United
      States


Securities
      And Exchange Commission


Washington,
      D.C. 20549





FORM
      10-QSB





xQuarterly
      Report Under
      Section 13 Or 15(d) Of The Securities Exchange
      Act Of 1934





For
      The
      Quarterly Period Ended March 31, 2008.





oTransition
      Report Under
      Section 13 Or 15(d) Of The Securities Exchange Act
      Of
      1934





For
      The
      Transition Period From ______________ To ______________





Commission
      File Number 333-125868





Execute
      Sports, Inc.


(Exact
      Name Of The Small Business Issuer As Specified In Its Charter)


Nevada
              30-0038070(State
                  or Other Jurisdiction of
              (I.R.S.
                  EmployerIncorporation
                  or Organization)
              Identification
                  No.)




21143
      Hawthorne BL #425


Torrance,
      CA 90503


(310)
      515-8902


(Address,
      Including Zip Code, And Telephone Number, Including


Area
      Code, Of Registrant's mailing address in California)





Check
      whether the issuer: (1) filed all reports required to be filed by Section
      13 or 15(d) of the Exchange Act during the past 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
xNo
o





The
      number of outstanding shares of the issuer's common stock, $0.001 par value,
      as
      of April 18, 2008 was 90,446,790.








Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
oNo
x





Transitional
      Small Business Disclosure Format (Check one): Yes oNo x








TABLE
      OF
      CONTENTS


PagePart
                  IItem
                  1.
              Financial
                  StatementsConsolidated
                  Balance Sheet as of March 31, 2008 (Unaudited)
              
              1Consolidated
                  Statements of Operations for the three monthsEnded
                  March 31, 2008 and 2007(unaudited)
              
              2Consolidated
                  Statements of Stockholders Equity for thethree
                  months Ended March 31, 2008 (unaudited)
              
              3Consolidated
                  Statements of Cash Flows for thethree
                  months ended March 31, 2008 and 2007 (unaudited)
              
              4Notes
                  To Financial Statements (Unaudited)
              
              5Item
                  2.
              Management's
                  Discussion and Analysis or Plan of Operations..
              
              25Item
                  3.
              Controls
                  and Procedures
              
              29Part
                  II - Other InformationItem
                  1.
              Legal
                  Proceedings
              
              31Item
                  2.
              Unregistered
                  Sales of Equity Securities and use of Proceeds
              
              31Item
                  3.
              Defaults
                  Upon Senior Notes
              
              31Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              
              31Item
                  5.
              Other
                  Information
              
              31Item
                  6.
              Exhibits
              
              32Signatures
              
              33


**EXECUTE
                  SPORTS, INC.**Consolidated
                  Balance Sheet (Unaudited)As
                  of March 31, 2008
 
 ASSETSCURRENT
                  ASSETSCash
              
              $
              78,102Accounts
                  receivable, net (Note A)
              
              
              269,369Inventory
              
              
              231,694Deferred
                  financing costs (Note E)
              
              
              60,542Other
                  current assets
              
              
              5,441TOTAL
                  CURRENT ASSETS
              
              
              645,148Fixed
                  assets, net (Note B)
              
              
              985,884Deferred
                  financing costs (Note E)
              
              
              211,948Intangible
                  assets, net (Note C)
              
              
              3,925,000Loans
                  receivable, net (Note D)
              
              
              146,128TOTAL
                  ASSETS
              
              $
              5,914,108LIABILITIES
                  AND STOCKHOLDERS' EQUITYCURRENT
                  LIABILITIESCurrent
                  portion of convertible debentures (Note E)
              
              $
              1,900,000Short
                  term borrowings (Note F)
              
              
              549,610Related
                  party notes payable (Note F)
              
              
              169,290Accounts
                  payable and accrued expenses
              
              
              141,498Interest
                  accrued on convertible debentures (Note E)
              
              
              351,501TOTAL
                  CURRENT LIABILITIES
              
              
              3,111,899Non-current
                  portion of convertible debentures (Note E)
              
              
              4,424,344TOTAL
                  LIABILITIES
              
              
              7,536,243Commitment
              
              
              -STOCKHOLDERS'
                  EQUITY (Note G)Common
                  stock, par value $.001, 100,000,000 shares authorizedauthorized;
                  issued and outstanding 90,446,790 at March 31, 2008
              
              
              90,442Additional
                  paid-in capital
              
              
              11,684,655Retained
                  earnings <deficit>
              
              
              (13,397,232
              )TOTAL
                  STOCKHOLDERS' EQUITY
              
              
              (1,622,135
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              5,914,108SEE
                  NOTES TO FINANCIAL STATEMENTS




1


**EXECUTE
                  SPORTS, INC.**Consolidated
                  Statements of Operations (Unaudited)Three
                  Months Ended March 31, 2008 and 2007
 
  Three
                    Months EndedMarch
                    31,REVENUES
                    & COST OF GOODS
                
                2008
                
                2007Net
                    watersports sales
                
                $
                329,223
                
                $
                553,482Net
                    Sugar Sand sales
                
                
                1,475,731
                
                
                -Total
                    net sales
                
                
                1,804,954
                
                
                553,482Watersports
                    cost of sales
                
                
                249,310
                
                
                340,947Sugar
                    Sand cost of sales
                
                
                1,401,944
                
                
                -Total
                    cost of sales
                
                
                1,651,254
                
                
                340,947Gross
                    profit
                
                
                153,700
                
                
                212,535EXPENSESGeneral
                    and administrative expenses
                
                
                272,637
                
                
                338,463Selling
                    and advertising
                
                
                26,175
                
                
                22,835Depreciation
                    expense
                
                
                102,630
                
                
                2,530Total
                    expense
                
                
                401,442
                
                
                363,828Income
                    (loss) from operations
                
                
                (247,742
                )
                
                (151,293
                )OTHER
                    INCOME AND EXPENSESOther
                    income
                
                
                
                
                
                462Interest
                    expense
                
                
                (242,187
                )
                
                (70,411
                )Loss
                    due to discount on conversion to stock
                
                
                
                
                
                (54,250
                )Amortization
                    of beneficial conversion feature of convertible debenture
                
                
                (63,184
                )
                
                (270,295
                )Amortization
                    of warrant discount related to convertible debenture
                
                
                (2,678
                )
                
                (90,381
                )Amortization
                    of deferred financing costs
                
                
                (15,032
                )
                
                (36,034
                )Total
                    other income and expenses
                
                
                (323,081
                )
                
                (520,909
                )Net
                    loss before discontinued operations
                
                
                (570,823
                )
                
                (672,202
                )Income
                    (loss) from discontinued operations
                
                
                -
                
                
                (1,421
                )Gain
                    (loss) on disposal of discontinued operations
                
                
                -
                
                
                208,112Total
                    discontinued operations
                
                
                -
                
                
                206,691NET
                    INCOME (LOSS)
                
                
                (570,823
                )
                
                (465,511
                )Net
                    (loss) per common share Basic and diluted from continuing
                    operations
                
                $
                (0.006
                )
                $
                (0.015
                )Net
                    (loss) per common share basic and diluted after discontinued
                    operations
                
                $
                (0.006
                )
                $
                (0.010
                )Weighted
                    average common shares outstanding basic and diluted
                
                
                89,451,823
                
                
                44,853,102The
                    average shares listed below were not included in the
                    computationper
                    share because to do so would have been antidilutive for the periods
                    presented:Stock
                    options
                
                
                -
                
                
                450,000Warrants
                
                
                16,161,667
                
                
                3,440,238Debt
                    collateralized with common stock
                
                
                808,472,298
                
                
                12,792,228
 SEE
                  NOTES TO FINANCIAL STATEMENTS




2


**EXECUTE
                  SPORTS, INC.**Statements
                  of Stockholders' Equity (Unaudited)Three
                  Months Ended March 31, 2008
 
