees, which is not a sufficient number to implement
industry-standard internal controls. Subject to the Company's ability to obtain
financing and hire additional employees, the Company expects to be able to
design and implement effective internal controls in the near future.

         This annual report does not include an attestation report of the
Company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the company to provide only
management's report in this annual report.

                                       25

<PAGE>

         Changes in Internal Controls
         ----------------------------

         During the last fiscal quarter ended December 31, 2008, there has been
no change in internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect our internal control over
financial reporting.

ITEM 9B.  OTHER INFORMATION.

         None.


                                       26

<PAGE>

                                    PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

         Certain information regarding our executive officers and directors is
set forth below. Our executive officers are appointed by, and continue to serve
at the will of, our board of directors. Our directors are elected or appointed
for terms that continue, absent resignation, death or removal by our
stockholders, until the later of the next annual meeting of stockholders or
until a replacement is duly appointed or elected and qualified. Among our
officers, Edward C. Feintech devotes substantially all of his time to our
business, Shane A. Campbell devotes approximately 10% of his time to our
business, and Dennis Harrison currently devotes less than 5% of his time to our
business. Although Edward C. Feintech and Shane A. Campbell are still affiliated
with Smoky Systems, LLC, in management capacities, because Smoky Systems has no
current operations, neither devotes any significant amount of time to the
business of Smoky Systems.

NAME                       AGE     POSITION
----                       ---     --------

Edward C. Feintech         61      Founder, Promoter, President, Chief Executive
                                   Officer and Chairman of the Board
Scott L. Bargfrede         51      Director
Shane A. Campbell          50      Director and Chief Financial Officer*
Dennis A. Harrison         60      Chief Information Officer*

* Such officer is not a full time employee of our company.

         EDWARD C. FEINTECH has been the Chairman of our Board of Directors, and
our President and Chief Executive Officer since our incorporation in April 2006.
Mr. Feintech operated full-service barbecue restaurants and tested quick-service
barbecue operations in Des Moines, Iowa (1977-1984) before closing his
enterprise and moving on toward development of our custom-engineered,
USDA-approved wood-burning oven system technology. Since organizing Smoky
Systems, LLC, in December 2000, Mr. Feintech has been its manager and directed
the development phase of the intellectual property that we license from Smoky
Systems.

         SCOTT L. BARGFREDE has served as a director of our company since May
2006. Mr. Bargfrede has been the President and CEO of First American Bank in
Webster City, Iowa since October 18, 1999. First American Bank is our primary
bank. Mr. Bargfrede graduated from the University of Minnesota in 1979 with a
Bachelor of Arts degree in Ag-Business Finance and in 1992, he graduated from
the University of Wisconsin Graduate School of Banking.

         SHANE A. CAMPBELL has been our Chief Financial Officer (acting as a
consultant) since our incorporation in April 2006. Mr. Campbell has served as a
business advisor to numerous small and medium sized businesses over his
twenty-two years of public and private practice. From April 2004 though the
present, Mr. Campbell has functioned as the chief financial officer of Smoky
Systems, LLC, and other small companies as chief financial officer on a
consultant contract basis consultant contractor. Mr. Campbell worked from
January 2001 to April 2004 as chief financial officer for MarketLive, Inc.
(previously Multimedia Live, Inc.), an e-commerce software company located in
Petaluma, California. Prior to that time, from January 1990 through January
2002, Mr. Campbell was an employee and then a partner at Jones, Schiller &
Company, LLC, an accounting firm located in San Francisco. Mr. Campbell earned a
Bachelor of Science degree from California State University, Chico in December
1981.

                                       27

<PAGE>

         DENNIS A. HARRISON, PHD, has been our Chief Information Officer (acting
as a consultant) since our inception in April 2006; however, he is expected to
become a full-time employee when and as our financial situation permits. Since
January 2000, Dr. Harrison has held senior level management positions as vice
president of business development for CSF-Telequest from 2000 to 2003, vice
president of business development for CallTech Communications from April 2003 to
April 2004, and vice president of business development for Effective
Teleservices from April 2004 to present. Dr. Harrison received a Bachelor of
Arts degree in Philosophy & Classical Languages from the Seminary of St. Pius X,
an affiliate of Catholic University, a Master of Arts degree in Counseling from
Loyola College, and a Doctor of Philosophy degree in Human Development from the
University of Maryland.

AUDIT COMMITTEE

         Our entire board of directors presently serves as our audit committee.
None of the members of the audit committee satisfy the independence requirements
applicable to audit committees of listed companies. In addition, the board of
directors has determined that the audit committee does not have a member
qualifying as an audit committee financial expert, as defined in Item 401(d)(5)
of Regulation S-K. To save limited capital over the last several years, we have
chosen not to expand the size of our Board of Directors or to offer cash
compensation to our directors. The absence of cash compensation makes recruiting
persons who are not otherwise interested in our company more difficult. For
these reasons, we do not have on our board of directors a person who would
qualify as an audit committee financial expert.

         We do not presently have a standing nominating committee or
compensation committee, and we do not have a nominating committee charter or a
compensation committee charter.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Exchange Act requires the Company's officers and
directors to file reports concerning their ownership of Common Shares with the
SEC and to furnish the Company with copies of such reports. Based solely upon
the Company's review of the reports required by Section 16 and amendments
thereto furnished to the Company, the Company believes that all reports required
to be filed pursuant to Section 16(a) of the Exchange Act during 2008, were
filed with the SEC on a timely basis except as follows: (a) Form 4 for Daniel
Brune, a director, was due on September 11, 2007, but was filed on May 23, 2008
(b) Form 4 for Dennis Harrison, an officer, was due on April 2, 2008, but was
filed on April 22, 2008; (c) Form 4 for Shane Campbell, an officer, was due on
April 8, 2008, but was filed on April 22, 2008; (d) a Form 4 for Scott
Bargfrede, a director, was due on May 20, 2008 but was filed on May 23, 2008;
and (e) a Form 4 for Edward Feintech, an officer and director, was due on May
26, 2008, but was filed on June 17, 2008.

CODE OF ETHICS

         We have not adopted a code of ethics. Although we expect to adopt a
code of ethics during 2009, we have not done so to date because we believe that,
in light of our limited capital and operations, expending the resources on
developing a formal code of ethics would not be in the best interest of
shareholders. As we obtain the capital to establish a retail store and commence
operations, we expect to begin developing more comprehensive policies and
procedures appropriate to our size and stage.

ITEM 11.  EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

         The following table summarizes the compensation for the fiscal years
ended December 31, 2007 and December 31, 2008 paid or accrued by us to or on
behalf of our Chief Executive Officer, as well as our two most highly
compensated executive officers, if any, whose aggregate compensation for fiscal
years 2007 or 2008 exceeded $100,000 (collectively, the "Named Executive
Officers").

                                       28

<PAGE>
<TABLE>
<S>     <C>

          NAME AND              YEAR      SALARY     BONUS    STOCK       OPTION     NON-EQUITY   NONQUALIFIED     ALL       TOTAL
     PRINCIPAL POSITION                     ($)       ($)     AWARDS      AWARDS      INCENTIVE     DEFERRED      OTHER       ($)
                                                                ($)         ($)         PLAN      COMPENSATION COMPENSATION
                                                                                     COMPENSATION   EARNINGS       ($)
                                                                                         ($)          ($)

Edward C. Feintech, CEO,        2008      175,000     --        --          --           --            --           --       175,000
President and Director          2007      152,000     --    150,000(1)   30,983(2)       --            --           --       332,983


          (1) Value determined based upon the fair market value of 1,500,000
          shares of common stock issued on May 31, 2007, which was $0.10 per
          share.

          (2) Value determined using the Black-Scholes option valuation model.
          The grant date for such options was May 31, 2007, and the options are
          exercisable during a seven year term at an exercise price of $0.10 per
          share, which was the fair market value of the stock on the date of
          grant. Assumptions used for the valuation model are set forth below:
</TABLE>

              Expected Life                   7 years
              Risk-Free Interest Rate         4.7%
              Expected Volatility Factor      186%
              Weighted average fair market
              value of stock options
              granted                         0.099


         On May 10, 2007, Mr. Feintech signed an executive employment agreement.
The agreement is for a three-year term and calls for him to receive a minimum
base salary of $175,000 per year. The employment agreement also grants to him:
(i) a one-time stock issuance of 1,500,000 shares of common stock upon execution
of the agreement; (ii) an award of non-statutory stock options of 425,000 shares
of common stock at an exercise price of $0.10 per share; and (iii) a bonus equal
to an additional 1,000,000 shares of common stock upon the achievement of each
incremental level of $50,000,000 in revenue, provided that cumulative net
after-tax income is being maintained at a level not less than 7.5% on total
revenue.

         In addition, in May 2006, Mr. Feintech was issued 50,000 shares of
common stock in exchange for the assignment of any intellectual property rights
related to our business and granted an option to purchase 325,000 shares of
common stock pursuant to our stock incentive plan at an exercise price of $0.10
at any time prior to May 13, 2013. The options vested 25% on May 31, 2007 and
have continued to vest 1/48th each month thereafter until fully vested.

                                       29

<PAGE>

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

         The following table provides information regarding equity awards held
by the Named Executive Officers as of December 31, 2008:
<TABLE>
<S>     <C>

                                         OPTION AWARDS                                               STOCK AWARDS
--------------- ----------------------------------------------------------------- --------------------------------------------------
     NAME        Number of    Number of      Equity       Option       Option      Number of     Market        Equity       Equity
                Securities    Securities    Incentive    Exercise    Expiration    Shares or    Value of     Incentive     Incentive
                Underlying    Underlying      Plan         Price        Date       Units of     Shares or   Plan Awards:     Plan
                Unexercised  Unexercised     Awards:        ($)                   Stock That    Units of     Number of      Awards:
                  Options      Options      Number of                              Have Not    Stock That     Unearned     Market or
                    (#)          (#)       Securities                               Vested      Have Not      Shares,       Payout
                Exercisable  Unexercisable Underlying                                 (#)        Vested       Units or     Value of
                                           Unexercised                                             ($)         Other       Unearned
                                            Unearned                                                        Rights That     Shares,
                                             Options                                                          Have Not     Units or
                                               (#)                                                             Vested       Other
                                                                                                                (#)         Rights
                                                                                                                           That Have
                                                                                                                          Not Vested
                                                                                                                              ($)
--------------- ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ----------
  Edward C.     209,896(1)    115,104(1)       N/A         $0.10       May 31,        N/A          N/A           N/A           N/A
  Feintech,                                                             2013
     CEO,
President and
   Director
--------------- ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ----------
                274,479(1)    150,521(1)      N/A         $0.10        May 31,        N/A          N/A           N/A           N/A
                                                                        2014
--------------- ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ----------

          (1) Options vested 25% on May 31, 2007 and 1/48th each month
thereafter until fully vested.
</TABLE>

COMPENSATION OF DIRECTORS

         Directors who are not officers of the Company do not receive any
regular compensation for their service on the board of directors but are
entitled to reimbursement of any actual expenses associated with the attendance
of board meeting and other activities and to receive options and other awards
under the Company's stock incentive plan. Directors are entitled to receive
compensation for services unrelated to their service as a director to the extent
that they provide such unrelated services to the Company.

