UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549




FORM
10-K





(Mark
One)


x     Annual Report under Section 13 or 15 (d)
      of The Securities Exchange Act of
1934





For
the fiscal year ended December 31, 2008





o     Transition Report under Section 14 or 15
      (d) of The Securities Exchange Act of
1934





For
the transition period from  N/A  to 
N/A


Commission
File Number:  000-53545





ORGANIC
ALLIANCE, INC.


(Name
of small business issuer specified in its charter)




Nevada
            20-0853334State of
      incorporation
            I.R.S.
      EmployerIdentification
      No.





401
Monterey Street, Suite 202


Salinas,
CA 93901


(Address
of principal executive offices)




(831)
240-0295


(Issuer’s
telephone number)




Securities
registered under Section 12 (b) of the Exchange Act:


None





Securities
registered under Section 12 (g) of the Exchange Act:





Common
Stock, $0.0001 par value per share.


(Title
of Class)







Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


 ̈ Yes   
x No





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   
x No





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  ̈ 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.  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
(Check one):





Large accelerated filer   ̈
              Non-accelerated filer   ̈
            Accelerated filer   ̈
              Small
      Business Issuer  x





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





As of
March 15, 2010, there were 27,299,943 shares of the Company’s .0001 par value
common stock issued and outstanding, and the aggregate market value of such
common stock held by non-affiliates totaling 18,513,527 shares was approximately
$1,018,000, based on the last sales price of such stock as of that date of
$0.055. For purposes of this calculation only, all directors, officers, and each
holder of a 10% or greater beneficial interest in the Company have been deemed
affiliates.




DOCUMENTS
INCORPORATED BY REFERENCE-None













ORGANIC
ALLIANCE, INC.


FORM
10-K ANNUAL REPORT


TABLE
OF CONTENTS







PART
      I
            
            PageITEM
      1.
            DESCRIPTION
      OF BUSINESS
            1ITEM
      1A.
            RISK
      FACTORS
            4ITEM
      1B.
            UNRESOLVED
      STAFF COMMENTS
            8ITEM
      2.
            DESCRIPTION
      OF PROPERTY
            8ITEM
      3.
            LEGAL
      PROCEEDINGS
            8ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
            8PART IIITEM
      5.
            MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
      ISSUER PURCHASES OF EQUITY SECURITIES
            8ITEM
      6.
            SELECTED
      FINANCIAL DATA
            10ITEM
      7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
            10ITEM
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            13ITEM
      8.
            FINANCIAL
      STATEMENTS
            13ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
            13ITEM 9A.
            CONTROLS
      AND PROCEDURES
            13ITEM 9B.
            OTHER
      INFORMATION
            15PART IIIITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS, KEY EMPLOYEES, AND CORPORATE
GOVERNANCE
            15ITEM
      11.
            EXECUTIVE
      COMPENSATION
            17ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
            19ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
            19ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
            20PART
      IVITEM
      15.
            EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES
            21SIGNATURES
            
            22





CERTIFICATION PURSUANT TO
SECTION 302 (A) OF THE SARBANES-OXLEY ACT OF 2002





CERTIFICATION PURSUANT TO 18
U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002










EXPLANATORY
NOTE




Unless
otherwise indicated or the context otherwise requires, all references in this
Annual Report on Form 10-K to “we,” “us,” “our,” and the “Company” are to
Organic Alliance Inc., a Nevada corporation.




In this
annual report, unless otherwise specified, all dollar amounts are expressed in
United States dollars.




Our
financial statements are stated in United States Dollars (US$) and are prepared
in accordance with United States Generally Accepted Accounting
Principles.




CAUTIONARY
NOTICE REGARDING FORWARD LOOKING STATEMENTS




We desire
to take advantage of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. This Annual Report on Form 10-K contains a number
of forward-looking statements that reflect management’s current views and
expectations with respect to our business, strategies, products, future results
and events and financial performance. All statements other than statements of
historical fact, including future results of operations or financial position,
made in this Annual Report on Form 10-K are forward looking. In particular, the
words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,”
variations of such words, and similar expressions identify forward-looking
statements, but are not the exclusive means of identifying such statements and
their absence does not mean that the statement is not forward-looking. These
forward-looking statements are subject to certain risks and uncertainties,
including those discussed below. Our actual results, performance or achievements
could differ materially from historical results as well as those expressed in,
anticipated or implied by these forward-looking statements. We do not undertake
any obligation to revise these forward-looking statements to reflect any future
events or circumstances.




PART
I




ITEM
I:  DESCRIPTION OF BUSINESS




History




NB Design & Licensing, Inc., (“NB
Design”) was organized in September 2001.  The former parent, New
Bridge Products, Inc., was originally incorporated in August 1995 as a
manufacturer of minivans and filed a petition in bankruptcy under Chapter 11 of
the U.S. Bankruptcy Code. Its Plan of Reorganization was approved by the U.S.
Bankruptcy Court for the District of Arizona in September 2002 and we were
discharged from bankruptcy in October 2002.   NB Design was inactive
from October 2002 to April 29, 2008.





Organic
Alliance Inc., a Texas corporation, (“Organic Texas”) was organized on February
19, 2008 to sell organically grown fruits and vegetables.





On April
29, 2008, NB Design a Nevada corporation, acquired all 10,916,917 issued and
outstanding shares of common stock and assumed all liabilities of Organic Texas
for 9,299,972 shares of the NB Design’s shares of common stock. Organic Texas
thereupon became a wholly owned subsidiary of NB Design. The business of Organic
Texas is the only business of NB Design.





The
acquisition of Organic Texas by NB Design on April 29, 2008 was accounted for as
a reverse capitalization in accordance with the Securities and Exchange
Commission’s (“SEC”) Division of Corporate Financial Reporting manual Topic 12
“Reverse Acquisition and Reverse Capitalization”. The reverse capitalization was
the acquisition of a private operating company (Organic Texas) into a
non-operating public shell corporation (NB Design) with nominal net assets and
as such is treated as a capital transaction, rather than a business combination.
As a result no goodwill is recorded.  In this situation, NB Design is
the legal acquirer because it issued its equity interests, and Organic Texas is
the legal acquiree because its equity interests were
acquired.  However, NB Design is the acquiree and Organic Texas as the
acquirer for accounting purposes.  Organic Texas is treated as the
continuing reporting entity that acquired the registrant, NB
Design.  The pre-acquisition financial statements of Organic Texas are
treated as the historical financial statements of the consolidated
companies.  Pursuant to the Exchange Agreement, NB Design issued 9,299,972
shares of our Common Stock for all of the issued and outstanding Common Stock of
Organic Texas and assumed all assets and liabilities. NB Design also had
outstanding 1,000,028 each of Class A, Class B, Class C, Class D, Class E and
Class F warrants prior to April 29, 2008.  The warrants were
exercisable at $2.00, $2.00, $4.00, $4.00, $6.00 and $6.00, respectively, at any
time until December 31, 2008.  As a condition to closing the Exchange
Agreement, the exercise prices of the warrants were subsequently reduced to
$1.00 per share for all classes of Warrants and the expiration date was extended
to December 31, 2011.  In exchange for the exercise price reduction,
the holders of at least 80% of the Warrants agreed to a call provision by us on
10 days notice to them if (i) the bid price of our common stock is quoted at
$1.25 per share or higher and the average share volume exceeds 300,000 shares
for at least one day, and (ii) the shares underlying the warrants are subject to
a current registration statement on file with the Securities and Exchange
Commission (SEC).  Both the share price and volume must be met on the
same day for the call provision to be effective.   As of March
18, 2010 the common shares are unregistered with the SEC.





-1-


We
completed the Exchange Agreement in order to merge with an operating company and
thereby provide our shareholders with the potential to realize liquidity in
their stockholdings.





On June
2, 2008, the name NB Design was changed to Organic Alliance, Inc.  On
August 29, 2008, the name of Organic Texas was changed to Organic Texas,
Inc.  All references throughout this Annual Report to “Organic
Alliance, Inc.,” or the “Company” refer to the combined operations of Organic
Alliance, Inc., a Nevada corporation, and our wholly-owned subsidiary, Organic
Texas, Inc.





On
December 31, 2008, registration of 2,638,250 shares of our .0001 par value
Common Stock filed on Form S-1 was declared effective by the United States
Securities and Exchange Commission.





Business




Organic Alliance, Inc. brings
together a unique alliance of respected growers, packers and shippers from
around the world in order to source, market and distribute best-quality
certified-organic, conventional, and certified Fair Trade food
products.  Crops are grown, packed and shipped under Organic Alliance
supervision using advanced quality, food safety and sustainable agriculture
practices. In the case of our certified Fair Trade program, we work directly
with the growers to develop the structures and standards to be certified under
the Fair Trade Labeling Organization (FLO) standards. The Company’s Approved
OriginsTM Program delivers not only on-demand traceability through a partnership
with Yottamark’s Harvestmark technology, but transparency in all
business-critical practices, including leading-edge food safety practices,
continuous improvement and work force fairness.





While we
offer conventional fresh food products to our customers, our focus is on growing
our certified organic and certified Fair Trade markets as these are areas we
believe offer the most opportunity for growth and support.





Our
primary go-to-market segments for supplying our products are the grocery
channel, food service distribution, fresh processors, consumer package goods
companies, and the overseas markets focusing on those grocery chains and their
importer partners. We currently supply product to most of these market segments
with overseas markets in Europe and Asia being served.





We were a
development stage company from inception (February 19, 2008) through March
2009.  We have been establishing supplies of organic fresh fruits and
vegetables from several regions globally since April 2009. We have made
significant strides as we have established long-term relationships with growers
in Mexico, USA, Argentina, Peru, and Costa Rica that will help ensure a
continuous year round supply to our customers. We are continuing to expand our
sourcing areas from other Latin America countries as well as from the Asia
continent in 2010 and beyond.





We have
added several sourcing areas that are Fair Trade certified and we have several
projects in line for 2010 that will establish new products grown and packed by
growers who have not had market access prior to the establishment of their
cooperatives. This is the essence of our Company mission of helping improve the
lives of growers and those in their community as well as providing our customers
with this unique product so they can sell to those consumers who want to make a
social and ecological difference.





Based on
2008 data from the Organic Monitor, the global organic food market grew by 13.7%
in 2008 to reach a value of $52 billion.   In 2013, the market is
forecast to have a value of $85.1 billion, an increase of 63.6% since
2008.   The sale of fruit and vegetables accounts for 36% of the
market's value.  Based on 2008 data from FLO (Fair Trade Labeling
Organization), Fair Trade certified sales amounted to approximately $4
billion worldwide, a 22% year-to-year increase. This leaves room for other
innovative organizations like Organic Alliance to develop new solutions and
build a leading position in this young and growing industry.





Development
Stage and Going Concern





We were
still in the development stage at December 31, 2008 and did not realize
any revenue until April 2009. Beginning in April 2009 the Company began
selling conventional and organically grown fruits and vegetables.  We
have a receivables factoring financing facility in place, however we will need
to raise additional capital through private equity placements and, or other
financing means.





The
consolidated financial statements contained in this annual report have been
prepared using accounting principles generally accepted in the United States of
America applicable for a going concern which assumes that we will realize its
assets and discharge its liabilities in the ordinary course of business. As of
December 31, 2008, we had no established source of revenues and had
accumulated losses of $4,949,977 since our inception. Our ability to continue as
a going concern is dependent upon achieving production or sale of goods, our
ability to obtain the necessary financing to meet our obligations and pay our
liabilities arising from normal business operations when they come due and upon
profitable operations. The outcome of these matters cannot be predicted with any
certainty at this time and raise substantial doubt that we will be able to
continue as a going concern.


-2-


Competitive
Differnetiation and Synergy





As the
food industry develops, there is a well-established trend of buyers working to
purchase products closer to product origin and moving past intermediary sellers.
This trend has been strengthened by the global movement toward “knowing where
your food comes from” evidenced by Fair Trade, Organic and Local movements. In
general, the shorter a supply chain is, the more profitable, safe and
sustainable trade becomes.





Several
of the world’s larger trading companies are adept marketers, importers and
distributors but they have historically been unable to work directly with
growers and packers outside of isolated, small-scale projects. To take advantage
of this rapidly evolving market and maintain profitability, traders will need to
migrate their activities closer to the field and execute the following
tactics:





1)
            Develop
      Organic and Fair Trade certified production according to market demand to
      alleviate supply shortages





2)
            Install
      leading edge food-safety, traceability and quality control technology to
      comply with evolving international
standards





3)
            Make
      equity investments in production to increase control, lower costs and
      improve profitability





4)
            Create
      promotional media in producing communities that supermarkets seek to
      communicate value and generate consumer
loyalty





Organic
Alliance, Inc. (OAI) is positioned to be a global leader in working directly
with growers to invest in production, develop certified origins and shorten
supply chains. By executing our grower-direct strategy, OAI supports our
targeted market segments with more certified products, sensible pricing and
informational stories about our growers from the many producing communities in
Latin America, Asia and Africa. OAI’s business model capitalizes on these
emerging trends to create win-win solutions for consumers and the
industry.





Sales
and Marketing




Due to
the continued increase in demand for certified organic and Fair Trade products,
procurement departments in corporations are seeking additional sources of
organic products.  However, the challenge continues to be attaining a
reliable, year round supply for their buying programs, in part due to the
fractionalized nature of the organic farm supply.




We
believe there is strong demand for a company that has a dependable, reliable
source of organic food products production with access to the key market
segments to enter this market.  We believe that offering our products
at reasonable and sensible prices will allow our customers to fulfill their
program needs while increasing store sales volume as a result. Our initial sales
and marketing efforts will be aimed at these primary channels of distribution:
the grocery channel, food service distribution, fresh processors, consumer
produced goods, and the overseas markets focusing on those grocery chains and
their importer partners.





For the
year ended December 31, 2009 our unaudited revenues were approximately $4.5
million.





Government
Regulation




All
organic production is regulated by the United States Department of Agriculture
("USDA") under the 2002 Federal NOP (Title 7 CFR205) which regulates organic
producers and organic handlers. Requirements for organic producers (growers)
are:





Organic
      crops must be grown without the use of:●
            synthetic
      fertilizers;●
            synthetic
      pesticides;●
            sewage
      sludge;●
            genetically
      modified organisms (“GMOs”); or●
            treated
      seeds.Any
      applied materials must be allowed on the National List of Allowed and
      Prohibited Substances of the Organic Materials Review Institute
      (“OMRI”);Must
      use organic seeds if “commercially available”; andMust
      be certified by a USDA accredited certifying organization as complying
      with NOP regulations.