 Common
                  Stock
              
              Additional
              
              Retained
              
              TotalNumber
                  of
              
              
              
              Paid-in
              
              Earnings
              
              Stockholders'Shares
              
              Amount
              
              Capital
              
              <Deficit>
              
              EquityDecember
                  31, 2007
              
              
              87,456,541
              
              $
              87,452
              
              $
              11,647,807
              
              $
              (12,826,409
              )
              $
              (1,091,150
              )Shares
                  issued for director compensation
              
              
              750,000
              
              
              750
              
              
              11,250
              
              
              
              
              
              12,000Shares
                  issued for services
              
              
              1,125,000
              
              
              1,125
              
              
              13,875
              
              
              
              
              
              15,000Shares
                  issued for notes payable
              
              
              991,349
              
              
              991
              
              
              10,806
              
              
              
              
              
              11,797Shares
                  issued pursuant to put agreementfor
                  repayment of debenture
              
              
              123,900
              
              
              124
              
              
              917
              
              
              
              
              
              1,041Net
                  loss
              
              
              
              
              
              
              
              
              
              
              $
              (570,823
              )
              
              (570,823
              )March
                  31, 2008
              
              
              90,446,790
              
              $
              90,442
              
              $
              11,684,655
              
              $
              (13,397,232
              )
              $
              (1,622,135
              )
 
 SEE
                  NOTES TO FINANCIAL STATEMENTS
 
 3
 **EXECUTE
                    SPORTS, INC.**Consolidated
                    Statements of Cash Flows (Unaudited)Three
                    Months Ended March 31, 2008 and 2007
 
  March
                    31,2008
                
                2007CASH
                    FLOWS FROM OPERATING ACTIVITIES:Net
                    loss from continuing operations
                
                $
                (570,823
                )
                $
                (672,202
                )Net
                    gain from discontinued operations
                
                
                -
                
                
                206,691Adjustments
                    to reconcile net loss to net cash used by operating
                    activities:Depreciation
                    and amortization
                
                
                102,630
                
                
                2,530Stock
                    based compensation expense
                
                
                27,000
                
                
                112,500Loss
                    on the conversion of convertible debt
                
                
                -
                
                
                54,250Amortization
                    of beneficial conversion feature
                
                
                63,184
                
                
                270,295Amortization
                    of warrant discount related to convertible debenture
                
                
                2,678
                
                
                90,381Issuance
                    of common stock for debt principle
                
                
                -
                
                
                53,126Changes
                    in assets and liabilities, net of effect of
                    acquisitions:Accounts
                    receivable
                
                
                (242,246
                )
                
                38,236Inventory
                
                
                (166,077
                )
                
                (61,604
                )Prepaid
                    expenses
                
                
                -
                
                
                49,494Other
                    current assets
                
                
                -
                
                
                (5,441
                )Accounts
                    payable and accrued expenses
                
                
                68,580
                
                
                (354,111
                )Debenture
                    interest payable
                
                
                37,011
                
                
                -NET
                    CASH USED FOR OPERATING ACTIVITIES
                
                
                (678,063
                )
                
                (215,855
                )CASH
                    FLOWS FROM INVESTING ACTIVITIES:Acquisition
                    of furniture and equipment
                
                
                -
                
                
                (1,058
                )NET
                    CASH USED FOR INVESTING ACTIVITIES
                
                
                -
                
                
                (1,058
                )CASH
                    FLOWS FROM FINANCING ACTIVITIES:Issuance
                    of common stock for cash
                
                
                
                
                
                76,168Proceeds
                    from convertible debenture
                
                
                193,447
                
                
                -Proceeds
                    from related party notes payable
                
                
                90,000
                
                
                388,207Repayment
                    of related party notes payable
                
                
                -
                
                
                (307,300
                )Secured
                    borrowings
                
                
                -
                
                
                (34,521
                )Financing
                    related costs
                
                
                15,032
                
                
                36,034NET
                    CASH PROVIDED BY FINANCING ACTIVITIES
                
                
                356,910
                
                
                167,462NET
                    INCREASE <DECREASE> IN CASH
                
                
                (321,153
                )
                
                (49,451
                )CASH,
                    beginning of period
                
                
                399,255
                
                
                74,386CASH,
                    end of period
                
                $
                78,102
                
                $
                24,935SUPPLEMENTAL
                    DISCLOSURES OF CASH FLOW INFORMATIONCASH
                    PAID DURING THE YEAR FOR:Taxes
                    paid
                
                $
                -
                
                $
                -Interest
                    paid
                
                $
                -
                
                $
                -Other
                    non-cash investing and financing activities:Shares
                    issued for services
                
                $
                27,000
                
                $
                112,250Shares
                    issued for debt and accrued interest
                
                $
                1,041
                
                $
                271,323SEE
                    NOTES TO CONSOLIDATED FINANCIAL
                    STATEMENTS
  4
  **EXECUTE
          SPORTS, INC.**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**




**NOTE
      A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**




Basis
      of Presentation





The
      unaudited financial statements of Execute Sports, Inc. (“Execute Sports” or the
“Company”) as of March 31, 2008 and for the three month periods ended March 31,
      2008 and 2007 have been prepared in accordance with accounting principles
      generally accepted in the United States for interim financial reporting.
      Accordingly, they do not include all of the disclosures required by accounting
      principles generally accepted in the United States for complete financial
      statements and should be read in conjunction with the audited consolidated
      financial statements and notes thereto included in the Company’s Form 10-KSB for
      the fiscal year ended December 31, 2007 filed with the SEC on March 31, 2008.
      In
      the opinion of management, all adjustments (consisting only of normal recurring
      adjustments) considered necessary for a fair presentation of the interim
      financial information have been included. The results of operations for any
      interim period are not necessarily indicative of the results of operations
      for
      the entire year.





Organization





Execute
      Sports was founded in 2002 as Padova International USA, Inc. to produce graphics
      kits and ancillary soft goods for the motocross, enduro and ATV
      markets.





In
      2003,
      the Company launched its water sports division under the "Execute Sports" brand
      to provide wetsuits, vests, rash guards and ancillary products to the wake
      board
      and ski markets.





On
      March
      3, 2005 the Company changed its name from Padova International U.S.A., Inc.
      (DBA
      Execute Sports) to Execute Sports, Inc.





In
      January 2006, the Company expanded its product mix by consummating the
      acquisition of Pacific Sports Group, Inc. (“PSG”), which owned and operated
      Academy Snowboards, Kampus Wakesk8s, Kampus Wake Shoes and Collective
      Development Bags and Bindings. In January, 2007, the Company entered into a
      trademark transfer and assignment agreement whereby all right, title, interest
      and good will in the Academy brand were transferred to the two former owners
      of
      PSG. In connection with the transfer, all of the Company’s accounts payable and
      accounts receivable relating to the trademark were assigned as
      well.





In
      August
      2007, the Company further expanded its product mix by purchasing the right,
      title, interest and goodwill relating to the business of designing,
      manufacturing and marketing jet powered Sugar Sands boats, including the SUGAR
      SAND trade names, trademarks, service marks, and service names, including www.sugarsand.com .
      By
      acquiring the Sugar Sand brand, the Company expanded its product offering
      without the added responsibilities and complexities of the manufacturing
      process, while positioning the Company to capitalize on existing sales and
      marketing relationships.


5


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**
 
  **NOTE
        A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
        POLICIES**





Summary
      of Significant Accounting Principles





Basis
      of Presentation





The
      consolidated financial statements include the accounts of Execute Sports and
      its
      wholly owned subsidiary PSG under the accrual basis of accounting.





Accounting
      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.





Principles
      of consolidation





The
      consolidated financial statements include the accounts of Execute Sports and
      its
      subsidiary, which is 100% consolidated in the financial statements. All material
      inter-company accounts and transactions have been eliminated.