         No directors received any compensation, including option awards, for
their service as directors for the Company, during the fiscal year ended
December 31, 2008. Information with respect to the compensation of Edward C.
Feintech, our Chief Executive Officer and President, is set forth in the tables
above.

EXECUTIVE EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS

         Except as described in following paragraph, we have not entered into
employment agreements with any of our executive officers and, other than
provisions in our stock incentive plan that permit acceleration of vesting of
awards in connection with a change of control, have no arrangements or plans
which provide benefits in connection with retirement, resignation, termination
or a change of control.

         Pursuant to his executive employment agreement dated May 10, 2007,
Edward C. Feintech is entitled to receive, as severance and following execution
of a release of liabilities in favor of the Company, (i) if the termination was
by the Company without cause or by the employee with good reason (except in
connection with a change of control), base salary and medical benefits (plus any
pro-rated bonus for which he otherwise qualified) for a period of 12-months
following the termination, or (ii) if the termination was by the Company without
cause or by the employee with good reason and occurred 90 days prior to or
within one year after a change of control, base salary and medical benefits for
a period of 24 months and acceleration of the vesting of any stock options
granted under the employment agreement. Mr. Feintech is not entitled to such
severance benefits if the termination is either by the Company for cause, by Mr.
Feintech without good reason, or after May 10, 2010. A change of control
includes (a) any capital reorganization, reclassification of the capital stock
of Company, consolidation or merger of Company with another corporation in which
Company is not the survivor (other than a transaction effective solely for the
purpose of changing the jurisdiction of incorporation of Company), (b) the sale,
transfer or other disposition of all or substantially all of the Company's
assets to another entity, and (c) the acquisition by a single person (or two or
more persons acting as a group, as a group is defined for purposes of Section
13(d)(3) under the Exchange Act of 1934, as amended) of more than 40% of the
outstanding shares of common stock of the Company.

                                       30

<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The Company has no compensation committee or other board committee
performing equivalent functions. Edward C. Feintech, an officer of the Company
as well as chairman of the board of directors, participated in deliberations of
the Company's board of directors concerning executive officer compensation
during 2008.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

The following table sets forth information with respect to the beneficial
ownership of our common stock as of March 31, 2009 and as adjusted to reflect
the sale of the shares of our common stock offered hereby, by:

         o        all persons known by us to beneficially own more than 5% of
                  our common stock;
         o        each of our named executive officers;
         o        each of our directors; and
         o        all directors and executive officers as a group.

         Beneficial ownership is determined according to the rules of the SEC
and generally means that a person has beneficial ownership of a security if he,
she or it possesses sole or shared voting or investment power of that security,
and includes options and warrants that are currently exercisable or exercisable
within 60 days. Except as indicated by footnote, and subject to community
property laws where applicable, we believe the persons named in the table have
sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them.


                                          AMOUNT AND NATURE OF
NAME OF EXECUTIVE OFFICER OR DIRECTOR       BENEFICIAL OWNER         PERCENT (1)
---------------------------------------   --------------------       -----------

Edward C. Feintech (includes Smoky
Systems, LLC)
Chairman, President and CEO                  42,561,481       (2)       59.60%

Scott L. Bargfrede, Director                   354,074        (3)          *

Shane A. Campbell, Director and CFO            271,875        (4)          *

All Officers and Directors as a Group
(4 persons)                                  43,869,721       (5)       63.95%

NAME OF 5% STOCKHOLDER
----------------------

Edward C. Feintech (includes Smoky
Systems, LLC)
1511 E 2nd St., Webster City, IA 50595       42,561,481       (2)       59.60%

_____________________
* Represents less than 1% of the outstanding shares of common stock.

(1) The percentages set forth above have been computed assuming the number of
shares of common stock outstanding equals the sum of (a) 70,850,820, which is
the number of shares of common stock actually outstanding on March 31, 2009, and
(b) shares of common stock subject to options, warrants, convertible notes and
similar securities exercisable or convertible for common stock within 60 days of
such date held by the person with respect to percentage is computed (but not by
any other person).


                                       31

<PAGE>

(2) Includes, in addition to outstanding shares held by Mr. Feintech, 562,500
shares issuable upon exercise of non-statutory stock options. Also includes
40,095,730 shares of common stock held of record by Smoky Systems, LLC. Mr.
Feintech, as manager of Smoky Systems, LLC, has voting and investment control
over shares held by Smoky Systems, LLC.
(3) Includes 121,875 shares issuable upon the exercise of non-statutory stock
options.
(4) Includes 121,875 shares issuable upon the exercise of non-statutory stock
options.
(5) Includes 1,171,875 shares issuable upon the exercise of non-statutory stock
options.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         The information set forth above in Item 5 under "Securities Authorized
for Issuance Under Equity Compensation Plans" is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.

ARRANGEMENTS WITH OFFICERS, DIRECTORS AND PROMOTERS

Set forth below is a description of certain transactions entered into since
January 1, 2008, or presently contemplated, with any officer, director,
affiliate or other related person:

Our directors have set the initial salary or consulting fee of certain of our
officers as follows (in each case pending availability of capital):

                                                   BASE SALARY OR CONSULTING FEE
         NAME                                      PER ANNUM
         ----                                      ---------

         Edward C. Feintech, President & CEO       $175,000
         Shane Campbell, CFO                       $65,000*
         Dennis Harrison, CIO                      $105,000*

         *Currently serving as a part-time consultant; salary is not being paid.

         Certain officer, directors, promoter and affiliates purchased
convertible notes, and received warrants, in our convertible note offering
conducted between May 2006 and May 2007. The convertible notes and warrants were
purchased on the same terms as offered to all participants in the offering. The
principal amount of the convertible notes (all of which have been converted into
common stock), and the number of warrants received in the offering by any
participating officers, directors, promoters or affiliates are as follows:

----------------------------------- ----------------------- --------------------
                                    PRINCIPAL AMOUNT OF
NAME OF PERSON                      CONVERTIBLE NOTES       NUMBER OF WARRANTS
----------------------------------- ----------------------- --------------------
Edward C. Feintech, President,              $25,000              250,000
CEO and Chairman
----------------------------------- ----------------------- --------------------
Toni L. Adams, Secretary and
former Director of Operations               $40,000              400,000
----------------------------------- ----------------------- --------------------

Scott L. Bargfrede, Director                $15,000              150,000
----------------------------------- ----------------------- --------------------

                                       32

<PAGE>

MAJORITY STOCKHOLDER

Smoky Systems, LLC beneficially owns approximately 57% of our common stock as of
March 31, 2009, and its manager is Edward C. Feintech, our President, CEO, the
Chairman of our Board of Directors and a promoter. In addition, the following
affiliates of our company own the following percentage of the outstanding equity
interests of Smoky Systems:

----------------------------------- ------------------------
NAME OF PERSON                      EQUITY INTEREST
----------------------------------- ------------------------
Edward C. Feintech, President,                29.5%
CEO and Chairman
----------------------------------- ------------------------
Toni L. Adams, Secretary and                  4.83%
former Director of Operations
----------------------------------- ------------------------
Scott L. Bargfrede, Director                      *
----------------------------------- ------------------------
* Less than 1%

INDEPENDENCE OF BOARD OF DIRECTORS AND COMMITTEES

         Our Board of Directors currently consists of Edward C. Feintech, our
Chairman and Chief Executive Officer, Scott L. Bargfrede, and Shane A. Campbell,
our Chief Financial Officer. The Board of Directors has determined that Mr.
Bargfrede is independent, using the standards of independence applicable to
companies listed on the NASDAQ Stock Market. We do not presently have a standing
audit committee, nominating committee, or compensation committee, and we do not
have a charter for any such committees. Our entire Board of Directors performs
the functions generally preformed by such committees. Mr. Bargfrede is
independent using the standards of the NASDAQ Stock Market applicable to
compensation and nominating committee but may not be independent for purposes of
applicable audit committee standards because of the financial relationship
disclosed below.

         Mr. Bargfrede has been the President and CEO of First American Bank in
Webster City, Iowa since October 18, 1999. First American Bank is our company's
primary bank.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

         AUDIT FEES

         The Company's independent auditor for the year ended December 31, 2008
was Moore & Associates, Chartered ("Moore & Associates"). Moore & Associated
also audited the financial statements for the year ended December 31, 2007 that
are included in this Form 10-K. The Company's independent auditor for the year
ended December 31, 2007 was Jaspers + Hall, PC ("Jaspers + Hall"). The aggregate
fees for audit services totaled $9,000 for the fiscal year ended December 31,
2008 and $5,000 for the fiscal year ended December 31, 2007.

         AUDIT RELATED FEES

         The aggregate fees for professional services for assurance and other
audit related services was $12,000 for the fiscal year ended December 31, 2008
and $3,000 for the fiscal year ended December 31, 2007.

         TAX FEES

         There were no fees paid to either Moore & Associates or Jaspers + Hall
for tax related professional services for the year ended December 31, 2008 or
the fiscal year ended December 31, 2007.

         ALL OTHER FEES

         Neither Moore & Associates nor Jaspers + Hall provided to the Company
any other material services during the fiscal year ended December 31, 2008 or
the fiscal year ended December 31, 2007.

                                       33

<PAGE>

         AUDIT COMMITTEE PRE-APPROVAL POLICIES

         Under the pre-approval policies and procedures established by the Board
of Directors, functioning as the Audit Committee, it would not permit engagement
of accountants to render audit or non-audit services without prior approval of
the Board of Directors, functioning as the Audit Committee. As a result, all
engagements of the independent auditors to render audit or non-audit services
were approved by the Board of Directors, functioning as the Audit Committee.