-3-


Intellectual
Property




As of
December 31, 2008, we had no Intellectual Property (IP).  During 2009,
we developed IP in a key area that enables our Company to compete globally. The
Company is dedicated to providing market-guided, sustainability focused
technical support and infrastructure development to small and medium-sized
producers in Latin America. Our work aims to build capacity in producing
communities for increasing production efficiency, human capital, export value
and ability to enter high-value international markets.


Our
market-guided approach leverages global buyer networks to develop projects that
are driven by demand, thus increasing the efficiency and economic viability of
our work.  The Organic Alliance buyer network is complemented by a
committed alliance of NGOs, regional development professionals, production
technicians and certification bodies that allow us to efficiently mobilize
experts in executing leading-edge development solutions.





This
model puts forward a new paradigm for hybrid social enterprise—each entity
acting in its own interest while supporting one another other to reinforce the
overarching goal of sustainable economic development in Latin
America.




Key
Impact Goals:




·
            Increase
      Export Value of Production





·
            Improve
      Competitiveness and Market Access





·
            Capture
      Higher Supply-Chain Value





·
            Develop
      Human Capacity





·
            Diversify
      Income in the Green Economy





·
            Link
      Projects to High-Value Markets





Employees




As of
December 31, 2008 we had three employees, including our two executive
officers.




Where You Can Find More
Information





You are
advised to read this Form 10-K in conjunction with other reports and documents
that we file from time to time with the SEC. In particular, please read our
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we file from
time to time. You may obtain copies of these reports directly from us or from
the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington,
D.C. 20549, and you may obtain information about obtaining access to the
Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC
maintains information for electronic filers at its website
http://www.sec.gov.





ITEM
IA:  RISK FACTORS




Risks
Related to Our Company





Our
inability to contract for organic products with growers and sell the food
products to our customers will reduce or eliminate our revenue.





In order
to generate revenue, we will be required to source organic food products from
growers and sell the food products to our customers.  We are building
an extensive network of suppliers that will mitigate the risk of not having
ample supply to meet our customers’ needs.





Our
products may be subject to recall, exposing us to significant
liabilities.





Our
organic food products may be subject to recall due to the existence of
disease or other conditions in connection with the growing or processing of the
products, which could result in harm to the end user consumer.  Any
such recall or harm to a consumer would subject us to significant financial
liability.  We place a high emphasis on adherence to meeting our food
safety standards from our grower base. We have regular audits performed that
meet or exceed the USDA standards and we work closely with each grower regularly
to ensure compliance.


-4-


We do
carry liability insurance for any food safety event both to cover the Company
against liability as well as covering our major customers through
indemnification on our certificate.





We
have no written agreements with retailers or growers.





We seek
to sell products using purchase orders, and we always generate a purchase order
from our customers with agreed to quality specifications, quantity, and price
prior to packing the product. We will establish written agreements with many of
our suppliers and many of our customers prior to the start of the new
season.





We
have significant competition from a variety of sources, which could reduce our
revenue and any profitability.





We
operate in competitive markets, and our future success will be largely dependent
on our ability to provide quality products and services at competitive prices.
Our competition comes from a variety of sources, including other distributors of
organic products as well as specialty grocery and mass market grocery
distributors.  We cannot assure you that our current or potential
competitors will not provide services comparable or superior to those provided
by us or adapt more quickly than we do to evolving industry trends or changing
market requirements. It is also possible those alliances among competitors may
develop and rapidly acquire significant market share or that certain of our
customers will increase distribution to their own retail facilities. Increased
competition may result in price reductions, reduced gross margins and loss of
market share, any of which could materially adversely affect our business,
financial condition or results of operations.





Our
operations are sensitive to economic downturns, which could reduce our revenue
and any profitability.





The food
industry is sensitive to national and regional economic conditions and the
demand for our products may be adversely affected from time to time by economic
downturns. Diversification in the markets we serve around the world will help
mitigate the affect of economic downturn. Our development into the European and
Asian markets is a result of planned strategy to grow in these markets but also
to mitigate our risk overall.





Our
future operating results are subject to significant fluctuations which could
have a negative effect on our stock price and any analysis of our future
operating results.





Our
future operating results may vary significantly from period to period due
to:





•
            demand
      for organic products;•
            changes
      in our operating expenses;•
            changes
      in customer preferences and changing demands for organic products,
      including levels of enthusiasm for health, fitness and environmental
      issues;•
            fluctuation
      of organic product prices due to competitive pressures;•
            personnel
      changes;•
            supply
      shortages;•
            general
      economic conditions;•
            lack
      of an adequate supply of high-quality agricultural products due to poor
      growing conditions, natural disasters or otherwise; and•
            volatility
      in prices of high-quality agricultural products resulting from poor
      growing conditions, natural disasters or
  otherwise.





Due
to the foregoing factors, we believe that period-to-period comparisons of our
operating results may not necessarily be meaningful and that such comparisons
cannot be relied upon as indicators of future performance.





We
are subject to significant governmental regulation which can increase our costs,
timing of products to market and profitability.





Our
business is highly regulated at the federal, state and local levels and our
products and distribution operations require various licenses, permits and
approvals. In particular:





•
            our
      products are subject to inspection by the U.S. Food and Drug
      Administration;•
            any
      warehouse and distribution facilities we may use will be subject to
      inspection by the U.S. Department of Agriculture and state health
      authorities;•
            the
      U.S. Department of Transportation and the U.S. Federal Highway
      Administration regulate our trucking operations or those of our
      contractors; and•
            our
      products must be certified as organic by the
  USDA.





-5-


The loss
or revocation of any existing licenses, permits, certifications or approvals or
the failure to obtain any additional licenses, permits or approvals in new
jurisdictions where we intend to do business could reduce our revenue, increase
our costs, affect the timing of our products going to market and reduce any
profitability.





We
are dependent for success on Parker Booth our Chief Executive Officer.  Our
inability to retain Mr. Booth’s services would impede our operations and growth
strategy, which would have a negative impact on the business and the value of
your investment.





Our
success is largely dependent on the skills, experience and efforts of Parker
Booth, our Chief Executive Officer.  The loss of Mr. Booth would have
a material adverse effect upon our growth strategy, operations and future
business development, and therefore the value of your investment.  We do
not maintain key man life insurance on any executive officers nor do we have an
employment agreement with Mr. Booth.  Additionally, any failure to attract
and retain qualified employees in the future could also negatively impact our
business strategy.





We will need to raise additional
capital in order to continue our operations, which could dilute the ownership
interests of existing shareholders and cause the issuance of securities with
preferences and privileges superior to our Common Stock.





We will
need to raise additional funds in the future in order to take advantage of
opportunities for sourcing organic food products or for potential
acquisitions.  Given this funding, we do not believe there is a strong
enough risk from international competition as we are building strong
partnerships with our international grower base. If additional funds are raised
through the issuance of equity or convertible debt securities, the percentage
ownership of the current stockholders of the Company will be reduced,
stockholders may experience additional dilution and such securities may have
rights, preferences and privileges senior to those of the Common Stock and may
have covenants which impose restrictions on the Company’s
operations.





Risks
Relating to Our Securities





Insiders have substantial control
over us, and they could delay or prevent a change in our corporate control even
if our other stockholders wanted it to occur.





As of
March 18, 2010, our executive officers, directors and 5% or greater stockholders
own 10,963,416 shares of our Common Stock or approximately 40% of our
outstanding Common Stock. Accordingly, these individuals will be able to control
all matters requiring stockholder approval, including the election of directors
and approval of significant corporate transactions. This could delay or prevent
an outside party from acquiring or merging with us even if our other
stockholders wanted it to occur.





Our
Common Stock is subject to the penny stock regulations and restrictions, which
could impair our liquidity and make trading difficult.





SEC
Rule 15g-9, as amended, establishes the definition of a “penny stock” as
any equity security that has a market price of less than $5.00 per share or with
an exercise price of less than $5.00 per share, subject to a limited number of
exceptions. Our shares are considered to be penny stock. This classification
could severely and adversely affect the market liquidity for our Common
Stock.





For any
transaction involving a penny stock, unless exempt, the penny stock
rules require that a broker or dealer approve a person’s account for
transactions in penny stock and the broker or dealer receive from the investor a
written agreement to the transaction setting forth the identity and quantity of
the penny stock to be purchased. To approve a person’s account for transactions
in penny stock, the broker or dealer must obtain financial information and
investment experience and objectives of the person and make a reasonable
determination that the transactions in penny stock are suitable for that person
and that that person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny
stock.





The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the SEC relating to the penny stock market,
which, in highlight form, sets forth:





·
            the
      basis on which the broker or dealer made the suitability determination,
      and·
            that
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.





Disclosure
also has to be made about the risks of investing in penny stock in both public
offerings and in secondary trading and commission’s payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stock.





Because
of these regulations, broker-dealers may not wish to engage in the
above-referenced necessary paperwork and disclosures and/or may encounter
difficulties in their attempt to sell shares of our Common Stock, which may
affect the ability of selling stockholders or other holders to sell their shares
in any secondary market and have the effect of reducing the level of trading
activity in any secondary market. These additional sales practice and disclosure
requirements could impede the sale of our securities, if and when our securities
become publicly traded. In addition, the liquidity for our securities may
decrease, with a corresponding decrease in the price of our securities. Our
shares, in all probability, will be subject to such penny stock rules for
the foreseeable future and our stockholders will, in all likelihood, find it
difficult to sell their securities.


-6-


The
market price of our Common Stock may be volatile.





The
market price of our Common Stock may be highly volatile, as is the stock market
in general, and the market for Pink Sheets quoted stocks in particular. Some of
the factors that may materially affect the market price of our Common Stock are
beyond our control, such as changes in financial estimates by industry and
securities analysts, announcements made by our competitors or sales of our
Common Stock. These factors may materially adversely affect the market price of
our Common Stock, regardless of our performance.





In
addition, the public stock markets have experienced extreme price and trading
volume volatility. This volatility has significantly affected the market prices
of securities of many companies for reasons frequently unrelated to the
operating performance of the specific companies. These broad market fluctuations
may adversely affect the market price of our Common Stock.





We
do not expect to pay dividends in the near future, and any return on investment
may be limited to the value of our stock.





We do not
anticipate paying any cash dividends on our Common Stock in the foreseeable
future, so any return on investment may be limited to the value of our stock. We
plan to retain any future earnings to finance growth.





Future
sales of our Common Stock may depress our stock price.





Sales of
a substantial number of shares of our Common Stock, including shares registered
hereby, by significant stockholders into the public market could cause a
decrease in the market price of our Common Stock.





Failure
to achieve and maintain effective internal controls in accordance with
Section 404 of the Sarbanes-Oxley Act of 2002 could prevent the Company
from producing reliable financial reports or identifying fraud.  In
addition, shareholders could lose confidence in the Company’s financial
reporting, which could have an adverse effect on its stock price.





Effective
internal controls are necessary for us to provide reliable financial reports and
effectively prevent fraud, and a lack of effective controls could preclude us
from accomplishing these critical functions.  We will be required to
document and test our internal control procedures in order to satisfy the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which
requires annual management assessments of the effectiveness of our internal
controls over financial reporting and a report by our independent
registered public accounting firm addressing these assessments.  We intend
to hire a full time Chief Financial Officer to augment our internal controls
procedures and expand our accounting staff, but there is no guarantee that these
efforts will be adequate.





During
the course of our testing, we may identify deficiencies which we may not be able
to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for
compliance with the requirements of Section 404.  In addition, if we
fail to maintain the adequacy of our internal accounting controls, as such
standards are modified, supplemented or amended from time to time, we may not be
able to ensure that it can conclude on an ongoing basis that we have effective
internal controls over financial reporting in accordance with
Section 404.  Failure to achieve and maintain an effective internal
control environment could cause us to face regulatory action and also cause
investors to lose confidence in our reported financial information, either of
which could have an adverse effect on our stock price.





There is a reduced probability of a
change of control or acquisition of us due to the possible issuance of
additional preferred stock.  This reduced probability could deprive
our investors of the opportunity to otherwise sell our stock in an acquisition
of us by others.





Our
Articles of Incorporation authorize our Board of Directors to issue up to
10,000,000 shares of preferred stock, of which no shares have been
issued.  Our preferred stock is issuable in one or more series and our
Board of Directors has the power to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, liquidation preferences and the
number of shares constituting any series or designation of such series, without
further vote or action by stockholders.  As a result of the existence
of this “blank check” preferred stock, potential acquirers of our Company may
find it more difficult to, or be discouraged from, attempting to effect an
acquisition transaction with, or a change of control of, our Company, thereby
possibly depriving holders of our securities of certain opportunities to sell or
otherwise dispose of such securities at above-market prices pursuant to such
transactions.





Going
Concern Risk





We were
still in the development stage at December 31, 2008 and did not realize
any revenue until April 2009. Beginning in April 2009 the Company began
selling conventional and organically grown fruits and vegetables.  We
have a receivables factoring financing facility in place, however we will need
to raise additional capital through private equity placements and, or other
financing means.





-7-


The
consolidated financial statements contained in this annual report have been
prepared using accounting principles generally accepted in the United States of
America applicable for a going concern which assumes that we will realize its
assets and discharge its liabilities in the ordinary course of business. As of
December 31, 2008, we had no established source of revenues and had
accumulated losses of $4,949,977 since our inception. Our ability to continue as
a going concern is dependent upon achieving production or sale of goods, our
ability to obtain the necessary financing to meet our obligations and pay our
liabilities arising from normal business operations when they come due and upon
profitable operations. The outcome of these matters cannot be predicted with any
certainty at this time and raise substantial doubt that we will be able to
continue as a going concern.





ITEM
1B. UNRESOLVED STAFF COMMENTS





Not
applicable to small business filers.





ITEM
2. DESCRIPTION OF PROPERTY




We do not
own any real property.  Beginning in December 2008, the Company leased
approximately 1250 square feet of office space located at 401 Monterey Street,
Suite 202, Salinas, CA 93901, for approximately $2,300 per month under a one
year agreement that expired on December 31, 2009.  The Company is
currently paying rent on a month to month basis.





ITEM
3. LEGAL PROCEEDINGS




In the
normal course of business, the Company is, and in the future may be, subject to
various disputes, claims, lawsuits, and administrative proceedings arising in
the ordinary course of business with respect to commercial, product liability,
employment, and other matters, which could involve substantial amounts of
damages. In the opinion of management, any liability related to any such known
proceedings would not have a material adverse effect on the business or
financial condition of the Company.  Additionally, from time to time, we
may pursue litigation against third parties to enforce or protect our rights
under our trademarks, trade secrets and our intellectual property rights
generally.