Cash
      and cash equivalents





For
      purposes of the statement of cash flows, the Company considers all highly liquid
      debt instruments purchased with an original maturity of three months or less
      to
      be cash equivalents.





Accounts
      receivable





Accounts
      receivable are reported at the customers' outstanding balances less any
      allowance for doubtful accounts. Interest is not accrued on overdue accounts
      receivable. The Company evaluates receivables on a regular basis for potential
      reserve. As of March 31, 2008, the allowance for doubtful accounts was
      $10,000.





The
      Company has a factoring agreement with JD Factors. Pursuant to the agreement
      JD
      Factors’ will provide account receivable financing and factoring to the Company.
      JD Factors purchases the accounts receivable and may pay a portion of the
      purchase price, or lend money to the Company based upon accounts’ receivable of
      the Company.





6


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)**





Inventories





Inventories
      are valued at the lower of cost or market. Cost is determined using the average
      costing method. Management performs periodic assessments to determine the
      existence of obsolete, slow moving and non-salable inventories, and records
      necessary provisions to reduce such inventories to net realizable
      value.





Property
      and equipment





Property
      and equipment are stated at cost. Major renewals and improvements are charged
      to
      the asset accounts while replacements, maintenance and repairs, which do not
      improve or extend the lives of the respective assets, are expensed. At the
      time
      property and equipment are retired or otherwise disposed of, the asset and
      related accumulated depreciation accounts are relieved of the applicable
      amounts. Gains or losses from retirements or sales are credited or charged
      to
      income.





Depreciation
      is provided using the 200% declining balance and straight line methods. It
      is
      calculated over recovery periods as prescribed by management that range from
      5
      years for equipment to 7 years for furniture.





Goodwill
      and Other Intangible Assets





The
      Company accounts for goodwill and other intangible assets in accordance with
      SFAS No. 142, Goodwill and Other Intangible Assets. This statement requires
      that
      goodwill and other intangible assets arising from an acquisition of a business
      be periodically assessed for impairment rather than amortized on a straight-line
      basis. Accordingly, the Company annually reviews the carrying value of this
      goodwill and other intangible assets to determine whether impairment, as
      measured by fair market value, may exist. SFAS No. 142 requires that goodwill
      and other intangible assets be assessed for impairment using fair value
      measurement techniques. Specifically, goodwill and other intangible asset
      impairment is determined using a two-step process. The first step of the
      goodwill and other intangible asset impairment test is used to identify
      potential impairment by comparing the fair value of a reporting unit with its
      carrying amount. If the fair value of a reporting unit exceeds its carrying
      amount, then the goodwill and other intangible assets of the reporting unit
      are
      not considered to be impaired and the second step of the impairment test is
      unnecessary. If the carrying amount of a reporting unit exceeds its fair value,
      the second step of the impairment test is performed to measure the amount of
      impairment loss, if any. The second step of the impairment test compares the
      implied fair value of the reporting unit's goodwill and other intangible assets
      with their carrying amount. If the carrying amount of the reporting unit's
      goodwill and other intangible assets exceeds their implied fair value, then
      an
      impairment loss is recognized in an amount equal to that excess.





7


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)**





Long-lived
      assets





Statement
      of Financial Accounting Standards No. 144, "Accounting for the Impairment or
      Disposal of Long-Lived Assets," requires that long-lived assets be reviewed
      for
      impairment whenever events or changes in circumstances indicate that the
      historical cost-carrying value of an asset may not be recovered. The Company
      assesses recoverability of the carrying value of an asset by estimating the
      fair
      value of the asset. If the fair value is less than the carrying value of the
      asset, an impairment loss is recorded equal to the difference between the
      asset's carrying value and fair value.





Revenue
      recognition policy





Revenue
      from the sale of water sports clothing and apparel, and Sugar Sand boats is
      recognized when the earning process is complete and the risk and rewards of
      ownership have transferred to the customer, which is generally considered to
      have occurred upon shipment to the customer.





The
      Company recognizes revenue under the guidance provided by the SEC Staff
      Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” and the Emerging
      Issues Task Force (“EITF”) Abstract No. 99-19 “Reporting Revenue Gross as a
      Principal versus Net as an Agent” (“EITF 99-19”). Pursuant to EITF 99-19, The
      Company recognizes revenue from the sale of Sugar Sand boats on a gross
      basis.





Shipping
      and handling costs





The
      Company's policy is to classify shipping and handling costs as selling, general
      and administrative expenses.





Advertising





The
      Company expenses all advertising costs as incurred. For the three months ended
      March 31, 2008 and 2007, the Company incurred approximately $11,600 and $0,
      respectively, in advertising expenses.





Loss
      per common share





The
      Company adheres to Statement of Financial Accounting Standards No. 128, which
      requires reporting of both basic and diluted earnings (loss) per share. Basic
      loss per share is calculated using the weighted average number of common shares
      outstanding in the period. Diluted loss per share includes potentially dilutive
      securities such as outstanding options and warrants, using the “treasury stock”
method and convertible securities using the "if-converted" method. There were
      no
      adjustments required to net loss for the period covered in this report in the
      computation of diluted earnings per share.




8


**EXECUTE
      SPORTS, INC.**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**







**NOTE
      A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Continued)**





Issuance
      of common stock




The
      Company accounts for stock-based compensation using the fair value method of
      Financial Accounting Standard No. 123R. Common shares issued for services
      rendered by a third party (both employees and non-employees) are recorded at
      management’s estimate of the fair value of the shares issued or services
      rendered, whichever is more readily determinable.





Comprehensive
      loss





The
      Company adopted Financial Accounting Standards Board Statement of Financial
      Standards No. 130, “Reporting Comprehensive Income,” which establishes standards
      for the reporting and display of comprehensive income and its components in
      the
      financial statements. There were no items of comprehensive income (loss)
      applicable to the Company during the periods covered in the financial statements
      included in this report.





Income
      taxes





On
      November 1, 2004, the Company amended its Articles of Incorporation to make
      the
      transition from an S-Corporation to a C-Corporation. Prior to the transition,
      the S-Corporation was not a tax paying entity for federal or state income tax
      purposes and thus no provision for income taxes was recognized. Subsequent
      to
      the change, the Company began recognizing the full valuation for deferred tax
      assets (See Note I).





Impact
      of accounting standards





In
      February 2006, the FASB issued SFAS Statement No. 155, “Accounting for Certain
      Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140”
("SFAS 155"). This Statement amends FASB Statements No. 133, Accounting for
      Derivative Instruments and Hedging Activities, and No. 140, Accounting for
      Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
      This Statement resolves issues addressed in Statement 133 Implementation Issue
      No. D1, “Application of Statement 133 to Beneficial Interests in Securitized
      Financial Assets.” This Statement permits fair value re-measurement for any
      hybrid financial instrument that contains an embedded derivative that otherwise
      would require bifurcation, clarifies which interest-only strips and
      principal-only strips are not subject to the requirements of Statement 133,
      establishes a requirement to evaluate interests in securitized financial assets
      to identify interests that are freestanding derivatives or that are hybrid
      financial instruments that contain an embedded derivative requiring bifurcation,
      clarifies that concentrations of credit risk in the form of subordination are
      not embedded derivatives and amends Statement 140 to eliminate the prohibition
      on a qualifying special-purpose entity from holding a derivative financial
      instrument that pertains to a beneficial interest other than another derivative
      financial instrument. SFAS 155 is effective for all financial instruments
      acquired or issued for the Company for fiscal year begins after September 15,
      2006. The adoption of this standard
      is not expected to have a material effect on the Company’s results of operations
      or financial position.