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<S>     <C>
                                                                                  INCORPORATED BY REFERENCE/FILED
 EXHIBIT NO.                              EXHIBIT                                           HEREWITH
--------------    ---------------------------------------------------------       --------------------------------
     3.1          Amended and Restated Articles of Incorporation                  Incorporated by reference to
                                                                                  Amendment No. 3 to Registration
                                                                                  Statement on Form SB-2 filed on
                                                                                  August 24, 2007, File No.
                                                                                  333-143008

     3.2          Bylaws                                                          Incorporated by reference to
                                                                                  Amendment No. 3 to Registration
                                                                                  Statement on Form SB-2 filed on
                                                                                  August 24, 2007, File No.
                                                                                  333-143008

     4.1          Form of Common Stock Certificate                                Incorporated by reference to
                                                                                  Amendment No. 3 to Registration
                                                                                  Statement on Form SB-2 filed on
                                                                                  August 24, 2007, File No.
                                                                                  333-143008

     4.2          2006 Stock Incentive Plan                                       Incorporated by reference to
                                                                                  Registration Statement on Form
                                                                                  10-SB filed on February 16,
                                                                                  2007, File No. 000-52158

     4.3          Form of Warrant (Bridge Financing)                              Incorporated by reference to the
                                                                                  Quarterly Report on Form 10-Q
                                                                                  filed on May 14, 2007, File No.
                                                                                  000-52158

    10.1          Exclusive License Agreement with Smoky Systems, LLC             Incorporated by reference to
                  (Amended and Restated)                                          Registration Statement on Form
                                                                                  10-SB filed on February 16, 2007,
                                                                                  File No. 000-52158

    10.2          Amended and Restated Processing Agreement with Mary             Incorporated by reference to
                  Ann's Specialty Foods, Inc. dated July 1, 2006                  Amendment No. 3 to Registration
                                                                                  Statement on Form SB-2 filed on
                                                                                  August 24, 2007, File No.
                                                                                  333-143008


                                       34

<PAGE>

                                                                                  INCORPORATED BY REFERENCE/FILED
 EXHIBIT NO.                              EXHIBIT                                           HEREWITH
--------------    ---------------------------------------------------------       --------------------------------
    10.3          Form of Purchase Agreement (Bridge Financing)                   Incorporated by reference to
                                                                                  Amendment No. 3 to Registration
                                                                                  Statement on Form SB-2 filed on
                                                                                  August 24, 2007, File No.
                                                                                  333-143008

    10.4          Form of Convertible Note (Bridge Financing)                     Incorporated by reference to the
                                                                                  Quarterly Report on Form 10-Q
                                                                                  filed on May 14, 2007, File No.
                                                                                  000-52158

    10.5          Form of NonStatutory Stock Option Agreement                     Incorporated by reference to
                                                                                  Registration Statement on Form
                                                                                  10-SB filed on February 16,
                                                                                  2007, File No. 000-52158

    10.6          Independent Contractor Agreement dated November 20,             Incorporated by reference to
                  2006 with Kenneth N. Hankin                                     Registration Statement on Form
                                                                                  10-SB filed on February 16, 2007,
                                                                                  File No. 000-52158

    10.7          Employment Agreement dated May 10, 2007 with Edward C.          Incorporated by reference to the
                  Feintech                                                        Quarterly Report on Form 10-Q
                                                                                  filed on May 14, 2007, File No.
                                                                                  000-52158

    10.8          QMG Services Proposal                                           Incorporated by reference from
                                                                                  Amendment No. 2 to Registration
                                                                                  Statement on Form SB-2, File No.
                                                                                  333-143008, filed on August 1, 2007

    10.9          Investment Agreement dated October 30, 2007 with                Incorporated by reference to the
                  Dutchess Private Equities Fund, Ltd.                            Current Report on 8-K/A filed on
                                                                                  November 6, 2007, File No.
                                                                                  000-52158

    10.10         Registration Rights Agreement dated October 30, 2007            Incorporated by reference to the
                  with Dutchess Private Equities Fund, Ltd.                       Current Report on 8-K/A filed on
                                                                                  November 6, 2007, File No.
                                                                                  000-52158

    10.11         Binding Term Sheet for Purchase Agreement dated                 Incorporated by reference to the
                  November 7, 2007 with Ron Barone                                Current Report on 8-K filed on
                                                                                  November 19, 2007, File No.
                                                                                  000-52158

    10.12         Consulting Agreement dated  May 1, 2008 with                    Incorporated by reference to the
                  International Monetary                                          Current Report on 8-K filed on May
                                                                                  8, 2008, File No. 000-52158

                                       35

<PAGE>

                                                                                  INCORPORATED BY REFERENCE/FILED
 EXHIBIT NO.                              EXHIBIT                                           HEREWITH
--------------    ---------------------------------------------------------       --------------------------------
    10.13         Promissory Note dated September 8, 2008                         Incorporated by reference to the
                                                                                  Current Report on 8-K filed on
                                                                                  September 10, 2008, File No.
                                                                                  000-52158

    10.14         Series 2008A Warrant dated September 8, 2008                    Incorporated by reference to the
                                                                                  Current Report on 8-K filed on
                                                                                  September 10, 2008, File No.
                                                                                  000-52158

    10.15         Note and Share Purchase Agreement dated January 27,             Incorporated by reference to the
                  2009 with 70 Limited LLC                                        Current Report on 8-K filed on
                                                                                  September 10, 2008, File No.
                                                                                  000-52158

    23.1          Consent of Independent  Registered Public                       Filed herewith
                  Accountants

     24           Power of Attorney                                               Included on the signature page
                                                                                  hereof

    31.1          Rule 13a-14(a)/15d-14(a) Certification of Chief                 Filed herewith
                  Executive Officer

    31.2          Rule 13a-14(a)/15d-14(a) Certification of Chief                 Filed herewith
                  Financial Officer

    32.1          Section 1350 Certification of Chief Executive Officer           Filed herewith

    32.2          Section 1350 Certification of Chief Financial Officer           Filed herewith

</TABLE>

                                       36

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed
on its behalf by the undersigned, thereunto duly authorized.

                            SMOKY MARKET FOODS, INC.

                      By:   /s/ Eddie Feintech
                            --------------------------------------
                                Eddie Feintech
                                Chief Executive Officer

                   Date:    May 14, 2009
                            --------------------------------------


                   POWER OF ATTORNEY AND ADDITIONAL SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated. Each person, whose signature
to this Form 10-K appears below, hereby constitutes and appoints Eddie Feintech
as his true and lawful attorney-in-fact and agent, with full power of
substitution, to sign on his behalf individually and in the capacity stated
below and to perform any acts necessary to be done in order to file all
amendments and post-effective amendments to this Form 10-K, and any and all
instruments or documents filed as part of or in connection with this Form 10-K
or the amendments thereto and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his substitutes, shall do
or cause to be done by virtue hereof.


Signature                   Title                                    Date
---------                   -----                                    ----

/s/ Edward C. Feintech      Chief Executive Officer, President     May 14, 2009
-----------------------     and Chairman
Edward C. Feintech          (Principal Executive Officer)


/s/ Shane Campbell          Director, Chief Financial Officer      May 14, 2009
-----------------------     (Principal Financial and Accounting
Shane Campbell              Officer)


/s/ Scott L. Bargfrede      Director                               May 14, 2009
-----------------------
Scott L. Bargfrede



                                       37

<PAGE>


SMOKY MARKET FOODS, INC.
(a development stage company)


FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007 (as restated)







                                      F-1
<PAGE>



MOORE & ASSOCIATES, CHARTERED

ACCOUNTANTS AND ADVISORS
------------------------
PCAOB REGISTERED


             Report of Independent Registered Public Accounting Firm

To the Board of Directors
Smoky Market Foods, Inc.

We have audited the accompanying balance sheet of Smoky Market Foods, Inc. (A
Development Stage Company) as of December 31, 2008 and restated December 31,
2007, and the related statements of operations, stockholders' deficit and cash
flows for the years ended December 31, 2008, restated December 31, 2007 and
since inception on April 18, 2006 through December 31, 2008. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conduct our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Smoky Market Foods, Inc. (A
Development Stage Company) as of December 31, 2008 and restated December 31,
2007 and the related statements of operations, stockholders' deficit and cash
flows for the years ended December 31, 2008, restated December 31, 2007 and
since inception on April 18, 2006 through December 31, 2008 in conformity with
accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2 to the
financial statements, the Company has a net deficit in working capital of
$716,046 and $507,199 as of December 31, 2008 and 2007 respectively, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also discussed in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


/s/ Moore & Associates

Moore & Associates, Chartered
Las Vegas, Nevada
May 7, 2009



                6490 WEST DESERT INN RD, LAS VEGAS, NEVADA 89146
                       (702) 253-7499 FAX: (702)253-7501


                                      F-2
<PAGE>
<TABLE>
<S>       <C>
                                     SMOKY MARKET FOODS, INC.
                                  (A Development Stage Company)

                                          Balance Sheets
                                          --------------


                                                                                    DECEMBER 31,
                                                                     DECEMBER 31,      2007
                                                                        2008         (RESTATED)
                                                                     -----------     -----------
ASSETS:
-------
Current Assets
    Cash                                                             $       282     $    16,235
    Inventory                                                             22,126           4,250
    Employee advances                                                        150              --
                                                                     -----------     -----------
    Total Current Assets                                                  22,558          20,485
                                                                     -----------     -----------
Property & Equipment, net of accumulated depreciation                    462,315         291,478
                                                                     -----------     -----------
Other Assets
    Intangible assets                                                     29,333          33,333
    Deposits                                                              11,333           8,483
                                                                     -----------     -----------
    Total Other Assets                                                    40,666          41,816
                                                                     -----------     -----------
    Total Assets                                                     $   525,539     $   353,779
                                                                     ===========     ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
-----------------------------------------------
Current Liabilities
    Accounts payable                                                 $   256,884     $   202,206
    Accounts payable - related parties                                    87,364          75,623
    Accrued payroll costs                                                264,771         191,728
    Short-term advance                                                    75,000          40,000
    Bank overdraft                                                        39,353              --
    Current maturities of capital lease obligations                       15,232          18,127
                                                                     -----------     -----------
    Total Current Liabilities                                            738,604         527,684

Long-term Liabilities
    Promissory note payable, less amortized discount                     491,975              --
    Capital lease obligatons, less current maturities                         --          12,835
                                                                     -----------     -----------
    Total Liabilities                                                  1,230,579         540,519
                                                                     -----------     -----------
Stockholders' Equity (Deficit)
    Preferred Stock, par value $.001, 10,000,000 shares
      authorized; no shares issued and outstanding                            --              --
    Common Stock, par value $.001, 200,000,000 shares authorized:
      issued and outstanding 67,422,820 and 54,812,824 at
      December 31, 2008 and 2007, respectively                            67,423          54,813
    Deferred Stock-Based Compensation                                   (108,542)     (1,044,574)
    Other paid-in capital                                              4,424,630       2,579,565
    Additional paid-in capital for warrants                              862,895         831,772
    Deficit accumulated during the development stage                  (5,951,446)     (2,608,316)
                                                                     -----------     -----------
    Total Stockholders' Equity (Deficit)                                (705,040)       (186,740)
                                                                     -----------     -----------
Total Liabilities and Stockholders' Equity (Deficit)                 $   525,539     $   353,779
                                                                     ===========     ===========


            The accompanying notes are an integral part of these financial statements.