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




No
matters were submitted to a vote of security holders since inception on February
19, 2008 through the date of this Form 10-K.




PART II




ITEM
5. MARKET FOR COMMON STOCK AND RELATED SHAREHOLDER MATTERS.




Market
Information




Our Common Stock is currently quoted
for sale on Pink Sheets of the National Quotation Service under the symbol
ORGC.  The high and low closing prices of our common stock since April 29,
2008 are set forth below. These closing prices do not reflect retail mark-up,
markdown or commissions.




High
            
            
            Low2008Second
      quarter
            
            $
            1.01
            
            
            $
            0.40Third
      quarter
            
            $
            1.06
            
            
            $
            0.51Fourth
      quarter
            
            $
            0.70
            
            
            $
            0.102009First
      quarter
            
            $
            0.29
            
            
            $
            0.06Second
      quarter
            
            $
            0.30
            
            
            $
            0.09Third
      quarter
            
            $
            0.19
            
            
            $
            0.05Fourth
      quarter
            
            $
            0.14
            
            
            $
            0.05







Holders




As of
March 18, 2010, we had approximately 550 stockholders of record of our common
stock.  None of our preferred stock was outstanding.




-8-


Dividends




The
Company has not paid any dividends since its inception. The Company currently
intends to retain any earnings for use in its business, and therefore does not
anticipate paying dividends in the foreseeable future.




Recent
Sales of Securities




Since
February 19, 2008, the Company has issued the following shares of its
securities:




All of
the securities set forth below, except as otherwise indicated, were issued by us
pursuant to Section 4(2) of the Securities Act of 1933 as amended.
Unless indicated, all such shares issued contained a restrictive legend
(unregistered) and the holders confirmed that they were acquiring the shares for
investment and without intent to distribute the shares. All of the purchasers
were friends or business associates of our management, had access to all
information related to us, were experienced in making speculative investments,
understood the risks associated with investments, and could afford a loss of the
entire investment.




All
Organic Texas common shares issued prior to April 29, 2008 for services provided
are retroactively shown below based on the ratio of 0.8435 NB Design common
share issued for one Organic Texas common share.  All Organic Texas
common shares issued prior to April 29, 2008 for cash are shown below based on
one NB Design common share issued for one Organic Texas common
share.  All disclosures of fair value per share for issuances prior to
April 29, 2008 represent the fair value of Organic Texas common stock issued on
that date.




(i)
            During
      March and April 2008 we sold 601,667 shares of our unregistered common
      stock to nine investors at the fair value of $0.30 per
    share.




(ii)
            In
      March 2008, officers, directors and related parties were issued 4,217,500
      unregistered shares of the Company’s common stock for director, officer
      and administrative services compensation.  These shares were
      valued at $0.30 per share.




(iii)
            On
      May 8, 2008, the Company sold 16,250 registered shares of the Company’s
      common stock for $0.40 to an investor. On the same date, the Company sold
      2,483,750 registered shares of the Company’s common stock for $0.40 per
      share to an investor, for a 90 day promissory note that bore interest at
      8% per annum on any unpaid balance.  The unpaid balance of
      $750,630 including accrued interest of $22,657 was deemed uncollectable
      and written off at December 31,
  2008.




The
shares above were issued pursuant to the provisions of Rule 504 of
Regulation D promulgated under the Securities Act.




(iv)
            During
      2008, we issued 5,112,772 unregistered shares of the Company’s common
      stock to a group of 61 consultants for investor relations, public
      relations, legal, web design, accounting, medical advisory and other
      administrative services.  These shares were valued from $0.30 to
      $1.03 per share.




(v)
            As
      a condition to close the April 29, 2008 Exchange Agreement, the Company’s
      1,000,028 of Class A, Class B, Class C, Class D, Class E and Class F
      warrants that were exercisable at $2.00, $2.00, $4.00, $4.00, $6.00 and
      $6.00, respectively, at any time until December 31, 2008, were
      subsequently reduced to $1.00 per share for all classes of Warrants and
      the expiration date was extended to December 31,
    2011.




(vi)
            During
      2009, officers, directors and related parties were issued 8,228,000
      unregistered shares of the Company’s common stock for director, officer
      and administrative services compensation.  These shares were
      valued from $0.08 to $0.22 per
share




(vii)
            During
      2009, we issued 466,500 unregistered share of the Company’s common stock
      to a group of five consultants for investor relations, medical advisory
      for a financing incentive.  These shares were valued from $0.08
      to $0.09 per share.




(viii)
            During
      January 2009 and March 2009, the Company exchanged a total of 1,747,071
      shares of our registered common stock from a group of investors and
      related parties for two shares of the Company’s unregistered common stock
      (3,493,476 shares).  The registered shares were transferred to
      group of financing partners in an unsuccessful attempt to obtain
      capital.  As part of this transaction, an additional 2,000,000
      unregistered shares of the Company’s common stock were transferred to this
      group in January 2009.




Dividends





We may
never pay any dividends to our shareholders. We did not declare any dividends
for the year ended December 31, 2008. Our Board of Directors does not
intend to distribute dividends in the near future. The declaration, payment and
amount of any future dividends will be made at the discretion of the Board of
Directors, and will depend upon, among other things, the results of our
operations, cash flows and financial condition, operating and capital
requirements, and other factors as the Board of Directors considers relevant.
There is no assurance that future dividends will be paid, and if dividends are
paid, there is no assurance with respect to the amount of any such
dividend.





-9-


Transfer
Agent





Our
Transfer Agent and Registrar for the common stock is Corporate Stock Transfer,
3200 Cherry Creek Drive South, Suite 430, Denver. CO, 80209





ITEM
6.  SELECTED FINANCIAL DATA





Not
required under Regulation S-K for “smaller reporting companies”.


ITEM
7:  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION




The following discussion includes
forward looking statements and uncertainties, including plans, objectives,
goals, strategies, financial projections as well as known and unknown
uncertainties. The actual results of our future performance may differ
materially from the results anticipated in these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievement.Forward-looking statements speak
only as of the date the statement was made. We do not undertake and specifically
decline any obligation to update any forward-looking
statements.




Overview




Organic
Alliance, Inc. brings together a unique alliance of respected growers, packers
and shippers from around the world in order to source, market and distribute
best-quality certified-organic, conventional, and certified Fair Trade food
products.  Crops are grown, packed and shipped under Organic Alliance
supervision using advanced quality, food safety and sustainable agriculture
practices. In the case of our certified Fair Trade program, we work directly
with the growers to develop the structure and standards to be certified under
the Fair Trade Labeling Organization (FLO) standards. The Company’s Approved
OriginsTM Program delivers not only on-demand traceability through a partnership
with Yottamark’s Harvestmark technology, but transparency in all
business-critical practices, including leading-edge food safety practices,
continuous improvement and work force fairness.





While we
offer conventional fresh food products to our customers, our focus is on growing
our certified organic and certified Fair Trade markets as these are areas we
believe offer the most opportunity for growth and support.





Our
primary go-to-market segments for supplying our products are the grocery
channel, food service distribution, fresh processors, CPG, and the overseas
markets focusing on those grocery chains and their importer partners. We
currently supply product to these market segments with overseas markets in
Europe and Asia being served.





Since we
began marketing products in June 2009, we have been establishing supplies of
organic fresh fruits and vegetables from several regions globally. We have made
significant strides as we have established long-term relationships with growers
in Mexico, USA, Argentina, Peru, and Costa Rica that will help ensure a
continuous year round supply to our customers. We are continuing to expand our
sourcing areas from other Latin America countries as well as from the Asia
continent in 2010 and beyond.





We have
added several sourcing areas that are Fair Trade certified and we have several
projects in line for 2010 that will establish new products grown and packed by
growers who have not had market access prior to the establishment of their
cooperatives. This is the essence of our Company mission of helping improve the
lives of growers and those in their community as well as providing our customers
with this unique product so they can sell to those consumers who want to make a
social and ecological difference.





The
global marketplace for Organic and Fair Trade continues to expand past $50
Billion and $4.1 Billion respectively at a sustained 20%+ annual growth rate.
This leaves room for other innovative organizations to develop new solutions and
build a leading position in this young and growing industry.





NB Design
& Licensing, Inc., (“NB Design”) was organized in September
2001.  The former parent, New Bridge Products, Inc., was
originally incorporated in August 1995 as a manufacturer of minivans and filed a
petition in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. Its Plan of
Reorganization was approved by the U.S. Bankruptcy Court for the District of
Arizona in September 2002 NB Design was discharged from bankruptcy in October
2002.   NB Design was inactive from October 2002 to April 29,
2008.





Organic
Alliance Inc., a Texas corporation, (“Organic Texas”) was organized on February
19, 2008 to sell organically grown fruits and vegetables.





On April
29, 2008, NB Design a Nevada corporation, acquired all 10,916,917 issued and
outstanding shares of common stock and assumed all liabilities of Organic Texas
for 9,299,972 shares of the NB Design’s shares of common stock. Organic Texas
thereupon became a wholly owned subsidiary of NB Design. The business of Organic
Texas is the only business of NB Design.





-10-


The
acquisition of Organic Texas by NB Design on April 29, 2008 was accounted for as
a reverse capitalization in accordance with the SEC’s Division of Corporate
Financial Reporting manual Topic 12 “Reverse Acquisition and Reverse
Capitalization”. The reverse capitalization was the acquisition of a private
operating company (Organic Texas) into a non-operating public shell corporation
with nominal net assets and as such is treated as a capital transaction, rather
than a business combination. As a result no goodwill is recorded.  In
this situation, NB Design is the legal acquirer because it issued its equity
interests, and Organic Texas is the legal acquiree because its equity interests
were acquired.  However, NB Design is the acquiree and Organic Texas
as the acquirer for accounting purposes.  Organic Texas is treated as
the continuing reporting entity that acquired the registrant, NB
Design.  The pre-acquisition financial statements of Organic Texas are
treated as the historical financial statements of the consolidated
companies.  Pursuant to the Securities Exchange, NB Design issued 9,299,972
shares of our Common Stock for all of the issued and outstanding Common Stock of
Organic Texas and assumed all assets and liabilities. NB Design also had
outstanding 1,000,028 each of Class A, Class B, Class C, Class D, Class E and
Class F warrants prior to April 29, 2008.  The warrants were
exercisable at $2.00, $2.00, $4.00, $4.00, $6.00 and $6.00, respectively, at any
time until December 31, 2008.  As a condition to close the Exchange
Agreement, the exercise prices of the warrants were subsequently reduced to
$1.00 per share for all classes of Warrants and the expiration date was extended
to December 31, 2011.  In exchange for the exercise price reduction,
the holders of at least 80% of the Warrants agreed to a call provision by us on
10 days notice to them if (i) the bid price of our common stock is quoted at
$1.25 per share or higher and the average share volume exceeds 300,000 shares
for at least one day, and (ii) the shares underlying the warrants are subject to
a current registration statement on file with the Securities and Exchange
Commission (SEC).  Both the share price and volume must be met on the
same day for the call provision to be effective.   As of March
18, 2010 the common shares are unregistered with the SEC.





We
completed the securities exchange in order to merge with an operating company
and thereby provide our shareholders with the potential to realize liquidity in
their stockholdings.





On June
2, 2008, the name NB Design was changed to Organic Alliance, Inc.  On
August 29, 2008, the name of Organic Texas was changed to Organic Texas,
Inc.




Critical
Accounting Estimates and Policies




Revenue
Recognition




Starting
in April 2009, our produce are sold to distributors and retailers (collectively
the “customers”) for cash or on credit terms which are established in accordance
with local and industry practices and typically require payment within 10 to 30
days of delivery. Revenue is recognized upon receipt of the produce by our
customers, in accordance with written sales terms, net of provisions for
discounts and allowances.




Share-Based
Compensation





The
Company expenses the cost of employee services received in exchange for an award
of equity instruments based on the grant date fair value of such instruments.
The Company uses the Black-Sholes model to calculate the fair value of the
equity instrument on the grant date.





Deferred
Tax Assets





In
assessing the realization of deferred tax assets, the Company considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. As a result of uncertainty of achieving sufficient taxable
income in the future a full valuation allowance against its deferred tax asset
has been recorded. If these estimates and assumptions change in the future, the
Company may be required to reverse the valuation allowance against deferred tax
assets, which could result in additional income tax income.





Allowance for Doubtful
Accounts





As of
December 31, 2008 we did not have any trade receivables. Once operations began
in April 2009, we maintained an allowance for doubtful accounts for estimated
losses resulting from the inability of our customers to make required payments.
A considerable amount of judgment is required in assessing the ultimate
realization of these receivables, including the current credit-worthiness of
each customer. We will record an allowance for doubtful account should the
financial condition of our customers deteriorate, resulting in an impairment of
their ability to make payments.





Results
of Operations




Results
of operations for the period from inception (February 19, 2008) to December 31,
2008




No
revenue was recorded for the period from inception (February 19, 2008) to
December 31, 2008.





General
and administrative expenses were $4,239,484 for the period from inception
(February 19, 2008) to December 31, 2008. General and administrative expenses
related primarily to legal, accounting, investor relations, public relations,
web development, stock based compensation and administrative costs. These
expenses included 9,330,272 shares of common stock issued to consultants to
perform accounting, legal, investor relations, public relations, administration
and medical advisory services which made up $3,670,672 of the
expenses.





-11-


Interest
expense of $770 was accrued on promissory notes payable to related
parties.





A Note
Receivable for $750,630 including accrued interest of $22,657 was deemed
uncollectable and written off.





Net loss
was $4,949,977 or $0.41 basic and basic and diluted loss per share for the
period from inception (February 19, 2008) to December 31, 2008.





Liquidity
and Capital Resources




We were a
start-up, development stage Company at December 31, 2008 and did not begin
generating revenue from our business operations until April 2009. Our operations
to date have generated substantial losses that have been funded through the
issuance of common stock and loans from related parties. We will require
additional sources of outside capital to continue our operations. We expect that
our primarily source of cash in the future will be from the issuance of common
stock, loans, accounts receivable factoring and a line of credit.