9


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**
 
  **NOTE
        A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
        POLICIES**





Impact
      of accounting standards (Continued)





In
      March
      2006, the FASB issued SFAS No. 156 ("FAS 156"), "Accounting for Servicing of
      Financial Assets—An Amendment
      of
      FASB Statement No. 140." Among other requirements, FAS 156 requires a company
      to
      recognize a servicing asset or servicing liability when it undertakes an
      obligation to service a financial asset by entering into a servicing contract
      under certain situations. Under FAS 156 an election can also be made for
      subsequent fair value measurement of servicing assets and servicing liabilities
      by class, thus simplifying the accounting and provide for income statement
      recognition of potential offsetting changes in the fair value of servicing
      assets, servicing liabilities and related derivative instruments. The Statement
      was effective beginning the first fiscal year that begins after September 15,
      2006. The Company does not believe that this accounting pronouncement will
      have
      a material impact on its financial position or results of operations.





In
      June
      2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes—an
      interpretation of FASB No. 109. This Interpretation clarifies the accounting
      for
      uncertainty in income taxes recognized in an enterprise’s financial statements
      in accordance with FASB No. 109, “Accounting for Income Taxes”. This
      interpretation prescribes recognition of threshold and measurement attribute
      for
      the financial statement recognition and measurement of a tax position taken
      or
      expected to be taken in a tax return. This interpretation also provides guidance
      on derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure, and transition. This interpretation is effective for fiscal
      years beginning after December 15, 2006. Earlier application is permitted if
      the
      entity has not yet issued interim or annual financial statements for that fiscal
      year. The adoption of this standard is not expected to have a material effect
      on
      the Company’s results of operations or financial position.





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      157, “Fair Value Measurements.” The standard provides guidance for using fair
      value to measure assets and liabilities. Under the standard, fair value refers
      to the price that would be received to sell an asset or paid to transfer a
      liability in an orderly transaction between market participants in the market
      in
      which the reporting entity transacts. The standard clarifies the principle
      that
      fair value should be based on the assumptions market participants would use
      when
      pricing the asset or liability. In support of this principle, the standard
      establishes a fair value hierarchy that prioritizes the information used to
      develop those assumptions. The Statement is effective for financial statements
      issued for fiscal years beginning after November 15, 2007, and interim periods
      within those fiscal years. The Company is currently evaluating the Statement
      to
      determine what impact, if any, it will have on the Company.





10


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**





Impact
      of accounting standards (Continued)





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans, an amendment of FASB Statements No. 87, 88, 106 and 132R” (“SFAS 158”).
      This statement requires balance sheet recognition of the funded status, which
      is
      the difference between the fair value of plan assets and the benefit obligation,
      of pension and postretirement benefit plans as a net asset or liability, with
      an
      offsetting adjustment to accumulated other comprehensive income in shareholders’
equity. In addition, the measurement date, the date at which plan assets and
      the
      benefit obligation are measured, is required to be the company’s fiscal year
      end. The Company does not believe that this accounting pronouncement will have
      a
      material impact on its financial position or results of operations.





In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      159, “The Fair Value Option for Financial Assets and Financial Liabilities”.
      This statement permits entities to choose to measure many financial instruments
      and certain other items at fair value. The objective is to improve financial
      reporting by providing entities with the opportunity to mitigate volatility
      in
      reported earnings caused by measuring related assets and liabilities differently
      without having to apply complex hedge accounting provisions. This Statement
      is
      expected to expand the use of fair value measurement, which is consistent with
      the Company’s Board of Directors long-term measurement objectives for accounting
      for financial instruments. This Statement is effective as of the beginning
      of an
      entity’s first fiscal year that begins after November 15, 2007. The Company does
      not believe that this recent accounting pronouncement will have a material
      impact on its financial position or results of operations.





In
      December 2007, the FASB issued SFAS 141(revised 2007), Business
      Combinations (“SFAS 141R”). SFAS 141R will significantly change the
      accounting for business combinations in a number of areas including the
      treatment of contingent consideration, contingencies, acquisition costs,
      IPR&D and restructuring costs. In addition, under SFAS 141R, changes in
      deferred tax asset valuation allowances and acquired income tax uncertainties
      in
      a business combination after the measurement period will impact income tax
      expense. SFAS 141R is effective for fiscal years beginning after
      December 15, 2008 and, as such, the Company will adopt this standard in
      fiscal 2010. The Company has not yet determined the impact, if any, of
      SFAS 141R on its consolidated financial statements.




In
      December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
      Consolidated Financial Statements, an amendment of ARB No. 51
      (“SFAS 160”). SFAS 160 will change the accounting and reporting for
      minority interests, which will be recharacterized as noncontrolling interests
      (NCI) and classified as a component of equity. This new consolidation method
      will significantly change the account with minority interest holders.
      SFAS 160 is effective for fiscal years beginning after December 15,
      2008 and, as such, the Company will adopt this standard in fiscal
      2010. The Company does not believe that this recent accounting pronouncement
      will have a material impact on its financial position or results of operations.




11


**EXECUTE
      SPORTS, INC.**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**







**NOTE
      A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**




Concentrations
      of credit risk





The
      Company performs ongoing credit evaluations of its customers. As of March 31,
      2008, four customers accounted for 87% (31%, 31%, 14 and 10%) of accounts
      receivable. As of March 31, 2007, two customers accounted for 59% (47% and
      12%)
      of accounts receivable.





For
      the
      three months ended March 31, 2008, one customer accounted for approximately
      82%
      of sales. For the three months ended March 31, 2007, two customers accounted
      for
      approximately 91% of sales (65% and 26%).





For
      the
      three months ended March 31, 2008 and 2007, approximately 2% and 0%,
      respectively, of the Company’s net sales were made to customers outside the
      United States.





The
      Company is dependent of third-party manufacturers and distributors for all
      of
      its supply of inventory. For the three months ended March 31, 2008, the
      Company's two largest suppliers accounted for 95% (85% and 10%) of product
      purchases. For the three months ended March 31, 2007, the Company's two largest
      suppliers accounted for 96% (77% and 19%) of product purchases.





The
      Company has maintained balances in excess of federally insured limits from
      time
      to time during the quarter. Management periodically reviews the adequacy and
      strength of the financial institutions and deems this to be an acceptable risk.





Disclosure
      about Fair Value of Financial Instruments





The
      Company estimates that the fair value of all financial instruments at March
      31,
      2008, as defined in FASB 107, does not differ materially from the aggregate
      carrying values of its financial instruments recorded in the accompanying
      balance sheet. The estimated fair value amounts have been determined by the
      Company using available market information and appropriate valuation
      methodologies. Considerable judgment is required in interpreting market data
      to
      develop the estimates of fair value, and accordingly, the estimates are not
      necessarily indicative of the amounts that the Company could realize in a
      current market exchange.





12


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      B - PROPERTY AND EQUIPMENT**





Property
      and equipment at March 31, 2008 consists of the following:


2008Computer
                  and office equipment
              
              $
              127,745Furniture
                  and fixtures
              
              
              2,281Machinery
                  and equipment
              
              
              11,262Boat
                  molds
              
              
              1,000,000$
              1,141,288Less:
                  Accumulated Depreciation
              
              
              (155,404
              )$
              985,884


Depreciation
      expense for the three months ended March 31, 2008 and 2007 was $102,630 and
      $2,530, respectively.





**NOTE
      C - INTANGIBLE ASSETS**





On
      August
      29, 2007, Execute Sports, Inc. (the "Company" or "Execute Sports") entered
      into
      an Asset Purchase Agreement (the "Agreement") with Challenger Powerboats, Inc.
      ("Challenger") and its wholly owned subsidiary, IMAR Group, Inc. ("IMAR",
      together with Challenger, the "Sellers"), pursuant to which Execute Sports
      purchased from the Sellers, and Sellers sold and transferred to Execute Sports,
      all right, title, interest and goodwill in and to certain assets, properties
      and
      rights relating to, used in or held for use in IMAR's business of designing,
      manufacturing and marketing water jet powered Sugar Sands boats, including
      the
      SUGAR SAND trade names and associated trade names, trademarks, service marks
      and
      service names, and the associated logos and their goodwill, and all associated
      domain names, in particular the domain www.sugarsand.com, trades secrets and
      copyrights and their goodwill. The purchase price was $5,000,000. Execute Sports
      did not assume any obligations of IMAR in connection with the acquisition,
      other
      than the obligation to procure or maintain permits in connection with the
      post-closing operation of the Business by the Company. The following trade
      names
      were included in the purchase: Sugar Sand, Sugar Sand Sting, Sugar Sand Tango,
      Sugar Sand Mirage, Sugar Sand Calais, Sugar Sand Oasis, and Sugar Sand
      Airwave.