                                               F-3
<PAGE>

                                     SMOKY MARKET FOODS, INC.
                                  (A Development Stage Company)

                                     Statements of Operations
                                     ------------------------



                                                       FOR THE YEARS ENDED
                                                  ----------------------------
                                                                                   APRIL 18, 2006
                                                                   DECEMBER 31,    (INCEPTION) TO
                                                  DECEMBER 31,         2007         DECEMBER 31,
                                                      2008          (RESTATED)          2008
                                                  ------------     ------------     ------------


Revenue                                           $        287     $      6,947     $     10,379
Cost of Goods Sold                                          --           12,425           15,302
                                                  ------------     ------------     ------------
Gross Profit (Loss)                                        287           (5,478)          (4,923)
                                                  ------------     ------------     ------------
Operating Expenses
  Salaries, Wages & Benefits - related parties         283,603          359,122          811,229
  Marketing                                             87,355          116,296          237,881
  Rent                                                 107,853           41,046          162,693
  Professional fees                                    102,390          158,483          369,141
  Depreciation/amortization                             38,405           41,072           98,532
  Stock based compensation - related parties
     Salaries, Wages & Benefits                        119,780          189,369          349,303
     Professional                                    1,818,983          159,900        2,102,633
     Financing                                         617,292          645,175        1,267,467
  Other                                                155,155          212,163          453,626
                                                  ------------     ------------     ------------
                                                     3,330,816        1,922,626        5,852,505
                                                  ------------     ------------     ------------
Operating Loss                                      (3,330,529)      (1,928,104)      (5,857,428)
                                                  ------------     ------------     ------------
Other Income (Expense)
  Interest Income                                           --              887              887
  Interest Expense                                     (12,601)         (56,580)         (94,905)
                                                  ------------     ------------     ------------
Other Expense - Net                                    (12,601)         (55,693)         (94,018)
                                                  ------------     ------------     ------------
Loss before Income Taxes                            (3,343,130)      (1,983,797)      (5,951,446)
Income Taxes                                                --               --               --
                                                  ------------     ------------     ------------
Net (Loss)                                        $ (3,343,130)    $ (1,983,797)    $ (5,951,446)
                                                  ============     ============     ============
Basic and Diluted
  (Loss) per Share:
          Basic and Diluted                       $     (0.058)    $     (0.043)
                                                  ============     ============

  Weighted Average
     Number of Shares                               57,665,296       46,388,636
                                                  ============     ============


            The accompanying notes are an integral part of these financial statements.

                                               F-4

<PAGE>

                                                      SMOKY MARKET FOODS, INC.
                                                    (A Development Stage Company)

                                                 Statements of Stockholders' Deficit
                                                 -----------------------------------


                                                                                                          Accumulated
                                             Common Stock         Deferred       Other      Additional    During the
                                       ------------------------  Stock-Based    Paid-in      Paid-in      Development      Total
                                         Shares       Amount    Compensation    Capital      Capital        Stage        (Deficit)
                                       -----------  -----------  -----------   -----------  -----------   -----------   -----------

Balance, April 18, 2006 (Inception)             --  $        --  $        --   $        --  $        --   $        --   $        --

Common stock issued for:
License agreement with related party    40,000,000       40,000           --            --            --                     40,000
Officers/director compensation             300,000          300                     29,700            --           --        30,000
Current services                         1,300,000        1,300                    128,700            --           --       130,000
Stock options (1,425,000) issued to
  officers/directors                            --           --     (144,584)           --      144,584            --            --
Amortization of stock-based
  compensation                                                        13,679                                                 13,679
Net (Loss) for the period 4/18/06
  to 12/31/06                                   --           --           --            --           --      (624,519)     (624,519)
                                       -----------  -----------  -----------   -----------  -----------   -----------   -----------

Balance, December 31, 2006 (Restated)   41,600,000       41,600     (130,905)      158,400      144,584      (624,519)     (410,840)

Common stock issued for:
Cash                                       628,571          629           --       301,371           --            --       302,000
CEO compensation                         1,500,000        1,500                    148,500            --           --       150,000
Endorsement rights                         500,000          500      (50,000)       49,500           --            --            --
Current services                           525,000          525     (330,000)      341,975           --            --        12,500
Leasehold rights to pilot restaurant       228,571          229           --       119,771           --            --       120,000
Satisfaction of trade payables              10,173           10           --         1,566           --            --         1,576
Future store opening promotion           1,375,000        1,375     (623,750)      622,375           --            --            --
Stock options (425,000) issued to
  CEO as compensation                           --           --      (42,013)           --       42,013            --            --
Common stock conversion priveledges
  to debtholders                                --           --     (322,587)           --      322,587            --            --
Warrants issued to convertible
  debtholders                                   --           --     (322,588)           --      322,588            --
Conversion of convertible debt to
  common stock                           8,445,509        8,445           --       836,107           --            --       844,552
Amortization of stock-based
  compensation                                  --           --      777,269            --           --            --       777,269
Net (Loss) for the Year Ended
  December 31, 2007                             --           --           --            --           --    (1,983,797)   (1,983,797)
                                       -----------  -----------  -----------   -----------  -----------   -----------   -----------
Balance, December 31, 2007 (Restated)   54,812,824       54,813   (1,044,574)    2,579,565      831,772    (2,608,316)     (186,740)

Common stock issued for:
Cash                                     1,673,332        1,673           --       139,327           --            --       141,000
Services performed by the CIO              266,666          267           --        41,733           --            --        42,000
Future marketing services                3,000,000        3,000                    987,000            --           --       990,000
Exercise of stock options                   50,000           50        8,000        12,450           --            --        20,500
Current services                         7,253,332        7,253                    601,922            --           --       609,175
Conversion of short-term advance
  to common shares                         366,666          367           --        62,633           --            --        63,000
Warrants issued in conjunction with
  debt offerring                                --           --           --            --       31,123            --        31,123
Amortization of stock-based
  compensation                                  --           --      928,032            --           --            --       928,032
Net (Loss) for the Year Ended
  December 31, 2008                             --           --           --            --           --    (3,343,130)   (3,343,130)
                                       -----------  -----------  -----------   -----------  -----------   -----------   -----------

Balance, December 31, 2008              67,422,820  $    67,423  $  (108,542)  $ 4,424,630  $   862,895   $(5,951,446)  $  (705,040)
                                       ===========  ===========  ===========   ===========  ===========   ===========   ===========



                             The accompanying notes are an integral part of these financial statements.

                                                                F-5

<PAGE>

                                      SMOKY MARKET FOODS, INC.
                                   (A Development Stage Company)

                                      Statements of Cash Flows
                                      ------------------------


                                                           FOR THE YEARS ENDED
                                                        ---------------------------
                                                                                       APRIL 18, 2006
                                                                        DECEMBER 31,   (INCEPTION) TO
                                                        DECEMBER 31,       2007         DECEMBER 31,
                                                           2008          (RESTATED)        2008
                                                        -----------     -----------     -----------

Operating Activities
     Net (Loss)                                         $(3,343,130)    $(1,983,797)    $(5,951,446)
     Stock-based financing and compensation costs         2,555,909         984,871       3,717,183
     Depreciation and amortization                           38,405          41,072          98,532
     Accrued interest converted to common stock                  --          58,451
     Amortization of promissory note discount                 1,147              --           1,147
     Adjustments to reconcile net loss to cash used
     in operating activities:
       (Increase) decrease in accounts receivable                --           1,877              --
       (Increase) decrease in inventory                     (17,876)          9,444         (22,126)
       (Increase) decrease in employee advances                (150)             --            (150)
       Increase (decrease) in accounts payable              117,669          55,356         344,248
       Increase (decrease) in accrued payroll costs          73,043         191,728         264,771
       Increase (decrease) in bank overdraft                 39,353              --          39,353
       Increase (decrease) in accrued interest                   --          43,991              --
                                                        -----------     -----------     -----------

Net Cash (Used) by Operating Activities                    (535,630)       (655,458)     (1,450,037)
                                                        -----------     -----------     -----------

Investing Activities
     Purchase of property and equipment                    (205,242)        (61,720)       (373,132)
     Deposits and other asset purchases                      (2,850)         (5,800)        (11,333)
                                                        -----------     -----------     -----------

Net Cash (Used) by Investing Activities                    (208,092)        (67,520)       (384,465)
                                                        -----------     -----------     -----------

Financing Activities
     Proceeds from issuance of common stock                 153,500         302,000         455,500
     Proceeds from issuance of convertible notes                 --         302,500         786,100
     Proceeds from issuance of promissory notes             500,000              --         500,000
     Proceeds from (payments on) short term                  90,000          40,000         130,000
       advances - net
     Principal payments on capital lease obligations        (15,732)        (13,407)        (36,816)
                                                        -----------     -----------     -----------

Cash Provided by Financing Activities                       727,768         631,093       1,834,784
                                                        -----------     -----------     -----------

Net Increase (Decrease) in Cash                             (15,954)        (91,885)            282

Cash, Beginning of Period                                    16,235         108,120              --
                                                        -----------     -----------     -----------

Cash, End of Period                                     $       281     $    16,235     $       282
                                                        ===========     ===========     ===========

Supplemental Information:
     Interest Paid                                      $    12,601     $    12,977     $    36,454

     Income Taxes Paid                                  $        --     $        --     $        --

     Intangible Assets Acquired in Exchange
       for Common Stock                                 $        --     $    80,000     $   125,000

     Convertible Promissory Notes and Accrued
       Interest Exchanged for Common Stock              $        --     $   844,551     $   844,551

     Short-term Advances Exchanged for Common Stock     $    55,000     $        --     $    55,000


             The accompanying notes are an integral part of these financial statements.