Our
financial statements contained within have been prepared on a going concern
basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business. For the period
from inception (February 19, 2008) to December 31, 2008, we reported a net loss
of $4,949,977.  Our ability to continue as a going concern is
dependent upon achieving sales, profitability and our ability to obtain the
necessary financing to meet our obligations and pay our liabilities arising from
normal business operations when they come due. The outcome of these matters
cannot be predicted with any certainty at this time and raise substantial doubt
that we will be able to continue as a going concern. The financial statements
contained in this Form 10-K do not include any adjustments to the amounts and
classification of assets and liabilities that may be necessary should we be
unable to continue as a going concern. We anticipate that additional funding may
be generated from the sale of common shares and/or debt with an equity feature
and from asset based financing or factoring.





At
December 31, 2008, we had $141,898 in accounts payable, $82,990 in other
accrued liabilities for payroll and consulting fees and $104,270 in short term
notes payable plus accrued interest to related parties.





For
the period from inception (February 19, 2008) to December 31, 2008 we sold
617,917 shares of our common stock for $187,000





We also
sold 2,483,750 shares of our common stock for $0.40 per share to an investor for
a 90 day promissory note that bore interest at 8% per annum on any unpaid
balance.  The unpaid balance of $750,630 including accrued interest of
$22,657 was deemed uncollectable and written off as of December 31,
2008.





In
September 2008, Earnest Mathis, a related party, advanced the Company $15,000.
The advance is evidenced by a promissory note bearing interest at 8% per
annum.  The unpaid balance including accrued interest was $15,442 at
December 31, 2008.





In
November and December 2008, Parker Booth, President, advanced the Company
$88,500. The advance is evidenced by four promissory notes bearing interest at
5% per annum.  The unpaid balance including accrued interest was
$88,828 at December 31, 2008.





We have
limited funding available for marketing and will rely solely on our ability to
raise debt or equity funds in the immediate future.





Our
contractual obligation consists of an operating lease for our office space in
Salinas California that expired on December 31, 2009 and current notes payable
to an officer and a related party.  Our total obligation was $26,760
for the office space and $104,270 for the notes at December 31,
2008.  As of the date of this Form 10-K, we are paying rent on a month
to month basis for our office space and the notes payable have not been paid
off.





Net
Cash Flows




Net cash
used in operating activities period from inception (February 19, 2008) to
December 31, 2008 was $325,777, primarily attributable to legal, accounting and
other general and administrative expenses discussed above.





Cash used
in investing activities of $30,000 is our deposit made in 2008 for our purchase
of the AvacodoMan Brand and related software system.  Our purchase of
these assets closed on January 9, 2009.





Net cash
provided by financing activities was $356,027 which was made up of $556,027 from
the sale of 617,917 shares of our common stock for $187,000, $103,500 from
related party loans, $265,527 principal payments on a note receivable to
purchase 2,483,750 shares of common stock and $200,000 was used to purchase and
retire 500,000 shares of our common stock as part of the April 29, 2008 Exchange
Agreement.





-12-


At
December 31, 2008, we had 675,000 stock options and 6,000,128 common stock
purchase warrants outstanding. The outstanding stock options have a weighted
average exercise price of $0.51 per share. The outstanding warrants have a
weighted average exercise price of $1 per share. Accordingly, at December 31,
2008, the outstanding options and warrants represented a total of 6,675,128
shares issuable for a maximum of $6,344,378 if these options and warrants were
exercised in full. The exercise of these options and warrants is at the
discretion of the holder while the holders of at least 80% of the Warrants
agreed to a call provision by us on 10 days’ notice to them if (i) the bid price
of our common stock is quoted at $1.25 per share or higher and the average share
volume exceeds 300,000 shares for at least one day, and (ii) the shares
underlying the warrants are subject to a current registration statement on file
with the SEC. The 6,000,128 warrants have not been registered with the SEC as of
the date of this Form 10-K.  There is no assurance that any of these
options or any additional warrants will be exercised.





ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not
applicable to smaller reporting companies.





ITEM
8. FINANCIAL STATEMENTS




The
information required by this Item 8 is incorporated by reference to the Index to
Consolidated Financial Statements beginning at page F-1 at the end of this Form
10-K.




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




On
November 5, 2009, the Company notified Weaver & Martin, LLC
(“W&M”) that they would be dismissed effective immediately as the
Company’s independent registered public accounting firm, as reported on Current
Report 8-K dated November 30, 2009.   This action was approved by our
Board of Directors. On November 30, 2009, the Company’s Board of Directors
appointed MHM Mahoney Cohen CPAs as its independent registered accounting firm,
detailed as follows.





The
reports of W&M on the consolidated financial statements of the Company and
its subsidiary as of and for the years ended December 31, 2006 and December 31,
2007 did not contain an adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope, or accounting principle
with the exception of the following “going concern” paragraph:





“The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses from operations and is
dependent upon the continued sale of its securities or obtaining debt financing
for funds to meet its cash requirements. These factors raise substantial doubt
about the Company’s ability to continue as a going concern.  The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.





During
the Company’s two most recent fiscal years ended December 31, 2006 and December
31, 2007 and through November 5, 2009, there were no disagreements with W&M
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to W&M satisfaction, would have caused W&M to make reference thereto in
its reports on the Company’s financial statements for such years.





The
Company has provided W&M with a copy of the Form 8-K dated November 30, 2009
prior to its filing with the SEC to which W&M furnished a letter addressed
to the SEC stating that it agreed with the statements made above.





On
November 30, 2009, the Company’s Board of Directors engaged MHM Mahoney Cohen
CPAs to serve as the Company’s principal independent registered public
accounting firm for the year ending December 31, 2008.





ITEM 9A. CONTROLS AND
PROCEDURES




Disclosure
Controls and Procedures





The
Company's management evaluated, with the participation of its Chief Executive
Officer/Chief Financial Officer (“CEO”), the effectiveness of the
design/operation of its disclosure controls and procedures (as defined in Rules
13a-15(c) and 15d-15(c) under the Securities Exchange Act of 1934, as amended
(“Exchange Act”)) as of December 31, 2008.





Disclosure
controls and procedures refer to controls and other procedures designed to
ensure that information required to be disclosed in the reports we file or
submit under the Exchange Act, is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the SEC and that
such information is accumulated and communicated to our management, including
our chief executive officer and chief financial officer, as appropriate, to
allow timely decisions regarding required disclosure. In designing and
evaluating our disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management is required to apply its judgment in evaluating and implementing
possible controls and procedures.





-13-


Management
conducted its evaluation of disclosure controls and procedures under the
supervision of our principal executive officer.  Based on that
evaluation, management concluded that our financial disclosure controls and
procedures were not effective related to the preparation of the 10-K filing as
of December 31, 2008.





The
controls designed were adequate for financial disclosures required for the
preparation of the 10-K filing; however due to lack of resources in the
company’s accounting department the controls were not operating effectively. The
remediation plan for improving the effectiveness over financial disclosure
controls, which caused the material weakness over financial disclosures required
in the 10-K, include the creation of a financial disclosures roll-forward model
in accordance with the disclosures contained in the audited 10-K
report.  This model will be maintained and updated by
Company staff and management as new business transactions require additional
financial disclosures. As the Company obtains additional  resources
these financial disclosures will be reviewed by an outside financial disclosure
expert for completeness and accuracy earlier in the financial statement closing
process cycle in order to help ensure completeness and accuracy for reporting
financial disclosures.  We intend to hire a full time Chief Financial
Officer to augment our internal controls procedures and expand our accounting
staff.





Management’s
Annual Report on Internal Control Over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is a
set of processes designed by, or under the supervision of, a company’s principal
executive and principal financial officers, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures
that:





·
            pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect our transactions and dispositions of our
      assets;





·
            provide
      reasonable assurance that our transactions are recorded as necessary to
      permit preparation of our financial statements in accordance with
      generally accepted accounting principals, and that receipts and
      expenditures of the Company are being made only in accordance with
      authorizations of our management and directors;
  and





·
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statement.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  It should be noted that any system
of internal control, however well designed and operated, can provide only
reasonable, and not absolute, assurance that the objectives of the system will
be met.  Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.





Under the
supervision and with the participation of our management, including our Chief
Executive, we conducted an assessment of the effectiveness of our internal
control over financial reporting based on criteria established in “Internal
Control-Integrated Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), as of December 31,
2008.





A
material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of annual or interim financial statements will not be prevented or
detected.  In connection with the assessment described above,
management identified the following control deficiency that represents material
weaknesses at December 31, 2008:





·
            Due
      to the limited number of Company personnel, a lack of segregation of
      duties exists.   An essential part of internal control is
      for certain procedures to be properly segregated and the results of their
      performance are adequately reviewed.  This is normally
      accomplished by assigning duties so that no one person handles a
      transaction from beginning to end and incompatible duties between
      functions are not handled by the same
person.





As a
result of this material weakness described above, management has concluded that,
as of December 31, 2008, our internal control over financial reporting was not
effective based on the criteria in “Internal Control-Integrated Framework”
issued by COSO.   We intend to hire a full time Chief Financial
Officer to augment our internal controls procedures and expand our accounting
staff.  We intend to initiate measures to remediate and refine our
internal controls to address this identified material weakness as the Company
grows and we obtain a stronger cash position that would justify additional
expenditures.


-14-


Changes
in internal control over financial reporting





Based on
the evaluation of our management as required by paragraph (d) of Rule 13a-15(f)
or 15d-15(f) under the SEC Act of 1934 we believe that there were no changes in
our internal control over financial reporting that occurred during our last
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.





Auditor
Attestation





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 rules of the Securities and Exchange
Commission that permit the company to provide only management’s report in this
annual report.





ITEM
9B. OTHER INFORMATION




None.




PART
III




ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, KEY EMPLOYEESS AND CORPORATE GOVERNANCE




The
names, ages and positions of our directors and executive officers are as
follows:





Name
      of Director
            
            Age
            
            Position(s) with
      the Company
            
            Director/Officer
      SinceThomas
      Morrison
            
            60
            
            Chairman
      of the Board of Directors
            
            2008Parker
      Booth
            
            53
            
            Chief
      Executive Officer, Chief Financial Officer
            
            2008James
      Haworth
            
            46
            
            Director
            
            2008Alicia
      Smith Kriese
            
            44
            
            Director
            
            2008Dr.
      Corey Ruth
            
            52
            
            Director
            
            2009Michael
      Rosenthal
            
            65
            
            Director
            
            2009Mark
      Klein
            
            35
            
            Director
            
            2009





There is
no family relationship between any of our directors or executive
officers.





Thomas
Morrison – Chairman of the Board of Directors





Mr.
Morrison has over 39 years experience in a wide range of consumer goods
industries and corporate farming with CEO/executive level general management and
consulting assignments within large public companies (P&G and Pepsi) and
private companies. He has held senior leadership positions in the following
industries: packaged goods; corporate farming; investment banking; and consumer
and technology. From November 1988 to March 1990, he was the Chief Executive
Officer of Superior Farming Company, which operated a leading organic farm. From
April 1990 to February 1992, he was the President, Chief Executive Officer,
Board Member and part owner of Pacific Agriculture Holdings, a $40 million
farming and marketing company.  In April 1992 he formed Morrison and
Wilson Recycling, Inc., a development and marketing company.  In
February 1995 he joined Conwaste Partners as a partner and helped sell the
company to Browning-Ferris Industries. From August 1997 to the present, Mr.
Morrison has been a partner in the investment banking firm of Morrison Partners,
LLC.  The firm specializes in packaged/consumer goods, retail grocery
and Internet mergers and acquisitions. Mr. Morrison currently devotes 100 %
his time to the Company.





Parker
Booth – Chief Executive Officer, Chief Financial Officer and
Director





Mr. Booth
has over 30 years of sales and operation experience in the fresh foods and
international transportation industries. From May 2007 to November 2008 he was
president of Ace Tomato and Delta PrePack, two companies that farm, ship, repack
and market fresh fruits and vegetables. Prior to running Ace Tomato and Delta
PrePack, from August 2000 to May 2007 he was employed by Fresh Express, most
recently there as Vice President Food Service Division. In this position he
was responsible for overseeing and directing the company’s foodservice business,
which included managing the sales division’s growth and formulating long-range
strategic sales plans. Mr. Booth has extensive international business and sales
experience as a result of his work in Asia, Europe and South America when he was
employed by TransFresh Corp and where he was responsible for developing and
expanding markets for the use of controlled atmosphere technology. This
technology is used in the shipping industry today for the worldwide,
long-distance, ocean transport of perishable commodities such as fresh fruits
and vegetables.


-15-


James
Haworth – Director





On March
5, 2009, Mr. Haworth resigned as Director of the Company.





Alicia
Smith Kriese – Director





Ms.
Kriese spent 18 years from 1988 until 2005 with Austin-based advertising agency
GSD&M (an Omnicom Company) as executive vice president, where she led the
development of national brand strategies, corporate messaging and customer
marketing campaigns for Wal-Mart Stores Inc. Since 2005 she has been the
president of Perspectives, an Austin-based marketing consulting
firm.





Dr.
Corey Ruth – Director





On March
11, 2010, Dr. Ruth resigned as Director of the Company.





Michael
Rosenthal – Director





On August
10, 2009, Michael Rosenthal joined our Board of Directors.  Mr.
Rosenthal has served since 1986 as Chairman and President of M.J. Rosenthal and
Associates, Inc., and investment and consulting firm. Mr. Rosenthal has been
Chairman of Skins, Inc., since 2005, and Chairman and CEO of Bill Blass New
York, a high-end manufacturer of men's and women's clothing, from January 2006
through November 2007, and Chairman through November 2008. From 1984 to 1986,
Mr. Rosenthal served as a partner and a Managing Director of Wesray Capital
Corp, an investment company, and prior to that was Senior Vice President and
Managing Director of Mergers and Acquisitions Department of Donaldson, Lufkin,
and Jenrette, Inc., an investment banking firm. Mr. Rosenthal has also served as
Chairman, a director or Chief Operating Officer to a number of other companies
including Wilson Sporting Goods, Northwestern Steel & Wire Company, Western
Auto Supply Company and Star Corrugated Box Company, Inc.





Mark
Klein – Director





On August
10, 2009, Mark Klein joined our Board of Directors.  Mr. Klein began
working on the business concept behind the predecessor of Skins Footwear Inc. in
2002 and was appointed President and Chief Executive Officer of Skins
Footwear Inc. on May 18, 2004. He has served in this capacity of President and
CEO of both Skins Inc. and Skins Footwear inc. from 2004 to Present. From
2001, Mr. Klein served as the Sales Director for ICQ Mobile, the mobile instant
messaging division of AOL Time Warner. From 1999 to 2001, he was a
senior marketing and sales executive for both Comverse Network Systems (CMVT)
and Oraios.com, where he directed, created and implemented sales and marketing
initiatives.