In
      connection with the transaction, Execute Sports and IMAR entered into an
      Agreement for Exclusive Right of Supply, pursuant to which IMAR will manufacture
      and be the exclusive supplier of the Sugar Sand line of jet boats to Execute
      Sports, for an initial term of 10 years. In addition, Execute Sports entered
      into an Exclusive Sales and Marketing Agreement with Challenger, pursuant to
      which Challenger will provide sales and marketing services related to the Sugar
      Sand boats for an initial term of 10 years.





The
      $5,000,000 purchase price was allocated $1,000,000 to boat molds, $500,000
      to
      marketing/sales infrastructure and client lists, and $3,500,000 to trademarks
      resulting in an increase of $1,000,000 to our net fixed assets and $4,000,000
      to
      intangible assets.




13


**EXECUTE
          SPORTS, INC.**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


During
      the three months ended March 31, 2008, the Company recognized $25,000 of
      amortization related to the $500,000 of marketing/sales infrastructure and
      client lists.





**NOTE
      D - LOANS RECEIVABLE**





During
      2005 and 2006, the Company made strategic loans totaling $396,127 for potential
      future association to an unaffiliated company that accrues interest at 2% per
      year and due 12 months from the date of draw.





As
      of
      March 31, 2008, the entire balance of the loans was in default. However, we
      are
      in the process of collections and believe a portion will be collected.
      Therefore, the Company has created a reserve of $250,000 against the
      loans.





**NOTE
      E - CONVERTIBLE DEBENTURES**





***May
      15, 2006 Debenture ($1,900,000)***





On
      May
      15, 2006, the Company completed a private placement of convertible debentures
      generating gross proceeds of $1.9 million, and the issuance of warrants to
      purchase $475,000 worth of the Company’s common stock. Third party fees totaled
      $191,000, which were paid in cash.





The
      terms
      of the warrants and debentures are substantially the same. The exercise price
      of
      the warrants is calculated the same as for the conversion price of the
      convertible debentures. The warrants and debentures are immediately exercisable.
      The debentures bear interest at 12% per annum, interest payable monthly at
      the
      option of the Holder in cash or common stock. The debenture agreement payment
      schedule provides for full repayment by September 15, 2007, or sixteen (16)
      months from the closing date. However, the debenture agreement maturity date
      is
      September 30, 2011 at which time any remaining principle balance automatically
      converts to the Company’s common stock. The Company has recorded the entire
      principle balance of $1,900,000 of this debenture as a current liability due
      to
      the short term nature of the agreement payment schedule.





Prior
      to
      maturity, the debentures and warrants are convertible into the Company's common
      stock at a fixed conversion price equal to the lowest closing bid price of
      the
      common stock between the issuance date and the date of the filing the
      registration statement covering resale of the shares underlying the debenture,
      or at a conversion price of fifteen cents ($.15). Since the Company’s stock
      price did not decline below $0.15 prior to the filing of the registration
      statement, $0.15 is the fixed conversion price for this debenture and associated
      warrants.





The
      debentures provide that the Holders may only convert the debenture if the number
      of shares held by the lender or its affiliates after conversion would not exceed
      4.99% of the outstanding shares of the Company's common stock following such
      conversion.





14


**EXECUTE
          SPORTS, INC.**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      E - CONVERTIBLE DEBENTURES**





***May
      15, 2006 Debenture ($1,900,000) (Continued)***





In
      connection with the transaction, the Company entered into a Registration Rights
      Agreement. Pursuant to the terms of the Registration Rights Agreement, within
      twenty-one calendar days following the initial closing date, or June 5, 2006,
      the Company was required to file with the Securities and Exchange Commission
      a
      registration statement under the Securities Act of 1933, as amended, covering
      the resale of all of the common stock underlying the convertible debenture
      and
      issuable upon the exercise of the warrants based on a conversion price of $0.15
      per share.





The
      Registration Rights Agreement further provides that if a registration statement
      is not filed within 21 days from the initial closing date, then in addition
      to
      any other rights the Holder may have, and until the registration statement
      is
      filed, the Company would be required to pay the Holder an amount in cash, as
      liquidated damages, equal to an aggregate two percent (2%) of the purchase
      price
      of the debentures. In addition, the conversion price would decrease by 10%
      of
      the fixed conversion price for each fifteen (15) day calendar period that a
      registration statement is not filed. The Registration Rights Agreement further
      provides that if a registration statement is not declared effective within
      80
      days from the initial closing date, then the Company would be required to pay
      the Holder an amount in cash, as liquidated damages, equal to an aggregate
      two
      percent (2%) of the purchase price of the debentures until the registration
      statement becomes effective. The Company initially filed the registration
      statement on May 24, 2006 and it was declared effective on June 15, 2006, or
      30
      days from the initial close date both within the time frames set forth in the
      Registration Rights Agreement.





The
      issuance costs related to the convertible debentures of approximately $191,000
      in cash were capitalized to deferred financing costs on the balance sheet and
      are being amortized over the term of the repayment schedule which is calculated
      based upon the effective interest method. The Company recognized $103,975 and
      $87,025 during the year ended December 31, 2007 and 2006, respectively, as
      other
      expense related to the amortization of the issuance costs. The deferred
      financing costs were fully amortized as of September 30, 2007.





Pursuant
      to Paragraph 9-32 of EITF 00-19, Accounting for Derivative Financial Instruments
      Indexed to, and Potentially Settled in, a Company's Own Stock, the warrants
      issued in connection with the convertible debentures meet the requirements
      of
      and are accounted for as permanent equity since the filing of an effective
      registration statement within the allotted time frames negated any liquidated
      damages, settlement is by delivery of shares only and the exercise price is
      fixed. The initial value of the warrants was treated as a discount to the
      debenture and recorded as additional paid in capital. The Company calculated
      the
      initial value of the warrants on the closing date of the transaction as being
      $633,333 as determined using a Black-Scholes option pricing model with the
      following assumptions: expected term 5 years, exercise price $0.15, volatility
      7.6%, risk free rate 5.15%, and zero dividend yield. The total value of the
      warrants and the debenture was $2.53 million of which the warrants represented
      25%. Thus, the relative value of the warrants to the total value, or 25% was
      applied to the debenture value of $1.90
      million yielding a warrant discount of $475,000. The discount to the debenture
      was amortized over the term of the repayment schedule, or sixteen (16) months,
      and is calculated based upon the effective interest method. The Company
      recognized $269,212 and $205,788 during the year ended December 31, 2007 and
      2006, respectively, in non-cash amortization expense related to the warrant
      discount. The warrant discount was fully amortized as of September 30,
      2007.