                                                 F-6
</TABLE>

<PAGE>

                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Smoky Market Foods, Inc, (the "Company") is a development stage company that was
incorporated on April 18, 2006 under the laws of the State of Nevada.

The Company intends to engage in the development, operation, franchising, and
licensing of fast service casual restaurants. The restaurants will feature
proprietary menu items and emphasize the preparation of food with high quality
ingredients developed under the Smoky Market(TM) brand, as well as unique
recipes and special seasonings to provide high quality food at competitive
prices. Traditional restaurants will feature dine-in, carryout and, possibly in
some instances, drive-thru or delivery service. Non-traditional units are
expected to include express locations and kiosks which have a more limited menu
and operate in non-traditional locations like airports, gasoline service
stations, convenience stores, stadiums, amusement parks and colleges, where a
full-scale traditional outlet would not be practical or efficient. The Company
may also engage in other retail or wholesale distribution strategies intended to
exploit the Smoky Market brand. As of the balance sheet date, the Company had
minimal operations and in accordance with Statements on Financial Accounting
Standards No. 7 is considered to be in the development stage.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates. On an ongoing basis, management reviews those estimates, including
those related to allowances for loss contingencies for litigation, income taxes,
and projection of future cash flows used to assess the recoverability of
long-lived assets.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior years' financial
statements to conform to the current year presentation. These reclassifications
had no effect on previously reported results of operations or retained earnings.

CASH AND CASH EQUIVALENTS

For purposes of balance sheet classification and the statements of cash flows,
the Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.


                                       F-7
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007


ACCOUNTS RECEIVABLE

Management monitors the liquidity and creditworthiness of accounts receivable
due from customers on an ongoing basis, considering industry and economic
conditions and other factors. These factors form the basis for calculating and
recording an allowance for doubtful accounts, which is an estimate of future
credit losses. The Company writes off individual accounts receivable against the
bad debt allowance when the Company determines a balance is uncollectible.
Management has determined that the bad debt allowance is appropriately
established at $-0- as of both December 31, 2008 and 2007.

INVENTORY

Inventory consists of Smoky Market food items and branded packaging. It is
valued at the lower of cost or market using the average cost method. Inventory
was as follows at December 31, 2008 and 2007:

                                                        2008           2007
                                                     -----------    -----------

Finished Goods                                       $        --    $        --
Raw Materials                                             22,126          4,250
                                                     -----------    -----------
                                                     $    22,126    $     4,250
                                                     ===========    ===========





                                      F-8
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are being depreciated using the
straight-line method over the assets' estimated economic lives, which range from
3 to 25 years. Property and equipment were as follows as of December 31, 2008
and 2007:

                                                      2008             2007
                                                  ------------     ------------

Processing Equipment                              $    104,771     $    104,771
Leasehold Improvements                                 250,361          125,000
Kiosks                                                  46,200               --
Operating Equipment                                     78,062           44,382
Office Equipment                                        29,112           29,112
Software                                                27,831           27,831
Transportation Equipment                                10,078           10,077
Smallwares                                               3,765            3,765
                                                  ------------     ------------
                                                       550,180          344,938
Accumulated depreciation                               (87,865)         (53,460)
                                                  ------------     ------------
                                                  $    462,315     $    291,478
                                                  ============     ============

Leasehold improvements are capitalized and amortized over the remaining term of
the leased facility. The Company recorded $34,405 in depreciation expense
relating to the assets above for both the years ended December 31, 2008 and
2007.

DEPOSITS

Deposits were as follows as of December 31, 2008 and 2007:

                                                     December 31,   December 31,
                                                         2008          2007
                                                     ------------  ------------
Security deposits at leased real estate facilities   $     10,500  $      2,500
Other                                                         833         5,983
                                                     ------------  ------------
                                                     $     11,333  $      8,483
                                                     ============  ============


BANK OVERDRAFT

Smoky Market Foods, Inc. was in a bank overdraft position with one of its main
banking institutions as of December 31, 2008 in the amount of $39,353. The
Company and the bank had not yet negotiated a settlement of this amount as of
the report date.



                                      F-9
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



ADVANCES

As of December 31, 2008, the Company was indebted to two individuals for loans
which are non-interest bearing, unsecured advances with no formal repayment
terms. Repayment of the loans is expected within the next twelve months, so the
debt has been classified as a current obligation.

FINANCIAL INSTRUMENTS

Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of December 31, 2008. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash and
accounts payable. Fair values are assumed to approximate carrying values for
these financial instruments because they are short term in nature, or are
receivable or payable on demand, and their carrying amounts approximate fair
value. The carrying value of the Company's capitalized leases approximated their
fair value based on the current market conditions for similar debt instruments.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically reviews the carrying amount of property and equipment
and its identifiable intangible assets to determine whether current events or
circumstances warrant adjustments to such carrying amounts. If an impairment
adjustment is deemed necessary, such loss is measured by the amount that the
carrying value of such assets exceeds their fair value. Considerable management
judgment is necessary to estimate the fair value of assets; accordingly, actual
results could vary significantly from such estimates. As of December 31, 2008,
management believes that there is no impairment of long-lived assets.

REVENUE RECOGNITION

As of December 31, the Company was still in the development stage. As such, the
only revenue consisted of minimal amounts of ecommerce sales. Such sales are
recognized at the time of shipment.

SHIPPING AND HANDLING

Shipping and handling charged to customers can vary depending on pricing
strategies, market conditions, etc., and is not necessarily based on the
recovery of cost. Accordingly, shipping and handling charges are recorded as a
component of sales while the corresponding shipping and handling costs are
reflected as a component of cost of goods sold.


                                      F-10
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



ADVERTISING COSTS

All advertising costs are charged to expense as incurred or the first time the
advertising takes place, unless it is direct-response advertising that results
in probable future economic benefits. Advertising expenses were $-0- for both
the years ended December 31, 2008 and 2007.

SEGMENT INFORMATION

The Company follows Statement of Financial Accounting Standards (SFAS) 131,
"Disclosure about Segments of an Enterprise and Related Information". Certain
information is disclosed, per SFAS 131, based on the way management organizes
financial information for making operating decisions and assessing performance.
The Company currently operates in one business segment and will evaluate
additional segment disclosure requirements if it expands operations.

NET (LOSS) PER COMMON SHARE

The Company follows SFAS 128, "Earnings per Share." Basic earnings (loss) per
common share calculations are determined by dividing net income (loss) by the
weighted average number of common shares outstanding during the period. Diluted
earnings (loss) per common share calculations are determined by dividing net
income (loss) by the weighted average number of common shares, outstanding stock
options, and the equivalent number of common shares that would have been
outstanding had the convertible debt holders converted their debt instruments to
common stock. All potential dilutive securities have been excluded from the
computation, as their effect is anti-dilutive.

STOCK-BASED COMPENSATION

The Company has issued its common shares as compensation to directors, officers,
and non-employees ("recipients"). The Company measures the amount of stock-based
compensation based on the fair value of the equity instrument issued or the
services or goods provided as of the earlier of (1) the date at which an
agreement is reached with the recipient as to the number of shares to be issued
for performance, or (2) the date at which the recipient's performance is
complete.

INCOME TAXES

The Company follows Statement of Financial Accounting Standard No. 109 (SFAS No.
109), "Accounting for Income Taxes," for recording the provision for income
taxes. Deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability each
period. If available evidence suggests that it is more likely than not that some
portion or all of the deferred tax assets will not be realized, a valuation
allowance is required to reduce the deferred tax assets to the amount that is
more likely than not to be realized. Future changes in such valuation allowance
are included in the provision for deferred income taxes in the period of change.


                                      F-11
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not related to an
asset or liability are classified as current or non-current depending on the
periods in which the temporary differences are expected to reverse.

The Financial Accounting Standards Board has published FASB Interpretation No.
48 (FIN No. 48), "Accounting for Uncertainty in Income Taxes", to address the
non-comparability in reporting tax assets and liabilities resulting from a lack
of specific guidance in FASB Statement of Financial Accounting Standards No. 109
(SFAS 109), "Accounting for Income Taxes", on the uncertainty in income taxes
recognized in an enterprise's financial statements. Specifically, FIN No. 48
prescribes (a) a consistent recognition threshold and (b) a measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return, and provides related
guidance on derecognition, classification, interest and penalties, accounting
interim periods, disclosure and transition. To the extent interest and penalties
would be assessed by taxing authorities on any underpayment of income taxes,
such amounts would be accrued and classified as a component of income tax
expenses on the consolidated statement of operations. FIN No. 48 applies to
fiscal years beginning after December 15, 2006, with earlier adoption permitted.
The Company has evaluated the effects of FIN No. 48 and found its adoption to
not have a material impact on the financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, DETERMINING
WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE
PARTICIPATING SECURITIES, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the
computation of earnings per share under the two-class method as described in
FASB Statement of Financial Accounting Standards No. 128, "Earnings per Share."
FSP EITF 03-6-1 is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008 and earlier adoption is prohibited. We
are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF
03-6-1 would have material effect on our consolidated financial position and
results of operations if adopted.


                                      F-12
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "Accounting for Financial Guarantee Insurance Contracts-and interpretation
of FASB Statement No. 60". SFAS No. 163 clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company's financial position, statements of operations, or cash flows at this
time.

In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162
sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB's amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company's financial position, statements of operations, or cash flows at
this time.

In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities--an
amendment of FASB Statement No. 133. This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.

In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110
regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB
107), in developing an estimate of expected term of "plain vanilla" share
options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular,
the staff indicated in SAB 107 that it will accept a company's election to use
the simplified method, regardless of whether the company has sufficient
information to make more refined estimates of expected term. At the time SAB 107
was issued, the staff believed that more detailed external information about
employee exercise behavior (e.g., employee exercise patterns by industry and/or
other categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in SAB 107 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for "plain vanilla" share options and warrants, and will
assess the impact of SAB 110 for fiscal year 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.


                                      F-13
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements--an amendment of ARB No. 51. This statement
amends ARB 51 to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This statement improves
comparability by eliminating that diversity. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 (that is, January 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this statement
is the same as that of the related Statement 141 (revised 2007). The Company
will adopt this Statement beginning March 1, 2009. It is not believed that this
will have an impact on the Company's consolidated financial position, results of
operations or cash flows.