Board
of Directors and Committees





Board
Meetings





During
calendar 2008, the Board of Directors of NB Design held two meetings prior to
acquisition on April 29, 2008. Subsequent to April 29, 2008, the Board of
Directors of the Company held one meeting. Each director attended meetings of
the Board of Directors. We expect each of our directors to attend our Annual
Meeting every year, unless extenuating circumstances prevent their
attendance.





Committees





Currently
we have no board committees. Our board acts as our Audit, Compensation and
Nominating and Governance Committee although we intend to appoint such
committees in the future comprised of a majority of members who will be
independent directors.





Director
Compensation





We have
not paid our directors fees for attending any meetings of our Board of
Directors. We reimburse each director for reasonable travel expenses related to
such director’s attendance at Board of Directors’ meetings. Our directors were
given stock for joining the Company. See “Executive Compensation”
below.





Director
Independence





As the
Company’s common stock is traded using Pink Sheets and not listed on one of the
national securities exchanges, it is not subject to any director independence
requirements.





Section
16(a) Beneficial Ownership Reporting Compliance




Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our officers
and directors and persons who beneficially own more than 10% of our common stock
to file with the SEC initial reports of ownership and reports of changes in
ownership of our common stock. Based solely upon our review of copies of such
forms we have received, and other information available to us, to the best of
our knowledge:


-16-


Thomas
Morrison, Chief Executive Officer, Chief Financial Officer (Principal Accounting
Officer) and Director, filed his initial Form 3 for 3,765,250 shares late, on
March 24, 2009




Parker
Booth, President, filed his initial Form 3 for 645,000 shares late on March 25,
2009.  We have not filed a Form 4 for Mr. Booth for the additional
1,500,000 shares he received from the Company in June 2009.  We filed
a Form 5 for these shares on March 10, 2010.




James
Haworth, Director, has not filed a Form 3 for 843,500 shares received from the
Company in March 2008.  We filed a Form 3 for these shares on
March 18, 2010.




Alicia
Smith Kriese, Director, filed her initial Form 3 for 843,500 shares late on
March 20, 2009. We have not filed a Form 4 for Ms. Kriese for the additional
231,000 shares she received from the Company in September 2009.  We
filed a Form 5 for these shares on March 9, 2010




Code
of Ethics




The
Company has not adopted a Code of Ethics policy. The Company is in the process
of establishing such policy.





ITEM 11.  EXECUTIVE
COMPENSATION




The
following table sets forth information concerning the compensation for the
fiscal year ended December 31, 2008 of the principal executive officer,
principal financial officer, in addition to, as applicable, our three most
highly compensated officers whose annual compensation exceeded $100,000, and up
to two additional individuals for whom disclosure would have been required but
for the fact that the individual was not serving as an executive officer of the
registrant at the end of the last fiscal year (the “Named Executive
Officers”).





2008
SUMMARY COMPENSATION TABLE





Name
      and Principal Position
            
            Year
            
            Salary ($)
            
            
            Bonus ($)
            
            
            Stock
              Awards
              ($)
            
            
            Option
              Awards
              ($)
            
            
            Non-Equity
              Incentive
      Plan
              Compensation
              ($)
            
            
            Change
      in
              Pension
              Value
      and
              Nonqualified
              Deferred
              Compensation
              Earnings
              ($)
            
            
            All
      Other
              Compensation
              ($)
            
            
            Total
              ($)Thomas
      Morrison
              Chief
      Executive Officer, Chief 2008 Financial Officer &
    Director2008
            
            
            -
            
            
            
            -
            
            
            
            450,000
            (1)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            450,000Parker
      Booth, President (2)2008
            
            
            37,500
            
            
            
            -
            
            
            
            
            
            
            
            100,230
            (3)
            
            
            -
            
            
            
            -
            
            
            
            1,350
            (4)
            
            
            139,080James
      Haworth, Director2008
            
            
            
            
            
            
            -
            
            
            
            300,000
            (5)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            300,000Alicia
      Smith Kriese, Director2008
            
            
            
            
            
            
            -
            
            
            
            300,000
            (6)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            300,000William
      Gallagher, Consultant2008
            
            
            
            
            
            
            -
            
            
            
            450,000
            (7)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            37,500
            
            
            
            487,500





_____________________________


(1)
            Value
      of 1,265,250 shares of the Company’s common stock upon joining the
      Company.(2)
            Mr.
      Booth became our President on November 15,
2008.


(3)
            Value
      of 675,000 stock options for shares of the Company’s common
      stock.(4)
            Relates
      to automobile benefits


(5)
            Value
      of 843,500 shares of the Company’s common stock.(6)
            Value
      843,500 shares of the Company’s common stock.(7)
            Value
      of 1,265,250 shares of the Company’s common stock upon joining the
      Company





Only
Mr. Booth and Mr. Gallagher have a formal employment or consulting
agreement.


-17-


2008
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE





Option
      Awards
            Stock
      AwardsNumber
      of
              Securities
              Underlying
              Unexercised
              Options
              (#)
            Number
      of
              Securities
              Underlying
              Unexercised
              Options
              (#)
            Equity
              Incentive
              Plan Awards:
              Number
      of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            Option
              Exercise
              Price
              ($)
            Option
              Expiration
              Date
            Number of
              Shares
      or
              Units
      of
              Stock That
              Have
      Not
              Vested
              (#)
            Market
              Value of
              Shares or
              Units
      of
              Stock That
              Have
      Not
              Vested
              ($)
            Equity Incentive
              Plan
      Awards:
              Number
      of
              Unearned
              Shares,
      Units
              or
      Other
              Rights
      That
              Have
      Not
              Vested
              (#)
            Equity
              Incentive
              Plan Awards:
              Market
      or
              Payout
      Value
              of
      Unearned
              Shares,
      Units
              or
      Other
              Rights
      That
              Have
      Not
              Vested
              ($)Name
            Exercisable
            UnexercisableParker
      Booth,
              President
      (1)
            -
            675,000
            -
            0.51
            September
      30, 2013
            -
            -
            -
            -





_________________


(1) Mr.
Booth became our President on November 15, 2008.





Employment/Consulting
      Agreements




On July
1, 2008, we executed a 16 month consulting agreement with William J. Gallagher
to provide financial advisory, investor relations and certain administrative
services for $6,250 per month. We accrued consulting compensation for Mr.
Gallagher beginning on July 1, 2008.




On
October 1, 2008 we executed an employment contract with Mr. Booth as our Company
President.  Mr. Booth’s employment contract was effective on November 15,
2008 and provides for an annual salary of $300,000, participation in our annual
performance-based incentive plan (PIP) that could increase the compensation up
to 50% based on meeting projected strategic outputs and profit objectives to be
determined by the Board of Directors, pay the premium on current $300,000 Life
Insurance Policy, a $900 per month car allowance and participation in any other
benefits that we may offer.   The agreement also included options to
purchase 675,000 shares of the Company stock at $0.51 per share that vest over a
three year period beginning:




September
30, 2009 for 1/3 of the options


September
30, 2010 for 1/3 of the options


September
30, 2011 for 1/3 of the options





The
options expire five years from the date of the original grant.  We
accrued the salary for Mr. Booth beginning on November 15, 2008.





Liability
and Indemnification of Officers and Directors





Our
Articles of Incorporation provide that liability of directors to us for monetary
damages is eliminated to the full extent provided by Nevada
law.  Under Nevada law, a director is not personally liable to us or
our stockholders for monetary damages for breach of fiduciary duty as a director
except for liability (i) for any breach of the director’s duty of loyalty
to us or our stockholders; (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law;
(iii) for authorizing the unlawful payment of a dividend or other
distribution on our capital stock or the unlawful purchases of our capital
stock; (iv) a violation of Nevada law with respect to conflicts of interest by
directors; or (v) for any transaction from which the director derived any
improper personal benefit.


-18-


The
effect of this provision in our Articles of Incorporation is to eliminate our
rights and our stockholders’ rights (through stockholders’ derivative suits) to
recover monetary damages from a director for breach of the fiduciary duty of
care as a director (including any breach resulting from negligent or grossly
negligent behavior) except in the situations described in clauses
(i) through (v) above.  This provision does not limit or
eliminate our rights or the rights of our security holders to
seek non-monetary relief, such as an injunction or rescission, in the
event of a breach of a director’s duty of care or any liability for violation of
the federal securities laws.





Insofar
as indemnification for liabilities arising under the Act may be permitted to our
directors, officers and controlling persons pursuant to the foregoing
provisions, or otherwise, we have been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.





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




As of the
date of this filing, there are 27,299,943 shares of common stock outstanding.
The following table sets forth certain information regarding the beneficial
ownership of the outstanding shares as of the date of this filing, including any
conversion privileges, stock options or warrants exercisable within 60 days of
the date of this filing, by (i) each person who is known by us to own
beneficially more than 10% of our outstanding common stock; (ii) each of
our executive officers and directors; and (iii) all of our executive
officers and directors as a group.  Each such person has investment and
voting power with respect to such shares, subject to community property laws
where applicable. The address of each owner who is an officer or director is in
care of the Company at 401 Monterey Street, Suite 202 Salinas, CA
939010.




Name of Beneficial Owner
            
            Shares
              Beneficially
              Owned
            
            Percentage
              Beneficially
              OwnedDirectors
      and Executive Officers:Thomas
      Morrison, Chief Executive Officer and Chairman
            
            
            3,765,250
            
            13.8
            %Parker
      Booth, President and Chief Operating Officer
            
            
            2,370,000
            (1)
            8.6
            %Alicia
      Smith Kriese, Director
            
            
            1,074,500
            
            3.9
            %Corey
      K Ruth, Director
            
            
            958,166
            
            3.5
            %James
      Harold Haworth, Director
            
            
            843,500
            
            3.1
            %Michael
      J. Rosenthal, Director
            
            
            -
            
            0.0
            %Mark
      Klein, Director
            
            
            -
            
            0.0
            %Executive
      Officers and Directors as a group (5 persons)
            
            
            9,011,416
            
            32.7
            %10%
      or more Stockholder:Mathis
      Family Partners
            
            
            3,640,000
            (2)
            11.9
            %(1)  This
      amount includes 225,000 shares of common stock purchase
      options.(2)  This
      amount includes 3,360,000 shares of common stock purchase
      warrants.





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




In
September 2008, Earnest Mathis, a related party, advanced the Company $15,000.
The advance is evidenced by a promissory note bearing interest at 8% per
annum.  The unpaid balance including interest was $15,442 at December
31, 2008.





-19-


In
November and December 2008, Parker Booth, President, advanced the Company
$88,500. The advance is evidenced by a four promissory note bearing interest at
5% per annum.  The unpaid balance including interest was $88,828 at
December 31, 2008.  The promissory notes also include the issuance of
542,500 shares of the Company’s common stock to Mr. Booth upon repayment of the
notes.






ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES




Audit
Fees:




The
aggregate fees billed by MHM Mahoney Cohen CPAs at December 31, 2009 for
professional services rendered for the audit of the Company’s December 31, 2008
consolidated financial statements were $10,000.




Tax
Fees




The
Company did not engage its principle accountants to provide tax compliance, tax
advice and tax planning services during the year ended December 31,
2008.




-20-


PART
IV




ITEM
15.    EXHIBITS.




Number
            Exhibit3.1
            Articles
      of Incorporation, as amended, of Registrant (1)3.2
            Bylaws
      of Registrant (1)5.1
            Opinion
      of Gary A. Agron (1)10.1
            Exchange
      Agreement with Organic Alliance, Inc, a Texas corporation (1)
      (2)10.2
            Amendment
      to Exchange Agreement with Organic Alliance, Inc, a Texas corporation (1)
      (2)10.3
            Consultant
      Agreement (Gallagher) (3)10.4
            Employment
      Agreement (Booth) (3)10.5
            Office
      Lease Agreement (3)31.1
            Rule
      13a-14(a) Certification of Chief Executive Officer and Chief Financial
      Officer. (3)32.1
            Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to 18
      U.S.C. Section 1350, as Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002. (3)





(1)
Incorporated by reference to the Registrant’s Registration Statement on Form S-1
declared effective by the Commission on December 31, 2008.





(2) The
originally filed Exchange Agreement (Exhibit 10.1) indicated therein that we
issued 1,000,000 warrants in connection with our acquisition of Organic
Texas.  In fact the actual number of warrants issued was
1,000,028.  Accordingly, to correct this error of 28 warrants, we
filed Exhibit 10.2 which shows the correct number of warrants issued in the
Exchange Agreement to be 1,000,028.  Exhibit 10.2 represents the
accurate and correct Exchange Agreement (2)





(3)  Filed
herein.





-21-


SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.




ORGANIC
      ALLIANCE, INC.By: /s/ Parker BoothParker
      BoothChief
      Executive Officer, Chief Financial Officer (PrincipalAccounting
      Officer) and DirectorDate:
      March 18, 2010





In
accordance with the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.




Signature
            
            Title/s/
      Parker BoothParker
      Booth
            
            Chief
      Executive Officer, Chief FinancialOfficer
      (Principal Accounting Officer) and Director/s/
      Thomas MorrisonThomas
      Morrison
            
            Chairmen
      of the Board of Directors/s/ Alicia Smith KrieseAlicia
      Smith Kriese
            
            Director/s/
      Michael RosenthalMichael  Rosenthal
            
            Director/s/
      Mark KleinMark
      Klein
            
            Director




-22-


Organic
Alliance Inc.


(a
Development Stage Company)




Index to Financial
Statements




Report of Independent Registered
      Public Accounting Firm
            F-2Consolidated
      Financial StatementsConsolidated
      Balance Sheet — December 31, 2008
            F-3Consolidated
      Statement of Operations — For the Period From Inception (February 19,
      2008) to December 31, 2008
            F-4ConsolidatedStatement of Changes in
      Stockholders’ Equity (Deficiency) — For the Period From Inception
      (February 19, 2008) to December 31, 2008
            F-5Consolidated
      Statement of Cash Flows — For the Period From Inception (February 19,
      2008) to December 31, 2008
            F-6Notes to Consolidated Financial
      Statements
            F-7







F-1


REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




Board of
Directors and Stockholders


Organic
Alliance, Inc. and Subsidiary





We have
audited the accompanying consolidated balance sheet of Organic Alliance, Inc.
and Subsidiary (a development stage company) (the "Company") as of December 31,
2008, and the related consolidated statements of operations, stockholders'
equity (deficiency) and cash flows for the period from February 19, 2008, date
of inception, to December 31, 2008. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our
audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Organic Alliance, Inc. and
Subsidiary at December 31, 2008, and the results of their operations and their
cash flows for the period from February 19, 2008, date of inception, to December
31, 2008, in conformity with accounting principles generally accepted in the
United States of America.