15


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      E - CONVERTIBLE DEBENTURES**





***May
      15, 2006 Debenture ($1,900,000) (Continued)***





The
      Company determined that the $1.90 million debenture was issued with a beneficial
      conversion feature (“BCF”) due to the conversion price ($0.15) being less than
      the closing stock price ($.32) on the date of issuance, and the conversion
      feature being in-the-money. Thus, pursuant to EITF 00-27, 27, Application of
      Issue No. 98-5 to Certain Convertible Instruments, the BCF has been determined
      based on the gross debenture amount less the portion attributable to the
      warrants described above, and recorded as a discount to reduce the carry value
      of the debenture and increase additional-paid-in-capital. The Company calculated
      the initial BCF on the closing date of the transaction to be $1,615,000 using
      the intrinsic value method. Since this amount is greater than the $1,425,000
      remaining value of the debenture after deducting for the warrant discount
      described above, the Company reduced the initial carry value of the debenture
      to
      zero effectively recording a BCF of $1,425,000 as additional-paid-in-capital.
      The BCF discount was amortized over the debenture repayment term of sixteen
      (16)
      months and calculated based upon the effective interest method. The Company
      recognized $989,423 and $435,577 during year ended December 31, 2007 and 2006,
      respectively, in non-cash amortization expense attributable to the amortization
      of the beneficial conversion feature discount. The beneficial conversion feature
      was fully amortized as of September 30, 2007.





During
      the three months ended March 31, 2008, the Company made no payments nor issued
      any stock in repayment of this debenture.





During
      the three months ended March 31, 2008 and 2007, the Company recognized $57,480
      and $53,049, in interest expense related to the May 2006 debenture.





The
      debenture balance, including interest and principle as of March 31, 2008 is
      $1,950,476.





***August
      23, 2007 Debenture ($5,750,000)***





On
      August
      23, 2007, the Company completed a private placement of convertible debentures
      generating gross proceeds of $5.75 million, and the issuance of warrants to
      purchase 5,750,000 shares of the Company’s common stock for $.02 per share. Fees
      totaled $307,500, which were paid in cash.





16


**EXECUTE
          SPORTS, INC.**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      E - CONVERTIBLE DEBENTURES**





***August
      23, 2007 Debenture ($5,750,000) (Continued)***





The
      warrants and debentures are immediately exercisable. The debentures bear
      interest at 12% per annum, interest payable monthly at the option of the Holder
      in cash or common stock. The debenture has a term of five (5) years and matures
      August 23, 2012. Any remaining principle balance automatically converts to
      the
      Company’s common stock. The Company is not obligated to make payments until
      maturity. Therefore, the Company has classified the entire balance of $4,424,344
      of this debenture as a non current liability.





Prior
      to
      maturity, the debentures are convertible into the Company's common stock at
      the
      lesser of (i) seventy-five percent (75%) of the lowest closing bid price of
      the
      Common Stock during the twenty (20) trading days immediately prior to a
      Conversion Notice; or (ii) 2/100 U.S. dollars ($.02).





The
      debentures provide that the Holders may only convert the debenture if the number
      of shares held by the lender or its affiliates after conversion would not exceed
      4.99% of the outstanding shares of the Company's common stock following such
      conversion.





The
      issuance costs related to the convertible debentures of approximately $307,500
      in cash were capitalized to deferred financing costs on the balance sheet and
      are being amortized over the term of the debenture which is calculated based
      upon the effective interest method. During the three months ended March 31,
      2008, the Company recognized $15,032 as other expense related to the
      amortization of the issuance costs. The balance of deferred financing costs
      as
      of March 31, 2008 was $272,490.





Pursuant
      to Paragraph 9-32 of EITF 00-19, Accounting for Derivative Financial Instruments
      Indexed to, and Potentially Settled in, a Company's Own Stock, the warrants
      issued in connection with the convertible debentures meet the requirements
      of
      and are accounted for as permanent equity since settlement is by delivery of
      shares only and the exercise price is fixed. The initial value of the warrants
      was treated as a discount to the debenture and recorded as additional paid
      in
      capital. The Company calculated the initial value of the warrants on the closing
      date of the transaction as being $53,759 as determined using a Black-Scholes
      option pricing model with the following assumptions: expected term 5 years,
      exercise price $0.02, Strike price $.025, volatility 14.28%, risk free rate
      4.62%, and zero dividend yield. The discount to the debenture is being amortized
      over the term of the debenture and is calculated based upon the effective
      interest method. During the three months ended March 31, 2008, the Company
      recognized $2,678 in non-cash amortization expense related to the warrant
      discount.





The
      Company determined that the debenture was issued with a beneficial conversion
      feature (“BCF”) due to the conversion price ($0.020) being less than the closing
      stock price ($.025) on the date of issuance, and the conversion feature being
      in-the-money. Thus, pursuant to EITF 00-27, 27, Application of Issue No. 98-5
      to
      Certain Convertible Instruments, the BCF has been determined based on the gross
      debenture amount less the portion attributable to the warrants, and recorded
      as a discount to reduce the carry value of the debenture and increase
      additional-paid-in-capital. The Company calculated the initial BCF on the
      closing date of the transaction to be $1,424,185 using the intrinsic value
      method. The BCF discount is being amortized over the term of the debenture.
      During the three months ended March 31, 2008, the Company recognized $63,184
      in
      non-cash amortization expense attributable to the amortization of the BCF
      discount.




17


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      E - CONVERTIBLE DEBENTURES**





***August
      23, 2007 Debenture ($5,750,000) (Continued)***





During
      the three months ended March 31, 2008, the Company issued 123,900 shares of
      common stock in payment of $1,041 of interest related to the August 2007
      debenture.





During
      the three months ended March 31, 2008, the Company recognized $172,027 in
      interest expense related to this debenture.





The
      debenture balance, including interest and principle as of March 31, 2008 is
      $6,051,025.





As
      of
      March 31, 2008, the actual dollar amount due to the Holders of the Company’s May
      15, 2006 ($1.9 million), and August 23, 2007 ($5.75 million) debentures was
      $8,001,501. The following table represents the actual balance due compared
      to
      the amount recorded on the balance sheet as of March 31, 2008:


December
                  31,2007Amount
                  borrowed under the convertible debentures
              
              
              7,650,000Accrued
                  interest
              
              
              351,501Debenture
                  balance payable
              
              
              8,001,501Unamortized
                  beneficial conversion feature
              
              
              (1,278,143
              )Unamortized
                  Warrant discount
              
              
              (47,513
              )Recorded
                  debenture balance
              
              
              6,675,845BALANCE
                  SHEET ACCOUNTSCurrent
                  portion of convertible debentures
              
              
              1,900,000Interest
                  accrued on convertible debentures
              
              
              351,501Non-current
                  portion of convertible debentures
              
              
              4,424,344Recorded
                  debenture balance
              
              
              6,675,845


***Investment
      Agreement***





In
      connection with the debenture, the Company entered into a separate Investment
      Agreement on May 15, 2006 with Dutchess Private Equities Fund, L.P.
      ("Dutchess"), which provides for the sale and issuance from time to time of
      up
      to $10,000,000 in shares of Common Stock for a period of up to 36 months from
      the date the Registration Statement is declared effective. The maximum number
      of
      shares that the Company may put to Dutchess at any one time shall be equal
      to,
      at the Company's election, either (a) 200% of the average daily volume in the
      U.S. market
      of
      the Common Stock for the ten trading days prior to the date the Company notifies
      Dutchess of its intent to sell shares to Dutchess, multiplied by the average
      of
      the three daily closing bid prices immediately preceding the date a Put Notice
      is delivered, or (b) a number of shares having a value of $100,000. The Company
      may not submit a Put Notice until after the completion of a previous sale under
      the Investment Agreement. The purchase price for the Common Stock to be sold
      shall be equal to 93% of the lowest closing best bid price of the Common Stock
      during the five-day period following the date the Company delivers a Put Notice.
      Since the price of the shares put to Dutchess are expected to be below market
      price at 93% of the market price, there is no added benefit to the Company.
      Thus, the Company has not recorded an asset related to this agreement. Upon
      the
      delivery of shares and receipt of cash related to this Investment Agreement,
      the
      Company records the increase in cash or decrease in debenture interest and
      principle, and an increase in common stock and additional paid in capital.




18


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      E - CONVERTIBLE DEBENTURES (Continued)**





***Investment
      Agreement (Continued)***





During
      the three months ended March 31, 2008, the Company placed puts with Dutchess
      totaling $1,041 resulting in the issuance of 123,900 shares of common stock
      that
      reduced the same amount of accrued interest.