In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business
Combinations'. This Statement replaces FASB Statement No. 141, Business
Combinations, but retains the fundamental requirements in Statement 141. This
Statement establishes principles and requirements for how the acquirer: (a)
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree; (b) recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase; and (c) determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. This statement
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. An entity may not apply it before that date. The
effective date of this statement is the same as that of the related FASB
Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements. The Company will adopt this statement beginning March 1, 2009. It is
not believed that this will have an impact on the Company's consolidated
financial position, results of operations or cash flows.


                                      F-14
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for
Financial Assets and Liabilities--Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. This option is available to
all entities. Most of the provisions in FAS 159 are elective; however, an
amendment to FAS 115 Accounting for Certain Investments in Debt and Equity
Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entity's first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS
No. 159 beginning March 1, 2008 and is currently evaluating the potential impact
the adoption of this pronouncement will have on its consolidated financial
statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this statement does not require any
new fair value measurements. However, for some entities, the application of this
statement will change current practice. This statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. Earlier application is
encouraged, provided that the reporting entity has not yet issued financial
statements for that fiscal year, including financial statements for an interim
period within that fiscal year. The Company will adopt this statement March 1,
2008, and it is not believed that this will have an impact on the Company's
consolidated financial position, results of operations or cash flows.

In September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
and FASB Interpretation 46 (revised December 2003), "Consolidation of Variable
Interest Entities - an interpretation of ARB No. 51," as well as other
modifications. While the proposed revised pronouncements have not been finalized
and the proposals are subject to further public comment, the Company anticipates
the changes will not have a significant impact on the Company's financial
statements. The changes would be effective March 1, 2010, on a prospective
basis.


                                      F-15
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair Value
of a Financial Asset When the Market for That Asset is Not Active," ("FSP FAS
157-3"), which clarifies application of SFAS 157 in a market that is not active.
FSP FAS 157-3 was effective upon issuance, including prior periods for which
financial statements have not been issued. The adoption of FSP FAS 157-3 had no
impact on the Company's results of operations, financial condition or cash
flows.

In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8,
"Disclosures by Public Entities (Enterprises) about Transfers of Financial
Assets and Interests in Variable Interest Entities." This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise's
involvement with variable interest entities, including qualifying
special-purpose entities. This FSP is effective for the first reporting period
(interim or annual) ending after December 15, 2008, with earlier application
encouraged. The Company adopted this FSP effective January 1, 2009. The adoption
of the FSP had no impact on the Company's results of operations, financial
condition or cash flows.

In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures
about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1"). FSP FAS 132(R)-1
requires additional fair value disclosures about employers' pension and
postretirement benefit plan assets consistent with guidance contained in SFAS
157. Specifically, employers will be required to disclose information about how
investment allocation decisions are made, the fair value of each major category
of plan assets and information about the inputs and valuation techniques used to
develop the fair value measurements of plan assets. This FSP is effective for
fiscal years ending after December 15, 2009. The Company does not expect the
adoption of FSP FAS 132(R)-1 will have a material impact on its financial
condition or results of operation.

In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly" ("FSP FAS 157-4").
FSP FAS 157-4 provides guidance on estimating fair value when market activity
has decreased and on identifying transactions that are not orderly.
Additionally, entities are required to disclose in interim and annual periods
the inputs and valuation techniques used to measure fair value. This FSP is
effective for interim and annual periods ending after June 15, 2009. The Company
does not expect the adoption of FSP FAS 157-4 will have a material impact on its
financial condition or results of operation.



                                      F-16
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



NOTE 2.  GOING CONCERN

The Company's ability to continue as a going concern is contingent upon its
ability to obtain debt and/or capital financing.

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern.

The Company has experienced $5,951,446 in losses since inception which relate
mainly to the Company's search for debt and equity financing necessary to carry
out its business plan. Additionally, the Company has a net deficit in working
capital of $716,046 and $507,199 at December 31, 2008 and 2007, respectively.
The Company has had no material revenue generating operations since inception.

In an effort to recapitalize the Company, management has authorized the sale of
$10,000,000 of Preferred Stock (see Note 9). However, there can be no assurances
that the Company will find investors to purchase such preferred shares.

The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.


NOTE 3.  NOTES PAYABLE

In September 2008, the Company received $500,000 from a trust in exchange for a
$500,000 promissory note and 300,000 warrants to purchase the Company's common
stock. The promissory note is non-interest bearing and is due on September 30,
2010. The warrants have an exercise price of $.15 per share and expire on the
due date of the promissory note. The warrants were valued at $9,172 under the
Black-Scholes method, are classified as a bond discount, and are therefore
netted against the promissory note on the balance sheet. The discount is being
amortized straight-line over the two-year life of the warrants. .

During 2007 and 2006, the Company raised $786,100 in exchange for convertible
promissory notes. The notes accrued interest at an annual 9% rate and the
combined principal and accrued interest were convertible to common stock at the
price of $.10 per share. Each note included 10:1 warrant coverage, exercisable
at $.25 per share, with expiration on September 30, 2008. The Company recognized
$676,298 of additional costs for the combined Black-Scholes value of the
warrants and beneficial conversion feature on the notes. These costs were
charged to expense over the life of the notes, expiring on September 30, 2007,
at which point all of the promissory notes were converted to common stock


                                      F-17
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



The Company incurred interest expense of $-0- and $43,603 with respect to these
liabilities for the years ended December 31, 2008 and 2007, respectively.


NOTE 4.  CAPITAL LEASE OBLIGATIONS

The Company assumed multiple lease obligations in the transaction described in
Note 5. The leases have been capitalized and are reflected as liabilities on the
balance sheet. Future lease obligations are as follows for the twelve months
ending December 31:

                                                    December 31,   December 31,
                                                       2008             2007
                                                    ------------   ------------
Minimum lease payments for the years ended:
  2008                                              $         --   $     25,915
  2009                                                    16,527         14,321
  Following twelve months                                     --             --
                                                    ------------   ------------
  Total                                                   16,527         40,236
Amounts representing interest                              1,295          9,274
                                                    ------------   ------------
Present value of minimum lease payments                   15,232         30,962
Current portion                                           15,232         18,127
                                                    ------------   ------------
Long-term portion                                   $         --   $     12,835
                                                    ============   ============


NOTE 5.  CAPITAL STOCK

Common Stock
------------

On April 18, 2006, the State of Nevada authorized the Company to issue a maximum
of 200,000,000 shares of the Company's common stock. The assigned par value was
$.001. On the same day, the Company issued 40,000,000 common shares to Smoky
Systems, LLC, a Nevada LLC and related party, in exchange for certain assets.
This transaction is discussed more fully in Note 5 below.

Preferred Stock
---------------

In June 2006, the State of Nevada authorized the Company to issue a maximum of
10,000,000 shares of the Company's preferred stock at $.001 per share. Shares of
Preferred Stock may be issued from time to time in one or more series as may
from time to time be determined by the Board of Directors. Each series shall be
distinctly designated. All shares of any one series of the Preferred Stock shall
be alike in every particular, except that there may be different dates from
which dividends thereon, if any, shall be cumulative, if made cumulative. The
powers, preferences and relative, participating, optional and other rights of
each such series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any time
outstanding. No preferred shares had been issued as of December 31, 2008 and
2007 - See Note 10.


                                      F-18
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007


Stock Transactions:
-------------------

In April 2006, the Company issued 40,000,000 shares of its $.001 par value
common stock to Smoky Systems, LLC in exchange for assets valued at $40,000.

In May 2006, the Company issued 1,300,000 stock options to officers/directors,
then another 162,500 in October 2006 in warrant purchase agreements. The
combined awards were valued at $106,619.

In July 2006, the Company issued 300,000 shares of its $.001 par value common
stock to officers/directors of the Company in exchange for services valued at
$30,000.

In December 2006, the Company issued 50,000 of its $.001 par value common stock
for services valued at $5,000.

In December 2006, the Company issued 1,250,000 of its $.001 par value common
stock to a consultant in exchange for services valued at $123,750 plus cash of
$1,250.

In April 2007, an individual was granted 500,000 shares of $.001 par value
common stock in exchange for an endorsement agreement. The shares were valued at
$.10 per share.

Also in April 2007, a separate individual was granted 25,000 shares of the
Company's $.001 par value common stock in exchange for IT consulting services.
The shares were valued at $.10 per share.

In May 2007, the Company issued 1,500,000 shares of its $.001 par value common
stock as an award to the CEO. Additionally, the CEO was granted another 450,000
in May 2007, 25% of which vested immediately, with the remainder to vest over 48
months. The shares were valued at $.10 per share.

Also in May 2007, the Company issued 325,000 shares of its $.001 par value
common stock to an investment banking firm in exchange for services valued at
$32,500. The shares were valued at $.10 per share (see update below).

In June 2007, the Company issued 100,000 of its $.001 par value common stock to
a consultant in exchange for services valued at $9,900 plus cash of $100. The
shares were valued at $.10 per share.


                                      F-19
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



In September 2007, the Company issued 628,571 of its $.001 par value common
stock to an individual investor in exchange for $302,000, or $.48 per share.

Also in September, 2007, the Company issued 400,000 of its $.001 par value
common stock to a financial consultant in exchange for services. The services
were valued at $192,000, based on 400,000 shares given at $.48 per share.

Also in September 2007, the Company cancelled 325,000 of its $.001 par value
common stock previously issued in May 2007 to an investment banking firm. It was
discovered that the firm was no longer qualified by the SEC to perform the
agreed upon services, so the transaction was rescinded.

Also in September 2007, the Company retired $786,100 in convertible promissory
notes and related accrued interest of $58,451, for a total debt retirement of
$844,551. The debt and accrued interest was exchanged for 8,445,509 shares of
$.001 par value common stock at the conversion rate of $.10 per share, pursuant
to the multiple promissory note agreements.

In October 2007, an individual was given 50,000 shares of $.001 par value common
stock in exchange for future sports promotional activities. The shares were
valued at $24,000, based on 50,000 shares given at $.48 per share

In December 2007, a vendor exchanged $1,577 in trade payables for 10,173 shares
of $.001 par value common stock. The stock was valued at $.155 per share.

Also in December 2007, an individual was given 975,000 shares of $.001 common
stock in exchange for future international promotional activities. The stock was
valued at $.48 per share.

Also in December 2007, an individual was given 50,000 shares of $.001 par value
common stock in exchange for future promotional activities. The stock was valued
at $.48 per share.

In January 2008, an individual was sold 1,000,000 shares of $.001 par value
common stock in exchange for cash at par value ($.001 per share) in connection
with the renewal of his agreement for consulting services through the end of
2008. The stock was valued at $.25 per share.