The
accompanying consolidated financial statements have been prepared assuming that
Organic Alliance, Inc. and Subsidiary will continue as a going concern. As
more fully described in Note 3, at December 31, 2008, the Company has no
revenues, a working capital deficit of $324,447, and has accumulated losses of
$4,949,977 since inception. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The consolidated 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 outcome of this
uncertainty.







/s/
MHM Mahoney Cohen CPAs


(The New
York Practice of Mayer Hoffman McCann P.C.)





New York,
New York


March 18,
2010


F-2




Organic
      Alliance Inc.(a
      Development Stage Company)Consolidated
      Balance SheetDecember
      31, 2008AssetsCurrent
      assets:Cash
            
            $
            250Prepaid
      expenses and other current assets
            
            
            4,461Total
      current assets
            
            
            4,711Other
      assets (Note 11)
            
            
            30,000Total
      Assets
            
            $
            34,711Liabilities
      and Stockholders' DeficiencyCurrent
      liabilities:Accounts
      payable
            
            $
            141,898Accrued
      expenses and other current liabilities
            
            
            82,990Notes
      payable to related parties (Note 9)
            
            
            104,270Total
      current liabilities
            
            
            329,158Stockholders'
      Deficiency:Preferred
      stock, no stated value authorized;10,000,000
      shares; -0- shares issuedand
      outstanding as of December 31, 2008
            
            
            -Common
      stock, $.0001 par value, 60,000,000 sharesauthorized,
      13,131,967 shares outstanding as ofDecember
      31, 2008
            
            
            1,313Additional
      paid-in capital
            
            
            4,654,217Deficit
      accumulated during development stage
            
            
            (4,949,977
            )Total
      stockholders' deficiency
            
            
            (294,447
            )Total
      Liabilities and Stockholders' Deficiency
            
            $
            34,711





The
accompany notes are an integral part of these consolidated financial
statements


F-3




Organic
      Alliance Inc.(a
      Development Stage Company)Statements
      of OperationsPeriod
      from Inception(February 19, 2008)to December 31,
      2008Operating
      Expenses:General
      and administrative
            $
            4,239,484Operating
      Loss
            
            (4,239,484
            )Other
      (income) expense:Interest
      expense
            
            1,273Interest
      income
            
            (41,410
            )Loss
      from write-off on notes receivable (Note 7)
            
            750,630Total
      net other expenses
            
            710,493Net
      loss
            $
            (4,949,977
            )Basic
      and diluted loss per share
            $
            (0.41
            )Weighted
      average number ofcommon
      shares outstanding - basic and diluted
            
            12,102,221





The
accompany notes are an integral part of these consolidated financial
statements




F-4




Organic
      Alliance Inc.(a
      Development Stage Company)Statement
      of Stockholder's Equity (Deficiency)DeficitAccumulatedCommon
      Stock
            
            Additional
            
            
            
            During
            
            TotalPaid-In
            
            Note
            
            Development
            
            Stockholders'Shares
            
            Amount
            
            Capital
            
            Receivable
            
            Stage
            
            DeficiencyBeginning
      Balances, February 19, 2008
            
            
            -
            
            $
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            
            --Issuance
      of common stock for services on March 6, 2008
            
            
            7,712,255
            
            
            771
            
            
            2,742,177
            
            
            -
            
            
            
            
            
            2,742,948Proceeds
      from shares Issued on March 17, 2008
            
            
            35,000
            
            
            3
            
            
            10,497
            
            
            -
            
            
            
            
            
            10,500Proceeds
      from shares Issued on March 19, 2008
            
            
            100,000
            
            
            10
            
            
            29,990
            
            
            -
            
            
            
            
            
            30,000Issuance
      of common stock for services on March 21, 2008
            
            
            168,700
            
            
            17
            
            
            59,983
            
            
            -
            
            
            
            
            
            60,000Proceeds
      from shares Issued on March 25, 2008
            
            
            200,000
            
            
            20
            
            
            59,980
            
            
            -
            
            
            
            
            
            60,000Issuance
      of common stock for services on March 26, 2008
            
            
            295,225
            
            
            30
            
            
            104,970
            
            
            -
            
            
            
            
            
            105,000Issuance
      of common stock for services on April 1, 2008
            
            
            462,877
            
            
            46
            
            
            164,581
            
            
            -
            
            
            
            
            
            164,627Proceeds
      from shares Issued on April 2, 2008
            
            
            100,000
            
            
            10
            
            
            29,990
            
            
            -
            
            
            
            
            
            30,000Issuance
      of common stock for services on April 3, 2008
            
            
            75,915
            
            
            8
            
            
            26,992
            
            
            -
            
            
            
            
            
            27,000Proceeds
      from shares Issued on April 3, 2008
            
            
            50,000
            
            
            5
            
            
            14,995
            
            
            -
            
            
            
            
            
            15,000Proceeds
      from shares Issued on April 16, 2008
            
            
            66,667
            
            
            7
            
            
            19,993
            
            
            -
            
            
            
            
            
            20,000Proceeds
      from shares Issued on April 17, 2008
            
            
            33,333
            
            
            3
            
            
            9,997
            
            
            -
            
            
            
            
            
            10,000NB
      Design Inc., net assets assumed on April 29, 2008
            
            
            1,200,028
            
            
            120
            
            
            (120
            )
            
            -
            
            
            -
            
            
            -Shares
      repurchased and retired on April 29, 2008
            
            
            (500,000
            )
            
            (50
            )
            
            (199,950
            )
            
            -
            
            
            -
            
            
            (200,000
            )Proceeds
      from shares Issued on April 30, 2008
            
            
            16,667
            
            
            2
            
            
            4,998
            
            
            -
            
            
            
            
            
            5,000Issuance
      of common stock for services on May 1, 2008
            
            
            90,000
            
            
            9
            
            
            53,991
            
            
            -
            
            
            
            
            
            54,000Proceeds
      from shares Issued on May 8, 2008
            
            
            16,250
            
            
            2
            
            
            6,498
            
            
            -
            
            
            
            
            
            6,500Shares
      issued based on issuance of promissory note, May 8, 2008
            
            
            2,483,750
            
            
            248
            
            
            993,252
            
            
            (993,500
            )
            
            
            
            
            -Payments
      received on note receivable
            
            
            -
            
            
            -
            
            
            -
            
            
            265,527
            
            
            
            
            
            265,527Loss
      on write off of note receivable
            
            
            -
            
            
            -
            
            
            -
            
            
            727,973
            
            
            
            
            
            727,973Issuance
      of common stock for services on June 30, 2008
            
            
            30,000
            
            
            3
            
            
            30,297
            
            
            -
            
            
            
            
            
            30,300Issuance
      of common stock for services on July 17, 2008
            
            
            430,300
            
            
            43
            
            
            425,954
            
            
            -
            
            
            
            
            
            425,997Issuance
      of common stock for services on August 15, 2008
            
            
            10,000
            
            
            1
            
            
            10,299
            
            
            -
            
            
            
            
            
            10,300Issuance
      of common stock for services on August 20, 2008
            
            
            5,000
            
            
            -
            
            
            5,000
            
            
            -
            
            
            
            
            
            5,000Issuance
      of common stock for services on September 10, 2008
            
            
            50,000
            
            
            5
            
            
            45,495
            
            
            -
            
            
            
            
            
            45,500Share
      based compensation
            
            
            -
            
            
            -
            
            
            4,358
            
            
            -
            
            
            
            
            
            4,358Net
      loss
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            (4,949,977
            )
            
            (4,949,977
            )Balance
      at December 31, 2008
            
            
            13,131,967
            
            $
            1,313
            
            $
            4,654,217
            
            $
            -
            
            $
            (4,949,977
            )
            $
            (294,447
            )





The
accompany notes are an integral part of these consolidated financial
statements


F-5




Organic
      Alliance Inc.(a
      Development Stage Company)Consolidated
      Statement of Cash FlowsPeriod
      from Inception(February 19, 2008)to December 31,
      2008Cash
      flows from operating activities:Net
      loss
            $
            (4,949,977
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Common
      stock issued for services
            
            3,670,672Share-based
      compensation
            
            4,358Loss
      from write-off of note receivable, net of accrued interest income of
      22,657
            
            727,973Accrued
      interest expense
            
            770Changes
      in operating assets and liabilities:Prepaid
      expense and other current assets
            
            (4,461
            )Accounts
      Payable
            
            141,898Accrued
      expenses and other current liabilities
            
            82,990Net
      cash used in operating activities
            
            (325,777
            )Cash
      flows from investing activities:Deposit
      on asset purchase (Note 11)
            
            (30,000
            )Net
      cash flows from financing activities:Proceeds
      from notes payable to related parties
            
            103,500Proceeds
      from issuance of common stock
            
            187,000Principal
      payments on note receivable for common stock
            
            265,527Repurchase
      of common stock
            
            (200,000
            )Net
      cash provided by financing activities
            
            356,027Net
      increase in cash and cash at the end of the year
            $
            250Supplemental
      for Non-Cash Financing Activities:Issuance
      of shares of common stock for note receivable
            $
            993,500





The
accompany notes are an integral part of these consolidated financial
statements





F-6


Organic
Alliance Inc.


(A
Development Stage Company)


Notes to
Consolidated Financial Statements





1.
            NATURE
      OF BUSINESS AND OTHER MATTERS





NB Design
& Licensing, Inc., (“NB Design”) was organized in September
2001.  The former parent, New Bridge Products, Inc., was
originally incorporated in August 1995 as a manufacturer of minivans and filed a
petition in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. Its Plan of
Reorganization was approved by the U.S. Bankruptcy Court for the District of
Arizona in September 2002 and NB Design was discharged from bankruptcy in
October 2002.   NB Design was inactive from October 2002 to April 29,
2008.





Organic
Alliance Inc., a Texas corporation, (“Organic Texas”) was organized on February
19, 2008 to sell organically grown fruits and vegetables.





On April
29, 2008, NB Design, a Nevada corporation, acquired all 10,916,917 issued and
outstanding shares of common stock and assumed all liabilities Organic Texas for
9,299,972 shares of NB Design’s common stock. Organic Texas thereupon became a
wholly owned subsidiary of NB Design. All Organic Texas common shares issued
prior to April 29, 2008 for services provided are retroactively shown in the
Consolidated Statement of Stockholders’ Equity (Deficiency) based on the ratio
of 0.8435 NB Design common share issued for one Organic Texas common share (See
Note 6).  All Organic Texas common shares issued prior to April 29,
2008 for cash are shown in the Consolidated Statement of Stockholders’ Equity
(Deficiency) based on one NB Design common share issued for one Organic Texas
common share (See Note 6).  The business of Organic Texas is the only
business of NB Design.





The
acquisition of Organic Texas by NB Design on April 29, 2008 was accounted for as
a reverse capitalization in accordance with the Securities and Exchange
Commission’s (“SEC”) Division of Corporate Financial Reporting manual Topic 12
“Reverse Acquisition and Reverse Capitalization”. The reverse capitalization was
the acquisition of a private operating company (Organic Texas) into a
non-operating public shell corporation (NB Design) with nominal net assets and
as such is treated as a capital transaction, rather than a business combination.
As a result no goodwill is recorded.  In this situation, NB Design is
the legal acquirer because it issued its equity interests, and Organic Texas is
the legal acquiree because its equity interests were
acquired.  However, NB Design is the acquiree and Organic Texas as the
acquirer for accounting purposes.  Organic Texas is treated as the
continuing reporting entity that acquired the registrant, NB
Design.  The pre-acquisition financial statements of Organic Texas are
treated as the historical financial statements of the consolidated
companies.





Prior to
April 29, 2008, NB Design had outstanding 1,000,028 each of Class A, Class B,
Class C, Class D, Class E and Class F warrants.  The warrants were
exercisable at $2.00, $2.00, $4.00, $4.00, $6.00 and $6.00, respectively, at any
time until December 31, 2008.  As a condition to closing the Exchange
Agreement, the exercise prices of the warrants were subsequently reduced to
$1.00 per share for all classes of Warrants and the expiration date was extended
to December 31, 2011.   In exchange for the exercise price reduction,
the holders of at least 80% of the Warrants agreed to a call provision
by NB Design on 10 days notice to them if (i) the bid price of our
common stock is quoted at $1.25 per share or higher and the average share volume
exceeds 300,000 shares for at least one day, and (ii) the shares underlying the
warrants are subject to a current registration statement on file with the
SEC.  Both the share price and volume must be met on the same day for
the call provision to be effective.  A registration statement has not been
filed with the SEC for the warrants as of March 18, 2010.





We
completed the Exchange Agreement in order to merge with an operating company and
thereby provide our shareholders with the potential to realize liquidity in
their stockholdings.





On June
2, 2008, the name NB Design was changed to Organic Alliance, Inc.  On
August 29, 2008, the name of Organic Texas was changed to Organic Texas,
Inc.  All references throughout this Annual Report to “Organic
Alliance, Inc.,” or the “Company” refer to the combined operations of Organic
Alliance, Inc., a Nevada corporation, and our wholly-owned subsidiary, Organic
Texas.





On
December 31, 2008, we filed a Form S-1 with the SEC covering 2,638,250
shares of our .0001 par value Common Stock.





2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Development Stage– The
Company is in the development stage.  Since its formation the Company
has not realized any revenues from its planned operations. The Company's intends
to sell conventional fresh food products with a focus on growth in the certified
organic and certified Fair Trade markets.  The Company’s primary
activities since incorporation have been performing business, strategic and
financial planning and raising capital.





Basis of Presentation - The
Company's consolidated financial statements have been prepared on an accrual
basis of accounting, in conformity with accounting principles generally accepted
in the United States of America. These principles contemplate the realization of
assets and liquidation of liabilities in the normal course of
business.


F-7


Principles of
Consolidation-The consolidated financial statements include the accounts of the Organic
Alliance, Inc. and its wholly owned subsidiary, Organic Texas. Inc.
(collectively, the "Company”). All significant inter-company transactions and
balances have been eliminated in consolidation.





Concentration of Credit Risk -The Company maintains cash balances at various financial institutions.
Accounts at each financial institution are insured by the Federal Deposit
Insurance Corporation (“FDIC”) for up to $250,000.  At December 31,
2008 the Company’s cash did not exceed the FDIC insurance limit.