**NOTE
      F - NOTES PAYABLE**





***Notes
      Payable***





Non-related
      party notes payable at March 31, 2008 is as follows:


Unsecured
                  demand note payable bearing interest at 2% per year; currently
                  in
                  default.
              
              $
              9,538Unsecured
                  demand note payable to John Helms bearing interest at 4% per year;
                  matures
                  3/31/09.
              
              $
              63,370Unsecured
                  demand note payable to New Heart Ministries, bearing interest at
                  4% per
                  year; currently in default.
              
              $
              2,925Unsecured
                  demand note payable to Pacific Sports Investors LLC, bearing interest
                  at
                  15% per year; currently in default.
              
              $
              48,923Secured
                  demand note payable to Hector Peneda, bearing interest at 12% per
                  year
                  collateralized by 40,000 shares of common stock; currently in
                  default.
              
              $
              8,800Secured
                  promissory note to Dutchess Private Equities Fund, Ltd., bearing
                  interest
                  at 12% per year and collateralized by however many shares are needed
                  to
                  settle the debt; matures May 1, 2008.
              
              $
              45,623Secured
                  promissory note to Dutchess Private Equities Fund, Ltd., bearing
                  interest
                  at 12% per year and collateralized by however many shares are needed
                  to
                  settle the debt; matures September 13, 2008.
              
              $
              312,000Unsecured
                  demand note payable April 21, 2008 and including a 4.5% fee of
                  $2,516.
              
              $
              58,431**TOTAL**
              
              $
              549,610
  19
 **EXECUTE
          SPORTS, INC.**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      F - NOTES PAYABLE (Continued)**





***Notes
      Payable (Continued)***





The
      interest rate offered on the 2% through 4% loans above is below market rate.
      The
      Company has determined the difference between the stated interest rate and
      the
      rate available at the date of the loan(s) would be immaterial to these financial
      statements.





In
      January 2008, the Company issued 991,349 shares of common stock to John Helms
      in
      exchange for $11,797 in amounts owed to him, including accrued interest of
      $816
      and principle of $10,981.





On
      May 1,
      2007, the Company issued to Dutchess a promissory note in the face amount of
      $132,000 for gross proceeds of $110,000. The Note bears interest at 12% per
      annum and matures on May 1, 2008. Pursuant to the Note, the Company is required
      to make payments to Dutchess in
      the
      amount of the greater of a) one hundred percent (100%) of each Put (as defined
      in the Investment Agreement (See Note G) between the Company and the Investor
      given to Dutchess from the Company; or b) eleven thousand seven hundred
      twenty-one dollars and 39/100 ($11,721.39) until the Face Amount is paid in
      full, minus any fees due. In connection with the issuance of the Note, the
      Company has agreed to provide Collateral to Dutchess in the form of thirty
      (30)
      Put Notices. In the event that the Company has not repaid the Face Amount by
      the
      maturity date, then as liquidated damages, the face amount shall be increased
      by
      ten percent (10.0%) as an initial penalty *and* an
      additional two and one-half percent (2.5%) per month (pro rata for partial
      periods), compounded daily, for each month until the face amount is paid in
      full.





As
      an
      incentive to enter into this note, the Company issued to Dutchess 800,000 shares
      of the Company’s restricted common stock. During the year ended December 31,
      2007, the Company issued 4,699,033 shares of common stock in repayment of
      $86,377 of the May 1, 2007 promissory note, which has a balance of $45,623
      as of
      March 31, 2008.





On
      August
      13, 2007, the Company issued to Dutchess a promissory note in the face amount
      of
      $312,000 for gross proceeds of $260,000. The Note bears interest at 12% per
      annum and matures on September 13, 2008. Pursuant to the Note, the Company
      is
      required to make payments to Dutchess in
      the
      amount of one hundred percent (100%) of each Put (as defined in the Investment
      Agreement until the Face Amount is paid in full, minus any fees due. In
      connection with the issuance of the Note, the Company has agreed to provide
      Collateral to Dutchess in the form of thirty (30) Put Notices. In the event
      that
      the Company has not repaid the Face Amount by the maturity date, then as
      liquidated damages, the face amount shall be increased by ten percent (10.0%)
      as
      an initial penalty *and* an
      additional two and one-half percent (2.5%) per month (pro rata for partial
      periods), compounded daily, for each month until the face amount is paid in
      full.





During
      the three months ended March 31, 2008, the Company borrowed $55,915 from a
      single source for the purchase of goods for resale. The loan includes a 4.5%
      fee, or $2,516 bringing the total amount due to $58,431, which is due April
      21,
      2008.





20


**EXECUTE
          SPORTS, INC.**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      F - NOTES PAYABLE (Continued)**





***Notes
      Payable (Continued)***





During
      the three months ended March 31, 2008 and 2007, the Company recognized $6,130
      and $3,674 of interest expense related to the notes above. No interest was
      paid
      during the three months ended March 31, 2008 or 2007.





***Related
      Party Notes Payable***





Related
      party Notes payable at March 31, 2008 is as follows:


Secured
                  demand note payable to Craig Hudson, bearing interest at 12% per
                  year
                  collateralized by 116,000 shares of common stock; currently in
                  default.
              
              $
              32,065Unsecured
                  demand note payable to Sheryl Gardner, former CFO, bearing interest
                  at 4%
                  per year.
              
              $
              47,225Unsecured
                  demand note payable to Phase 2 Sales, owned by Geno Apicella, CEO,
                  bearing
                  fees of 4.5% per purchase order transaction and maturing May 15,
                  2008.
              
              $
              90,000Total
              
              $
              169,290


During
      the three months ended March 31, 2008, the Company borrowed $90,000 from Phase
      2
      Sales, a corporation owned by Geno Apicella, CEO. The funds are being used
      to
      purchase goods for resale and bear interest of 4.5% per purchase transaction.
      The funds are due May 15, 2008.





During
      the three months ended March 31, 2008 and 2007, the Company recognized $5,484
      and $1,434, respectively, of interest expense related to the notes above. No
      interest was paid during the three months ended March 31, 2008 or 2007.





**NOTE
      G - STOCKHOLDERS’ EQUITY**





During
      the year ended December 31, 2007, the Company issued 3,266,968 shares of common
      stock valued at the closing price of the stock on the date of issuance, or
      $110,532 to two of its directors as payment in lieu of cash.





During
      the year ended December 31, 2007, the Company issued 3,177,271 shares of common
      stock valued at the closing price of the stock on the date of issuance, or
      $101,519 as payment for services rendered in lieu of cash.





During
      the year ended December 31, 2007, the Company issued 1,400,000 shares of common
      stock valued at the closing price of the stock on the date of issuance, or
      $28,600 to the Holders of our convertible debentures as an inducement to make
      short term loans to the Company for the purpose of financing production and
      working capital.





21


**EXECUTE
        SPORTS, INC.**
 **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      G - STOCKHOLDERS’ EQUITY (Continued)**





During
      the year ended December 31, 2007, the Company issued 8,933,552 shares of common
      stock in exchange for the retirement of $205,476 of principal amount owed and
      $14,145 of accrued interest thereon. The stock was valued at the closing price
      of the stock on the date of issuance and resulted in an increase to shareholders
      equity of $186,114 and a gain of $33,507.





During
      the year ended December 31, 2007, the Company issued 31,894,880 shares to
      Dutchess pursuant to the Investment Agreement (See NOTE E). The total value
      of
      the shares on the dates of issuance was $683,543. Of this amount $76,168 was
      received in cash, $219,530 was applied to promissory notes made to the Company
      (See Note F), $54,250 was recognized as a loss due to the conversion discount,
      $217,073 was applied to accrued interest on the May 2006 debenture and $116,525
      was applied to accrued interest on the August 2007 debenture.