In February 2008, an individual exchanged a $40,000 promissory note for 266,666
shares of $.001 par value common stock. The exercise price and fair value of the
stock was $.15 per share.


                                      F-20
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



In March 2008, an individual exchanged services valued at $40,000 for 266,666
shares of $.001 par value common stock. The exercise price of the stock was $.15
per share.

Also in March 2008, an individual was given 2,000,000 shares of $.001 par value
common stock in exchange for future investor and public relations services. The
exercise price was $.15 per share.

In April 2008, two Company officers given an aggregate 500,000 shares in
exchange a total of $75,000 in amounts owed to them by the Company.

Also in April 2008, an individual chose to cancel a $15,000 short-term advance
in exchange for 100,000 common shares, at a price of $.15 per share.

Also in April 2008, an individual was given 500,000 common shares at an
effective price of $.19 per share in return for financial services and investor
relations services.

In May 2008, an individual exercised his option to purchase 50,000 shares at
$.25 per share, for a net proceeds of $12,500 to the Company.

Also in May 2008, the Company issued 400,000 common shares to a financial
institution in exchange for international investor relations services. The fair
value of the stock was $.10 per share

In June 2008, an individual was granted 791,666 shares at a fair market value of
$.06 for financial services and investor relations.

Also in June 2008, the Company granted 1,385,000 common shares to a present
investor for financial services and future loan consideration. The fair value of
the stock was $.06 per share.

Also in June 2008, the Company issued 500,000 common shares at a fair value of
$.06 per share to a financial services company.

Also in June 2008, the Company issued 166,666 shares to an employee for
services. The stock was valued at $.06 per share.

In September 2008, the Company issued 1,000,000 of its $.001 par value common
stock to an individual investor in exchange for $40,000, or $.04 per share.

In September 2008, an individual was granted 600,000 common shares at a fair
market value of $.04 for financial services and investor relations.


                                      F-21
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



In September 2008, an individual was granted 130,000 common shares at a fair
market value of $.04 for employee benefits.

In September 2008, an individual was granted 200,000 common shares at a fair
market value of $.04 for financial services.

In September 2008, an individual was granted 60,000 common shares at a fair
market value of $.04 for employee benefits.

In September 2008, an individual was granted 1,000,000 common shares at a fair
market value of $.04 for financial services.

In September 2008, an individual was granted 75,000 shares at a fair market
value of $.04 per share for financial services.

In October 2008, an individual was granted 35,000 common shares at a fair market
value of $.04 per share for financial services.

In October 2008, an individual was granted 5,000 common shares at a fair market
value of $.04 per share

In December 2008, an individual was granted 40,000 common shares at a fair
market value of $.04 per share for employee benefit services.

In December 2008, an individual was granted 30,000 common shares at a fair
market value of $.04 per share for inventory supplies.

In December 2008, an individual was granted 500,000 common shares at a fair
market value of $.04 per share for financing consideration.

In December 2008, a corporation was granted 300,000 common shares at a fair
market value of $.04 per share for investor relations services.

In December 2008, an individual was granted 35,000 common shares at a fair
market value of $.04 per share for investor relations services.



                                      F-22
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



NOTE 6 - INCOME TAXES

At December 31, 2008 and 2007, the Company had federal net operating loss
carryforward amounts of $5,516,280 and $2,173,151, which begins to expire in
2021.

The provision for income taxes consisted of the following components for the
years ended December 31, 2008 and 2007:

                                                        2008           2007
                                                    ------------   ------------
Current
Federal                                             $         --   $         --
State                                                         --             --
Deferred                                                      --             --
                                                    ------------   ------------
                                                    $         --   $         --
                                                    ============   ============


Components of net deferred tax assets, including a valuation allowance, are as
follows at December 31, 2008 and 2007:

                                                        2008           2007
                                                    ------------   ------------
Deferred Tax Assets
Net operating loss carryforward                     $  5,516,250   $  2,173,151
Less valuation allowance                              (5,516,250)    (2,173,151)
                                                    ------------   ------------
Net deferred tax assets                             $         --   $         --
                                                    ============   ============


The valuation allowance for deferred tax assets as of December 31, 2008 and 2007
was $5,516,250 and $2,173,151, respectively. In assessing the recovery of the
deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income in the periods in which those temporary differences become
deductible. Management considers the scheduled reversals of future deferred tax
assets, projected future taxable income, and tax planning strategies in making
this assessment. As a result, management determined it was more likely than not
the deferred tax assets would not be realized as of December 31, 2008 and 2007
and maintained a full valuation allowance.


                                      F-23
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007



Reconciliation between the statutory rate and the effective tax rate is as
follows at December 31, 2008 and 2007:

                                                       2008            2007
                                                    ------------   ------------
Federal stautory rate                                     -35.0%         -35.0%
State taxes, net of federal benefit                         0.0%           0.0%
Change in valuation allowance                              35.0%          35.0%
                                                    ------------   ------------
Effective tax rate                                          0.0%           0.0%
                                                    ============   ============


NOTE 7.  RELATED PARTY TRANSACTIONS

As discussed in Note 4, the Company issued 40,000,000 shares of common stock to
a related party, Smoky Systems, LLC in exchange for a license to certain assets.
The license entitles Smoky Market Foods, Inc. to the use of certain assets
developed by Smoky Systems, LLC. The licensed assets include intellectual
property such as trademarks, copyrights, telephone numbers, email addresses,
marketing collateral and other branded materials that will be utilized by
management to exploit the Smoky Market brand.

Management assigned a nominal value of $40,000 to such assets in this related
party transaction. The 40,000,000 shares were issued at the $.001 par value per
share.

Subsequently in 2006, the Company purchased certain tangible assets from Smoky
Systems in a bulk asset purchase. The purchase was consummated at Smoky Systems,
LLC's net book value on such assets.

The transaction is summarized as follows:

Property and equipment acquired                          $      163,628
Less assumed capital leases                                      52,048
                                                         --------------
Net purchase price                                       $      111,580
                                                         ==============


As of December 31, 2008 the Company owed $87,364 to two related parties. Such
debts were reflected as trade payables, which are non-interest bearing
obligations with no formal repayment terms.



                                      F-24
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007


NOTE 8 - COMMITMENTS

OPERATING LEASE COMMITMENT
--------------------------

The Company is obligated under a long-term lease of restaurant property in Los
Gatos, California through February 2013. Base monthly rent was $5,000 at
December 31, 2008, with common area maintenance ("CAM") charges of $1,043.
Future minimum lease payments, exclusive of CAM charges, are as follows for the
years ending December 31:

              2009                   $    61,500
              2010                        63,345
              2011                        65,245
              2012                        67,203
              2013                        11,255
                                     -----------
             Total                   $   268,548
                                     ===========


EMPLOYMENT CONTRACT
-------------------

Effective May 1, 2007, the Company entered into a three-year employment contract
with the chief executive officer. Terms of the agreement include annual
compensation of $175,000, a potential 80% bonus, a stock award of 1,500,000
common shares, 425,000 options to purchase common stock at $.10 per share, and
an additional contingent 1,000,000 shares assuming that certain operating
performance metrics are achieved.

COMMON STOCK OPTION PLAN
------------------------

The Company has reserved 6,500,000 common shares for the exercise of stock
options to be issued pursuant to the 2006 Stock Option Plan. Information
relating to options issued through December 31, 2008 under this plan is as
follows:


                                      F-25
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007

<TABLE>
<S>            <C>
                                                                             Weighted
                                              Options and                     Average
                                              Stock Awards                     Option
                                                Available      Number of      Exercise
                                                for Grant        Shares         Price
                                                ----------     ----------    ----------
Outstanding as of April 18, 2006 (Inception)            --             --       --
  Shares reserved                                6,500,000             --
  Options granted                               (1,462,500)     1,462,500    $   0.10
  Options exercised                                     --             --       --
  Options canceled                                      --             --       --
                                                ----------     ----------
Outstanding as of December 31, 2006              5,037,500      1,462,500    $   0.10
  Shares reserved                                       --             --       --
  Options granted                                 (425,000)       425,000       --
  Stock awards granted                          (1,775,000)     1,775,000    n/a
  Options exercised                                     --             --       --
  Options canceled                                      --             --       --
                                                ----------     ----------
Outstanding as of December 31, 2007              2,837,500      3,662,500    $   0.10
  Shares reserved                                       --             --       --
  Options granted                                       --             --       --
  Stock awards granted                          (2,020,000)     2,020,000    n/a
  Options exercised                                     --             --       --
  Options canceled                                      --             --       --
                                                ----------     ----------
Outstanding as of December 31, 2008                817,500      5,682,500    $   0.10
                                                ==========     ==========
</TABLE>


The following table summarizes information about stock options outstanding and
exercisable at December 31, 2008:

                          Stock Options Outstanding
                  --------------------------------------------
                               Weighted-Average
                   Number of      Remaining       Weighted-
                    Options      Contractual       Average
Exercise Price    Outstanding   Life in Years   Exercise Price
--------------    -----------   -------------   --------------
     $0.10         1,887,500        4.58           $ 0.10


                   Stock Options Exercisable
                  ----------------------------
                   Number of      Weighted-
                    Options        Average
Exercise Price    Exercisable   Exercise Price
--------------    -----------   --------------
     $0.10         1,753,125       $ 0.10




                                      F-26
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007


The following table summarizes information about stock options outstanding and
exercisable at December 31, 2007:


                          Stock Options Outstanding
                  --------------------------------------------
                               Weighted-Average
                   Number of      Remaining       Weighted-
                    Options      Contractual       Average
Exercise Price    Outstanding   Life in Years   Exercise Price
--------------    -----------   -------------   --------------
     $0.10         1,887,500        5.58           $ 0.10


                   Stock Options Exercisable
                  ----------------------------
                   Number of      Weighted-
                    Options        Average
Exercise Price    Exercisable   Exercise Price
--------------    -----------   --------------
     $0.10         1,456,250       $ 0.10


The assumptions used in computing fair value of options is as follows:

Expected stock price volatility                              186.0%
Risk-free interest rate                                        4.7%
Expected term (years)                                          7.00
Weigted-average fair value of stock options granted         $ 0.099




                                      F-27
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007


COMMON STOCK WARRANTS

The following is a summary of the status of all the Company's stock warrants as
of December 31, 2008 and 2007 and changes during the years then ended:

                                                                       Weighted
                                                           Number      Average
                                                             of        Exercise
                                                          Warrants      Price
                                                         ----------   ----------
Oustanding, January 1, 2007                               4,836,000   $    0.25
  Granted                                                 3,025,000        0.25
  Exercised                                                      --          --
  Cancelled                                                      --          --
                                                         ----------   ----------
Ouststanding, December 31, 2007                           7,861,000        0.25
  Granted                                                   300,000        0.15
  Exercised                                                      --          --
  Cancelled                                              (7,861,000)       0.25
                                                         ----------   ----------
Ouststanding, December 31, 2008                             300,000   $    0.15
                                                         ==========   ==========
Warrants exercisable at December 31, 2007                 7,861,000   $    0.25
                                                         ==========   ==========
Warrants exercisable at December 31, 2008                   300,000   $    0.15
                                                         ==========   ==========

The following tables summarize information about stock warrants outstanding and
exercisable at December 31, 2008:


                          Stock Warrants Outstanding
                  --------------------------------------------
                                   Average
                   Number of      Remaining       Weighted-
                   Warrants      Contractual       Average
Exercise Price    Outstanding   Life in Years   Exercise Price
--------------    -----------   -------------   --------------
     $0.15          300,000        113.80           $ 0.15


                   Stock Warrants Exercisable
                  ----------------------------
                   Number of      Weighted-
                   Warrants        Average
Exercise Price    Exercisable   Exercise Price
--------------    -----------   --------------
     $0.15          300,000        $ 0.15



                                      F-28
<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007


The following tables summarize information about stock warrants outstanding and
exercisable at December 31, 2007:


                          Stock Warrants Outstanding
                  --------------------------------------------
                                  Weighted-
                                   Average
                   Number of      Remaining       Weighted-
                   Warrants      Contractual       Average
Exercise Price    Outstanding   Life in Years   Exercise Price
--------------    -----------   -------------   --------------
     $0.25         7,861,000        108.82          $ 0.25


                   Stock Warrants Exercisable
                  ----------------------------
                   Number of      Weighted-
                   Warrants        Average
Exercise Price    Exercisable   Exercise Price
--------------    -----------   --------------
     $0.25         7,861,000        $ 0.25


NOTE 9 - PRIOR YEAR RESTATEMENT

The financial statement information prior to 2008 has been restated to correct
for previous accounting errors, including unrecorded liabilities and the
misapplication of FAS 123r - Accounting for Stock-Based Compensation. A summary
of the changes to the previously issued balance sheet and income statement are
as follows:


                                      F-29
<PAGE>
                                         SMOKY MARKET FOODS, INC.
                                      (A DEVELOPMENT STAGE COMPANY)
                                      NOTES TO FINANCIAL STATEMENTS
                                        DECEMBER 31, 2008 AND 2007

<TABLE>

            <c>
                                                          DECEMBER 31,
                                                             2007                            DECEMBER 31,
                                                       (AS PREVIOUSLY       PRIOR PERIOD        2007
                                                           REPORTED)         ADJUSTMENTS    (AS RESTATED)
                                                          -----------        -----------     -----------
ASSETS:
-------
Current Assets
     Cash                                                 $    16,235                        $    16,235
     Inventory                                                  4,250                              4,250
                                                          -----------                        -----------
     Total Current Assets                                      20,485                             20,485
                                                          -----------                        -----------
Property & Equipment, net of accumulated depreciation         166,478 (1)     125,000            291,478
                                                          -----------                        -----------
Other Assets
     Intangible assets                                        125,000 (2)     (91,667)            33,333
     Deposits                                                   8,483                              8,483
                                                          -----------                        -----------
     Total Other Assets                                       133,483                             41,816
                                                          -----------                        -----------
     Total Assets                                         $   320,446                        $   353,779
                                                          ===========                        ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
-----------------------------------------------
Current Liabilities
     Accounts payable                                     $   264,548 (3)     (62,342)       $   202,206
     Accounts payable - related parties                            -- (4)      75,623             75,623
     Accrued payroll costs                                         -- (5)     191,728            191,728
     Short-term advance                                        40,000                             40,000
     Current maturities of capital lease obligations           18,127                             18,127
                                                          -----------                        -----------
     Total Current Liabilities                                322,675                            527,684
Long-term Liabilities
     Capital lease obligatons, less current maturities         12,835                             12,835
                                                          -----------                        -----------
     Total Liabilities                                        335,510                            540,519
                                                          -----------                        -----------
Stockholders' Equity (Deficit)
     Common Stock, par value $.001, 200,000,000 shares         54,813                             54,813
     Deferred Stock-Based Compensation                     (1,096,973)(6)      52,398         (1,044,575)
     Other paid-in capital                                  2,437,816 (7)     141,749          2,579,565
     Additional paid-in capital for warrants                  693,106 (8)     138,666            831,772
     Deficit accumulated during the development stage      (2,103,826)(9)    (504,489)        (2,608,315)
                                                          -----------                        -----------
     Total Stockholders' Equity (Deficit)                     (15,064)                          (186,740)
                                                          -----------                        -----------
Total Liabilities and Stockholders' Equity (Deficit)      $   320,446                        $   353,779
                                                          ===========                        ===========


RESTATEMENT EXPLANATIONS
------------------------

(1)   $85,000 was reclassified from intangible assets and an additional $40,000 was recorded in the
      restatement of stock based consideration exchanged for intangible leasehold rights.

(2)   A reduction of $85,000 was made to reclass leasehold rights to property and equipment.
      Additionally, $6,667 of an intangible license was amortized.

(3)   $106,250 in previously unrecorded liabilities are reflected, less $75,623 in related party accounts
      payable, which have been reclassified and reported separately on the line below.

(4)   $75,623 in related party accounts payable have been reclassified in order to present such debt
      separately on the balance sheet.

(5)   $98,758 in additional payroll related costs were discovered and recorded as a liability as of
      Decembrer 31, 2007.

(6)
(7) &
(8)   These adjustments relate to corrections in the application of FAS 123r Accounting for Stock-based
      Compensation.

(9)   The accumulated deficit increased $504,489 due to $98,758 in additional payroll costs, $106,250 in
      additional vendor payables, $6,667 in amortization of license amortization and $292,814 in
      adjustments related to the application of FAS 123r.



                                                  F-30
<PAGE>

                                             SMOKY MARKET FOODS, INC.
                                           (A DEVELOPMENT STAGE COMPANY)
                                           NOTES TO FINANCIAL STATEMENTS
                                            DECEMBER 31, 2008 AND 2007


                                                          DECEMBER 31,
                                                             2007                            DECEMBER 31,
                                                       (AS PREVIOUSLY       PRIOR PERIOD        2007
                                                           REPORTED)         ADJUSTMENTS    (AS RESTATED)
                                                          -----------        -----------     -----------

Revenue                                                   $     6,947                        $     6,947
Cost of Goods Sold                                             12,425                             12,425
                                                          -----------        -----------     -----------
Gross Profit (Loss)                                            (5,478)                --          (5,478)
                                                          -----------        -----------     -----------
Operating Expenses
      Salaries, Wages & Benefits                              260,364 (1)         98,758         359,122
      Marketing                                               116,296                            116,296
      Rent                                                     41,046                             41,046
      Professional fees                                       103,483 (2)         55,000         158,483
      Depreciation/amortization                                34,405 (3)          6,667          41,072
      Stock based compensation                                     --
        Salaries, Wages & Benefits                            180,950 (4)          8,419         189,369
        Professional                                          191,650 (4)        (31,750)        159,900
        Financing                                             394,555 (4)        250,620         645,175
      Other                                                   212,163                            212,163
                                                          -----------        -----------     -----------
                                                            1,534,912            387,714       1,922,626
                                                          -----------        -----------     -----------
Operating Loss                                             (1,540,390)          (387,714)     (1,928,104)
                                                          -----------        -----------     -----------
Other Income (Expense)
      Interest Income                                             887                887             887
      Interest Expense                                         56,580            (56,580)        (56,580)
                                                          -----------        -----------     -----------
Other Expense - Net                                            57,467            (55,693)        (55,693)
                                                          -----------        -----------     -----------
Net (Loss)                                                $(1,482,923)       $  (443,407)    $(1,983,797)
                                                          ===========        ===========     ===========
(Loss) per Share - basic and diluted                      $    (0.032)       $    (0.010)    $    (0.043)
                                                          ===========        ===========     ===========

RESTATEMENT EXPLANATIONS
------------------------

(1)   $98,758 in additional payroll related costs were discovered and recorded as a liability as of
      Decembrer 31, 2007.

(2)   $55,000 in additional unrecorded professional fees were discovered and recorded as liabilities at
      December 31, 2007.

(3)   Represents amortization of intangible license rights not previously recorded.

(4)   Adjustments made to correct FAS 123r calculations relating to stock-based compensation given to
      employees, vendors, creditors and shareholders.

</TABLE>


                                                  F-31

<PAGE>
                            SMOKY MARKET FOODS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2008 AND 2007


NOTE 10.  SUBSEQUENT EVENTS

The Company retains the services of a consultant (the "Consultant") who is
assisting the company in obtaining debt or equity financing and other corporate
finance initiatives. The Consultant was granted 1,250,000 common shares and
$25,000 as compensation under the terms of the first agreement, and another
1,000,000 common shares and $25,000 for 2008. The fair value of such shares was
reflected as an operating cost in the statement of operations.

In the first quarter of 2009, management authorized the sale of up to
$10,000,000 in 10% Convertible Redeemable Preferred Stock ("2009 Preferred
Stock"). Each share of 2009 Preferred stock includes a 2009A Warrant to purchase
25,000 shares of common stock. The 2009 Preferred Stock carries a 10% cumulative
dividend and a liquidation preference equal to the purchase price plus unpaid
accrued interest. The Company has authorized 500 shares to be issued at $20,000
per share. Each share is convertible at the option of the holder after March 31,
2012 into a number of shares of Common Stock that has a calculated market value
of five times the liquidation preference investment, or after April 1, 2014 with
the number of shares of Common Stock calculated at a market value of ten times
the liquidation preference. If not converted into Common Stock, the 2009
Preferred Stock is redeemable at a redemption price equal to the Liquidation
Preference at the option of the Company any time following March 31, 2012 with
30-days advanced written notice.

In the first quarter of 2009, the Company issued 103,000 common shares to an
individual for financing services. The Company also borrowed $100,000 in the
first quarter of 2009 in exchange for a 10% promissory note due in June 2010 and
3,000,000 common shares.

The Company also issued a combined 325,000 common shares in the first quarter of
2009 in connection with the receipt of multiple short-term cash advances from
multiple individuals which aggregated $16,250.




                                      F-32