Income Taxes - Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
losses. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. At December 31, 2008, the Company had a
full valuation allowance against its deferred tax assets.





The
Company files an income tax return in the U.S. federal
jurisdiction, California and Texas. Tax returns for 2008 that remain open
for examination in various tax jurisdictions in which it operates. The Company
adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109,
Accounting for Income Taxes” (“FIN 48”), at February 19,
2008.  The Company’s estimate of the potential outcome of any
uncertain tax issues is subject to management’s assessment of relevant risks,
facts, and circumstances existing at that time. The Company uses a more likely
than not threshold for financial statement recognition and measurement of tax
position taken or expected to be taken in a tax return. To the extent that our
assessment of such tax position changes, the change in estimate is recorded in
the period in which the determination is made.  As a result of the
implementation of FIN 48, the Company recognized no material adjustment in the
liability for unrecognized income tax benefits. At December 31, 2008, there were
no unrecognized tax benefits. Interest and penalties related to uncertain tax
positions will be recognized in income tax expense. As of December 31, 2008, no
interest and penalties related to uncertain tax positions had been
accrued.





Share Based Compensation - The
Company accounts for its share-based employee compensation arrangement in
accordance with SFAS No. 123R, Share Based Payment” (SFAS No. 123(R)”). Under
SFAS No. 123R, share-based payments are measured at the estimated fair value on
the date of grant and are recognized as an expense over the requisite service
period (generally the vesting period).





The
Company uses the provisions of FAS 123(R) and EITF 96-18,Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services to account for the compensation expense
associated with equity grants to non-employees. The Company measures the
compensation associated with these grants based on the fair value of the equity
instruments issued.  The measurement date to calculate the fair value
of the equity instruments granted is based upon the date that the performance
commitment has occurred.





Net Loss Per Share - Basic net
loss per share is computed by dividing net loss by the weighted average number
of common shares outstanding during the period.


Diluted
net loss per share is computed by dividing the net loss by the weighted average
number of common and common equivalent shares outstanding during the period.
Basic and diluted net loss per share are the same.




Period
      from Inception(February 19,
      2008)to December 31,
      2008Numerator:Net
      loss - basic and diluted
            $
            (4,949,977
            )Denominator:Weighted
      average shares – basic
            
            12,102,221Effect
      of dilutive stock options and warrants
            
            -Denominator
      for diluted earnings per share
            
            12,102,221Loss
      per shareBasic
            $
            (0.41
            )Diluted
            $
            (0.41
            )


F-8


At
December 31, 2008, the Company stock options outstanding totaled 675,000. In
addition, at December 31, 2008, the Company’s warrants outstanding represented
6,000,168 common shares. Inclusion of the Company’s options and warrants in
diluted loss per share for the year ended December 31, 2008, have an
anti-dilutive effect because the Company incurred a loss
from operations.





Use of Estimates - The
preparation of consolidated 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 reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.





Recently
Issued Accounting Standards





Effective
January 1, 2008, the Company adopted the provisions of Statement of
Financial Accounting Standards (“SFAS”) No. 157; “Fair Value Measurements”
(“SFAS 157”), (primarily codified into Topic 820 of Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”)), which did
not have a material impact on the Company’s consolidated financial statements.
SFAS 157 establishes a common definition for fair value, a framework for
measuring fair value under generally accepted accounting principles in the
United States, and enhances disclosures about fair value measurements. In
February 2008, the FASB issued Staff Position No. 157-2 (primarily
codified into Topic 820 of FASB ASC), which delays the effective date of SFAS
157 for all nonrecurring fair value measurements of nonfinancial assets and
nonfinancial liabilities until fiscal years beginning after November 15,
2008. The Company is evaluating the expected impact of SFAS 157 for nonfinancial
assets and nonfinancial liabilities on its consolidated financial position and
results of operations.





In
October 2008 the FASB issued FASB Staff Position (“FSP”) FAS No. 157-3 (“FSP FAS
157-3”) (primarily codified into Topic 820 of FASB ASC), “Determining Fair Value
of a Financial Asset When the Market for That Asset is Not Active.” FSP FAS
157-3 clarifies the application of SFAS No. 157 in a market that is not active
and provides an example to illustrate key considerations in determining the fair
value of a financial asset when the market for that financial asset is not
active. FSP FAS 157-3 is effective upon issuance, including prior periods for
which financial statements have not been issued. Revisions resulting from a
change in the valuation technique or its application should be accounted for as
a change in accounting estimate following the guidance in FASB Statement No.
154, “Accounting Changes and Error Corrections.” FSP 157-3 is effective for the
financial statements included in the Company’s annual report for the year ended
December 31, 2008 and application of FSP FAS 157-3 had no impact on the
Company’s consolidated financial statements.





In April
2009 the FASB issued FSP FAS 157-4 (primarily codified into Topic 820 of FASB
ASC), “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”. This FSP: (1) affirms that the objective of fair value
when the market for an asset is not active is the price that would be received
to sell the asset in an orderly transaction, (2) clarifies and includes
additional factors for determining whether there has been a significant decrease
in market activity for an asset when the market for that asset is not active,
and (3) eliminates the proposed presumption that all transactions are distressed
(not orderly) unless proven otherwise. The FSP instead (1) requires an entity to
base its conclusion about whether a transaction was not orderly on the weight of
the evidence, (2) includes an example that provides additional explanation on
estimating fair value when the market activity for an asset has declined
significantly, (3) requires an entity to disclose a change in valuation
technique (and the related inputs) resulting from the application of the FSP and
to quantify its effects, if practicable, and (4) applies to all fair value
measurements when appropriate.  FSP FAS 157-4 must be applied
prospectively and retrospective application is not permitted. FSP FAS 157-4 is
effective for interim and annual periods ending after June 15, 2009, with early
adoption permitted for periods ending after March 15, 2009. An entity early
adopting FSP FAS 157-4 must also early adopt FSP FAS 115-2 and FAS 124-2,
Recognition and Presentation of Other-Than-Temporary Impairments, as discussed
below.


In
December 2007, the FASB issued Statement No. 141(R), "Business Combinations”
(“SFAS 141(R)”) (primarily codified into Topic 805 of FASB ASC). SFAS 141(R)
expands the definition of transactions and events that qualify as business
combinations; requires that the acquired assets and liabilities, including
contingencies, be recorded at the fair value determined on the acquisition date
and changes thereafter reflected in revenue, not goodwill; changes the
recognition timing for restructuring costs; and requires acquisition costs to be
expensed as incurred. Adoption of SFAS 141(R) is required for 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.
Early adoption and retroactive application of SFAS 141(R) to fiscal years
preceding the effective date are not permitted.





In April
2009 the FASB issued FSP FAS 141(R)-1 (primarily codified into Topic 805 of FASB
ASC), “Accounting for Assets Acquired and Liabilities Assumed in a Business
Combination That Arise from Contingencies”. This FSP amends the guidance in SFAS
141 (R). This FSP is effective for assets or liabilities arising from
contingencies in 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.


F-9


The
Company is currently evaluating the impact adoption of SFAS 141(R) and FSP FAS
141(R)-1 may have on the financial statements.





In May
2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”). The new standard is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles (GAAP) for nongovernmental entities. Prior to the issuance of SFAS
162, GAAP hierarchy was defined in the American Institute of Certified Public
Accountants (AICPA) Statement on Auditing Standards (SAS) No. 69,The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles. SAS 69 has
been criticized because it is directed to the auditor rather than the entity.
SFAS 162 addresses these issues by establishing that the GAAP hierarchy should
be directed to entities because it is the entity (not its auditor) that is
responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP.





SFAS 162
is effective November 15, 2008 and is only effective for nongovernmental
entities; therefore, the GAAP hierarchy will remain in SAS 69 for state and
local governmental entities and federal governmental
entities.  Adoption of SFAS 162 did not have a material impact on
the Company’s consolidated financial statements.





In June
2008 the FASB issued FSP Emerging Task Force (“EITF”) 03-6-1 (primarily codified
into Topic 260 of FASB ASC), “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities.” FSP EITF 03-6-1
provides that unvested share-based payment awards that contain non-forfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings
per share pursuant to the two-class method. FSP EITF-03-6-1 is effective for
fiscal years beginning after December 15, 2008, and interim periods within those
years. Upon adoption, a company is required to retrospectively adjust its
earnings per share data (including any amounts related to interim periods,
summaries of earnings and selected financial data) to conform to the provisions
of FSP EITF 03-6-1.  The Company is evaluating the expected impact of
FSP EITF 03-6-1 on its consolidated financial statements.





In June
2009 FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets” —
an amendment of SFAS No. 140” (“SFAS 166”)”, (primarily codified into Topic
860 of FASB ASC).  This statement removes the concept of a qualifying
special-purpose entity which was primarily codified into Topic 810 of FASB ASC,
Consolidation of Variable Interest Entities, to qualifying special-purpose
entities.  This statement must be applied as of the beginning of each
reporting entity’s first annual reporting period that begins after
November 15, 2009, for interim periods within that first annual reporting
period and for interim and annual reporting periods thereafter. Earlier
application is prohibited. The Company is currently evaluating the impact this
statement may have on the consolidated financial statements.





In June
2009 the FASB issued SFAS No. 167, “Amendments to FASB interpretation No. 46(R)”
(“SFAS 167”), which has not been codified in the FASB ASC. This statement
requires an analysis of existing investments to determine whether variable
interest or interests gives the Company a controlling financial interest in a
variable interest entity. This analysis identifies the primary beneficiary of a
variable interest entity as the enterprise that has both the power to direct the
activities of significant impact on a variable interest entity and the
obligation to absorb losses or receive benefits from the variable interest
entity that could potentially be significant to the variable interest entity.
This statement requires ongoing reassessments of whether an enterprise is the
primary beneficiary of a variable interest entity. This statement is effective
as of the beginning of each reporting entity’s first annual reporting period
that begins after November 15, 2009, for interim periods within that first
annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. The Company is currently
evaluating the impact this statement may have on the consolidated financial
statements.





In June
2009 the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles (“US GAAP”) -a
replacement of FASB Statement No. 162” (“SFAS 168”) (primarily codified into
Topic 105 of FASB ASC). The FASB Accounting Standards Codification is intended
to be the source of authoritative U.S. GAAP and reporting standards as
issued by the Financial Accounting Standards Board. Its primary purpose is to
improve clarity and use of existing standards by grouping authoritative
literature under common topics. This statement is effective beginning with the
quarter ended September 30, 2009.  All references to GAAP in the
consolidated financial statements also use the new Codification numbering
system. The Codification does not change or alter existing GAAP; therefore, it
does not have an impact on the Company’s consolidation financial
statements.





In June
2009 the SEC released “Update of codification of Staff Accounting Bulletins”.
This update amends or rescinds existing portions of the interpretive guidance
included in the SEC’s Staff Accounting Bulletin Series to be consistent with the
authoritative accounting guidance of SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS 141(R)”) (primarily codified into Topic 805 of FASB ASC)
and SFAS No. 160, “Non-controlling Interests in Consolidated Financial
Statements” (“SFAS 160”) (primarily codified into Topic 810 of FASB ASC). This
update is effective for the Company beginning with the first fiscal quarter of
2010 and will be utilized in conjunction with future business combinations and
non-controlling interests.





In August
2009 the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, “Fair
Value Measurements and Disclosures (Topic 820) —Measuring Liabilities at Fair
Value”. This statement includes amendments to Subtopic 820-10, “Fair Value
Measurements and Disclosures—Overall”, for the fair value measurement of
liabilities and provides clarification that in circumstances in which a quoted
price in an active market for the identical liability is not available, a
reporting entity is required to measure fair value using one or more of the
techniques provided for in this update. This statement is effective for the
first report period (including interim periods) beginning after
issuance.


F-10





3.
            GOING
      CONCERN





The
consolidated financial statements have been prepared using accounting principles
generally accepted in the United States of America applicable for a going
concern which assumes that the Company will realize its assets and discharge its
liabilities in the ordinary course of business. As of December 31, 2008, the
Company has no revenues, a working capital deficit of approximately $325,000 and
has accumulated losses of approximately $4,950,000 since its
inception.  Its ability to continue as a going concern is dependent
upon achieving sale of goods, the ability of the Company to obtain the necessary
financing to meet its obligations and pay its liabilities arising from normal
business operations when they come due and upon profitable operations. The
outcome of these matters cannot be predicted with any certainty at this time and
raises substantial doubt that the Company will be able to continue as a going
concern. These consolidated financial statements do not include any adjustments
to the amounts and classification of assets and liabilities that may be
necessary should the Company be unable to continue as a going
concern.





The
Company intends to overcome the circumstances that impact its ability to remain
a going concern through a combination of the commencement of revenues, with
interim cash flow deficiencies being addressed through additional equity and
debt financing. The Company anticipates raising additional funds through public
or private financing, strategic relationships or other arrangements in the near
future to support its business operations; however the Company may not have
commitments from third parties for a sufficient amount of additional capital.
The Company cannot be certain that any such financing will be available on
acceptable terms, or at all, and its failure to raise capital when needed could
limit its ability to continue its operations. The Company’s ability to obtain
additional funding will determine its ability to continue as a going concern.
Furthermore, additional equity financing may be dilutive to the holders of the
Company’s common stock, and debt financing, if available, may involve
restrictive covenants, and strategic relationships, if necessary to raise
additional funds, and may require that the Company relinquish valuable
rights.




4.
            INCOME
      TAXES





The
components of deferred tax assets as of December 31, 2008 are as
follows:





Share
      based compensation
            
            $
            1,464,000Start
      up costs
            
            
            191,000Net
      operating losses
            
            
            23,000Less:
      valuation allowance
            
            
            (1,678,000)Net
      deferred tax asset
            
            $
            —





In
assessing the realization of 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. As a result of uncertainty of achieving sufficient taxable
income in the future, the Company has recorded a full valuation allowance
against its deferred tax asset of $1,678,000 as of December 31,
2008.





As part
of the Exchange Agreement the Company acquired NB Designs’ Federal net operating
loss carryforward of $86,000.  At December 31, 2008 the Company used
approximately $17,000 of acquired net operating losses, and has net operating
losses of $69,000 at December 31, 2008 that may be used to reduce future
tax liabilities. Such net operating losses expire through 2027 and may be
limited as the annual amount available for use under Internal Revenue Code
Section 382.





A
reconciliation of the benefit from income taxes based on the Federal statutory
rate to the Company’s effective rate for the period from inception (February 19,
2008) to December 31, 2008 is as follows:





2008
              %Federal
      income tax benefit at statutory rate
            
            
            34.0State
      income tax benefit, net of federal income tax
            
            
            6.0--Change
      in valuation allowance
            
            
            40.0Total
      benefit from taxes
            
            
            -





The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which temporary differences become
deductible.


F-11





5.
            PREFERRED
      STOCK





The
Company has not assigned any preference rights to the preferred stock, nor has
any preferred stock been issued as of December 31, 2008.





6.
            SHARE
      EXCHANGE AGREEMENT





On April
29, 2008, NB Design exchanged 9,299,972 shares of its common stock for
10,916,917 shares of Organic Texas common stock.  The shares were
exchanged in two groups as follows:





·
            Group
      A represents 44 Organic Texas stockholders that received Organic Texas
      common stock for consulting services, executive compensation and director
      compensation prior to the April 29, 2008 merger date.  These
      stockholders exchanged 10,331,917 shares of Organic Texas common stock for
      8,714,972 shares of the NB Design common stock using the ratio of .8435
      share of NB Design common stock to one share of Organic Texas common
      stock.


·
            Group
      B represents 8 investors who received Organic Texas common stock for
      investing funds in Organic Texas prior to the April 29, 2008 merger
      date.  These stockholders exchanged 585,000 shares of Organic
      Texas common stock for 585,000 shares of NB Design common
      stock.





As part
of the transaction, $200,000 was paid to certain shareholders of the Company by
Organic Texas to re-purchase 500,000 shares of Company’s common
stock.  These shares were subsequently retired.





7.
            EQUITY
      TRANSACTIONS





Unregistered Sales of Equity
Securities:





In March
2008, the Company sold 335,000 unregistered shares of common stock (Group B, See
Note 6) for $100,500.





In March
2008, the Company issued 5,000,000 shares of common stock to Officers, Directors
and a related party of the Company.  These shares were exchanged for
4,217,500 unregistered shares of the Company’s common stock (Group A, See Note
6) on April 29, 2008.  These shares were valued at $1,500,000 or $0.30
per share based on the sales price of shares to non-related third parties during
March 2008.





In March
and April 2008, the Company issued 5,331,917 shares of common stock to
consultants to perform services for the Company including legal, public
relations, investor relations, and others.  These shares were
exchanged for 4,497,472 unregistered shares of the Company’s common stock (Group
A, See Note 6) on April 29, 2008.  These shares were valued at
$1,599,575 or $0.30 per share based on the sales price of shares to non-related
third parties during March and April 2008.





In April
2008, the Company sold 250,000 unregistered shares of common stock (Group B, See
Note 6) for $75,000 and 16,667 unregistered shares of common stock for
$5,000.





During
May 2008, the Company issued 90,000 unregistered shares or common stock to an
attorney to perform legal services for the Company.  These shares were
valued at $54,000 or $0.60 per share based on the closing price of the Company’s
common stock on the date of the agreement.





During
June 2008, the Company issued 30,000 unregistered shares of common stock to a
consultant to perform accounting services for the Company.  These
shares were valued at $30,300 or $1.01 per share based on the closing price
of the Company’s common stock on the date of the agreement.





During
July 2008, the Company issued 73,000 unregistered shares of common stock to a
group of six physicians that served on a medical advisory board for the
Company.  These shares were valued at $72,270 or $0.99 per share based
on the closing price of the Company’s common stock on the date of the
agreement.





During
July 2008, the Company issued 357,300 unregistered shares of common stock to a
six individuals that performed investor relation services for the
Company.  These shares were valued at $353,727 or $0.99 per share
based on the closing price of the Company’s common stock on the date of the
agreement.





During
August 2008, the Company issued 10,000 unregistered shares of common stock to an
individual that performed investor relation services for the
Company.  These shares were valued at $10,300 or $1.03 per share based
on the closing price of the Company’s common stock on the date of the agreement.
Also during August 2008, the Company issued 5,000 unregistered shares of common
stock to an individual that performed administrative services for the
Company.  These shares were valued at $5,000 or $1.00 per share based
on the closing price of the Company’s common stock on the date of the
agreement.


F-12


During
September 2008, the Company issued 50,000 unregistered shares of common stock to
an individual that performed investor relation services for the
Company.  These shares were valued at $45,500 or $0.91 per share based
on the closing price of the Company’s common stock on the date of the
agreement.





Registered Sales of Equity
Securities:





In May
2008, the Company sold 16,250 registered shares of common stock for $0.40 a
share to an investor to help fund the Company.  The Company also sold
2,483,750 registered shares of common stock for $0.40 per share to an investor
for a 90 day promissory note that bore interest at 8% per annum on any unpaid
balance.  The unpaid balance of $750,630 including accrued interest of
$22,657 was written off as uncollectable and included in the consolidated
statement of operations for period of inception (February 19, 2008) to December
31, 2008.





The total
amount of $3,670,672 of common shares issued for services was expensed during
the period from inception (February 19, 2008) to December 31, 2008.





8. 
STOCK OPTIONS AND WARRANTS





Stock Options – Employment
Contract:





On
October 1, 2008 we executed an employment contract with Mr. Booth as the
Company’s President.  Mr. Booth’s employment contract was effective on
November 15, 2008 provides for options to purchase 675,000 shares of the Company
stock at $0.51 per share.  The options vest annually for three years
beginning September 30, 2009.  The options expire five years from the
date of the original grant.





The
Company uses historical data to estimate option exercise and employee
termination within the valuation model; separate groups of employees that have
similar historical exercise behavior are considered separately for valuation
purposes. The expected term of options granted is derived from the output of the
option valuation model and represents the period of time that options granted
are expected to be outstanding.  The risk-free interest rate for
periods within the contractual life of the option is based on the U.S. Treasury
yield curve in effect at the time of grant.




The fair
value was determined to be $100,230 utilizing the Black-Scholes option pricing
model with the following assumptions: stock price $0.15, expected term of 5
years, expected dividends of 0, 246.3% volatility, and a risk-free interest rate
of 2.31 %. The Company recognized $4,358 compensation expense included in
general and administrative expense on the consolidated statement of
operations.





Options
Summary:





A summary of option activity as of
December 31, 2008 and changes during the period from date of inception (February
19, 2008) to December 31, 2008 is presented below:




Options
            
            Shares
            
            
            Weighted
      AverageExercise
      price
            
            
            Weighted
      AverageRemainingContractual Term
            
            
            AggregateIntrinsic ValueGranted
            
            
            675,000
            
            
            $
            0.51
            
            
            $
            4.88
            
            
            $
            -Outstanding,
      December 31, 2008
            
            
            675,000
            
            
            $
            0.51
            
            
            $
            4.88
            
            
            $
            -Shares
            
            
            Weighted
      AverageExercise
      priceGranted
            
            
            675,000
            
            
            $
            0.51Non-vested,
      December 31, 2008
            
            
            675,000
            
            
            $
            0.51


The
Company expects to issues shares upon exercise of the options from its
authorized shares of common stock.





Common
Stock Warrants:





At
December 31, 2008 the Company had 6,000,168 warrants outstanding with an
exercise price of $1.00 and an expiration date of December 31, 2011 (See Note
1).


F-13




9.
            RELATED
      PARTY TRANSACTIONS





On July
1, 2008, the Company signed a 16 month consulting agreement with a consultant
and a shareholder of the Company. The consulting services include financial
advisory, investment relations and certain administrative and other services for
$6,250 monthly fees. At December 31, 2008, the Company owed approximately
$26,000 related to above consulting services, which is included in accrued
expenses and other current liabilities on the consolidated balance
sheet.





In
September 2008, Earnest Mathis, a major stockholder, advanced $15,000 to the
Company. The advance is evidenced by a promissory note bearing interest at 8%
per annum.  The unpaid balance including interest was $15,442 at
December 31, 2008, included in notes payable on the consolidated balance
sheet.





In
November and December 2008, Parker Booth, President, advanced $88,500. The
advance is evidenced by a four promissory note bearing interest at 5% per
annum.  The unpaid balance including interest was $88,828 at December
31, 2008, included in notes payable on the consolidated balance
sheet.




10.
            COMMITMENTS
      AND CONTINGENCIES




Operating Leases




From
February 2008 through January 2009, the Corporate office was in San Antonio,
Texas.  The terms were $1,500 a month for one year.  In
December 2008 the Company opened a new office in Salinas, California and moved
the Corporate Office and terminated the lease in San Antonio after January
2009.  The Salinas lease for $2,230 per month terminated on December
31, 2009.  The Company is currently paying rent on a month to month
basis.  Rent expense was $12,789 for the year ended December 31,
2008.  The lease commitment at December 31, 2008 was
$26,760




11.
            SUBSEQUENT
      EVENTS





On
January 7, 2009, the Company entered into an Asset Purchase Agreement with
American Eagle Transport LLC to purchase The AvacadoMan brand and an order
processing web software system for $30,000.  The purchase price was
paid in November 2008 and is included in other assets on the consolidated
financial statements at December 31, 2008.





During
January 2009 and March 2009, the Company exchanged 1,747,071 shares of our
registered common stock from a group of investors and related parties for two
shares of the Company’s unregistered common stock (3,493,476
shares).  The registered shares were transferred to Edge Trading, LLC
and Partners in an unsuccessful attempt to obtain financing.  As part
of the transaction an additional 2,000,000 unregistered shares of the Company’s
common stock were transferred to this group in January 2009.





During
February 2009, the Company compensated Thomas Morrison, chief executive officer,
with 2,500,000 unregistered shares of the Company’s common stock, Parker Booth,
president, with 645,000 unregistered shares of the Company’s common stock and
William J Gallagher, financial consultant, with 2,000,000 unregistered shares of
the Company’s common stock for service to the Company.  We also
compensated three investor relations consultants with a total of 270,000
unregistered shares of the Company’s common stock.  The total
compensation was valued at $487,350





On March
5, 2009, the Company accepted the resignation of Jim Haworth as Director of the
Company.





On March
5, 2009, Dr. Corey Ruth joined the Company’s Board of Directors.  He
received 843,000 unregistered shares of the Company’s stock for joining the
Board.  The total compensation was valued at $46,365.









On June
1, 2009 the Company announced the promotion of Parker Booth. Mr. Booth, the
President of Organic Alliance, was promoted to the additional title of Chief
Operating Officer and a seat on the Board of Directors.  The Company
compensated Mr. Booth with 1,500,000 unregistered shares.  The total
compensation was valued at $375,000.





During
June 2009, the Company compensated a, financial consultant, with 476,000
unregistered shares of the Company’s common stock upon repayment of loans made
to the Company.


F-14


On August
10, 2009, Mike Rosenthal and Mark Klein joined the Company’s Board of
Directors.  Both were to each receive 350,000 unregistered shares of
the Company's common stock upon appointment to the board.  As of March
18, 2010, these shares have not been issued by the Company.  They also will
receive an additional 650,000 unregistered shares each at such time as the
Company raises at least $1,000,000 in equity funds.  They will also receive
a fee of 8.5% of any funds raised by them in equity offerings of the Company.
The total compensation was valued at $91,000.





On June
11, 2009, Dr. Corey Ruth, Director, loaned the Company $10,000 payable with
interest at 5% and a maturity date of September 1, 2009.  In addition,
Dr. Ruth will receive an equity interest of 33,000 unregistered shares of the
Company’s common stock. The loan was paid back in September 2009 and Dr. Ruth
received the 33,000 shares of common stock.





On July
13, 2009, Alicia Kriese, Director, loaned the Company $35,000 payable with
interest at 5% and a maturity date of September 1, 2009.  In addition,
Ms. Kriese will receive an equity interest of 231,000 unregistered shares of the
Company’s common stock when the loan is paid back. The loan was paid back in
September 2009 and she received the 231,000 shares of common stock.





On August
7, 2009, the Company announced receiving a new loan from Mr. Parker Booth, the
Company’s President and COO, for $170,000 and consolidated twelve previous loans
from Mr. Booth into a single promissory note totaling ($223,500) the new
promissory note of $393,500 pays interest at 5% and matures on December 31,
2009.  In addition, Mr. Booth will receive an equity interest of
2,391,747 unregistered shares of the Company’s common stock when the loan is
paid back.





During
September 2009, the Company paid back a loan from an investor and compensated
him with 166,000 unregistered shares of the Company’s common stock. We also
compensated one individual with 10,500 unregistered shares of the Company’s
common stock for joining our medical advisory board. The total compensation was
valued at $13,238.





On
October 16, 2009, Mike Rosenthal, Director, loaned the Company $100,000 payable
with interest at 5% and a maturity date of March 31, 2010.  In
addition, Mr. Rosenthal will receive an equity interest of 750,000 unregistered
shares of the Company’s common stock when the loan is paid back.





On
November 30, 2009, Thomas Morrison, Chairman, loaned the Company $10,000 payable
with interest at 5% and a maturity date of June 30, 2010.  In
addition, Mr. Morrison will receive an equity interest of 55,400 unregistered
shares of the Company’s common stock when the loan is paid back.





On
December 10, 2009, Mr. Parker Booth, the Company’s President and COO, loaned the
Company $50,000 and consolidated his previous note dated August 13, 2009 into a
single promissory note totaling $443,500 that pays interest at 5% and matures on
December 31, 2010.  In addition, Mr. Booth will receive an equity
interest of 2,668,747 unregistered shares of the Company’s common stock when the
loan is paid back.





On
December 11, 2009, Dr. Corey Ruth, Director, loaned the Company $50,000 payable
with interest at 5% and a maturity date of February 4, 2010.  In
addition, Dr. Ruth will receive an equity interest of 200,000 unregistered
shares of the Company’s common stock. The loan was paid back in March 2010 and
Dr. Ruth received 200,000 unregistered shares of the Company’s common
stock.





On
December 11, 2009, Mike Rosenthal, Director, loaned the Company $30,000 payable
with interest at 5% and a maturity date of March 31, 2010.  In
addition, Mr. Rosenthal will receive an equity interest of 200,000 unregistered
shares of the Company’s common stock when the loan is paid back.





On
December 11, 2009, Company accepted the resignation of Thomas Morrison as
Chief Executive Officer.  Mr. Morrison will remain the Chairman of the
Board of Directors.  Mr. Parker Booth, President and Chief Operating
Officer, has been promoted to Chief Executive Officer.  The
resignation and promotion became effective immediately.  Mr. Morrison
decision to resign was voluntary and not as a result of any disagreement with
the registrant on any matter relating to registrant’s operations, policies or
practices.





On March
11, 2010, the Company accepted the resignation of Dr. Corey Ruth as Director of
the Company.


F-15