During
      three months ended March 31, 2008, the Company issued 750,000 shares of common
      stock valued at the closing price of the stock on the date of issuance, or
      $12,000 to two of its directors as payment in lieu of cash.





During
      three months ended March 31, 2008, the Company issued 1,125,000 shares of common
      stock valued at the closing price of the stock on the date of issuance, or
      $15,000 as payment for services rendered in lieu of cash.





During
      three months ended March 31, 2008, the Company issued 991,349 shares of common
      stock in exchange for the retirement of $10,981 of principal amount owed and
      $816 of accrued interest. The stock was valued at the closing price of the
      stock
      on the date of issuance.





During
      three months ended March 31, 2008, the Company issued 123,900 shares to Dutchess
      pursuant to the Investment Agreement (See NOTE E). The total value of the shares
      on the dates of issuance was $1,041. This amount was applied to accrued interest
      on the August 2007 debenture.





**NOTE
      H - WARRANTS**





At
      March
      31, 2008, the Company had 15,661,667 Warrants outstanding entitling the holder
      thereof the right to purchase one share of common stock for each warrant held
      as
      follows:




ExerciseWarrant
              
              Number
                  of
              
              Price
                  Per
              
              ExpirationClass
              
              Warrants
              
              Warrant
              
              DateMay
                  2006 Debenture
              
              
              2,911,667
              
              $
              0.150
              
              
              5/15/11August
                  2007 Debenture
              
              
              5,750,000
              
              $
              0.020
              
              
              8/23/12B
              
              
              5,000,000
              
              $
              0.001
              
              
              5/23/012B
              
              
              2,000,000
              
              $
              0.001
              
              
              5/23/012Total
              
              
              15,661,667
  22
 
 **EXECUTE
              SPORTS, INC.**
 **NOTES
              TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
              THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      H - WARRANTS (Continued)**





During
      the three months ended March 31, 2008, the Company canceled 500,000 warrants
      that had expired.





*Stock
      Warrants Issued to Third Parties*





The
      Company accounts for stock-based compensation issued to non-employees in
      accordance with the provisions of SFAS 123 and the Emerging Issues Task Force
      consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments
      that are Issued to Other Than Employees for Acquiring or in Conjunction with
      Selling, Goods or Services."





In
      addition, the Company evaluates each derivative issued to determine whether
      treatment as either equity or a liability is warranted for that derivative
      pursuant to EITF 00-19, Accounting for Derivative Financial Instruments Indexed
      to, and Potentially Settled in a Company's Own Stock of that
      derivative.





**NOTE
      I - NET OPERATING LOSS CARRY FORWARD**





In
      assessing the ability to realize deferred tax assets, management considers
      whether it is more likely than not that some portion or all of the deferred
      tax
      assets will not be realized. The ultimate realization of deferred tax assets
      is
      dependent upon the generation of future taxable income during the periods in
      which those temporary differences become deductible. Management considers the
      scheduled reversal of deferred tax liabilities, projected future taxable income
      and tax planning strategies in making this assessment.





At
      December 31, 2007, a valuation allowance for the full amount of the net deferred
      tax asset was recorded because of uncertainties as to the amount of taxable
      income that would be generated in future years.




United
      States Corporation Income Taxes




Period
                of Loss
            
            Amount
            
            Expiration
                DateDecember
                31, 2007
            
            $
            2,276,281
            
            
            December
                31, 2027December
                31, 2006
            
            $
            5,089,954
            
            
            December
                31, 2026December
                31, 2005
            
            $
            574,866
            
            
            December
                31, 2025December
                31, 2004
            
            $
            420,421
            
            
            December
                31, 2024





Prior
      to
      November 2004 the Company was organized as an S-Corporation and all losses
      were
      distributed and recognized through the tax returns of the owners. The book
      loss
      for the fiscal year ended December 31, 2007, was $2,671,410. As of December
      31,
      2007, a valuation allowance for the full amount of the net deferred tax asset
      has been recognized over the period for $3,344,610, based on an anticipated
      tax
      rate of 40%.





23


**EXECUTE
          SPORTS, INC.**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


**NOTE
      J - GOING CONCERN AND MANAGEMENT’S PLANS**





The
      Company has suffered recurring losses from operations since inception. In
      addition, the Company has yet to generate an internal cash flow from its
      business operations. These factors raise substantial doubt about its ability
      to
      continue as a going concern.





Management’s
      plans with regard to these matters encompass the following actions: 1) obtain
      funding from new investors to alleviate the Company’s working capital
      deficiency; and 2) implement a plan to generate additional sales. The Company’s
      continued existence is dependent upon its ability to resolve its liquidity
      problems and increase profitability in its current business operations. However,
      the outcome of management’s plans cannot be ascertained with any degree of
      certainty. The accompanying consolidated financial statements do not include
      any
      adjustments that might result from the outcome of these risks and
      uncertainty.





**NOTE
      K - RELATED PARTY TRANSACTIONS**





In
      January 2008, just prior to his departure as a board member, the Company made
      payments totaling $2,000 to Craig Washington for accounting
      services.





During
      the three months ended March 31, 2008, the Company borrowed $90,000 from Phase
      2
      Sales, a corporation owned by Geno Apicella, CEO (See NOTE F).





**NOTE
      L - CONTINGENCIES**





*Litigation*





The
      Company is involved in various legal proceedings arising in the ordinary course
      of business. The ultimate outcome of these proceedings cannot be determined
      because of the uncertainties that exist. In the opinion of management, the
      disposition of matters that are pending or asserted will not have a materially
      adverse effect on the financial position, results of operations or cash flows
      of
      the Company.




24




**Item
      2 - Management's Discussion and Analysis or Plan of
      Operations**





This
      management’s discussion and analysis of results of operations and financial
      condition contains forward-looking statements that involve risks and
      uncertainties. In some cases, you can identify these statements by
      forward-looking words such as "may," "might," "will," "should," "expect(s),"
      "plan(s)," "anticipate(s)," "believe(s)," "estimate(s)," "predict(s),"
      "intend(s)," "potential" and similar expressions. All of the forward-looking
      statements contained in this registration statement are based on estimates
      and
      assumptions made by our management. These estimates and assumptions reflect
      our
      best judgment based on currently known market and other factors. Although we
      believe such estimates and assumptions are reasonable, they are inherently
      uncertain and involve risks and uncertainties. In addition, management’s
      assumptions about future events may prove to be inaccurate. We caution you
      that
      the forward-looking statements contained in this registration statement are
      not
      guarantees of future performance and we cannot assure you that such statements
      will be realized. In all likelihood, actual results will differ from those
      contemplated by such forward-looking statements as a result of a variety of
      factors, including, but not limited to, those factors discussed in "Risk
      Factors" and included in our on Form 10-KSB for the fiscal year ended December
      31, 2007. Except as required by law, we undertake no obligation to update any
      of
      these forward-looking statements.





The
      discussion and analysis of our financial condition and results of operations
      are
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America (“GAAP”). The following discussion of our financial condition and
      results of operations should be read in conjunction with our audited
      consolidated financial statements for the years ended December 31, 2007 and
      2006, together with notes thereto included on Form 10-KSB as filed with the
      Commission on March 31, 2008.





***Critical
      Accounting Policies***





The
      Company’s discussion and analysis of its results of operations, financial
      condition and liquidity are based upon the Company’s financial statements, which
      have been prepared in accordance with accounting principles generally accepted
      in the United States. The preparation of these financial statements requires
      the
      Company to make estimates and judgments 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 period. The Company bases its estimates on historical
      experience and on various other assumptions that it believes to be reasonable
      under the circumstances. Actual results may materially differ from these
      estimates under different assumptions or conditions. On an on-going basis,
      the
      Company reviews its estimates to ensure that the estimates appropriately reflect
      changes in its business.





***Inventories***





Inventories
      are valued at the lower of cost or market and primarily consist of wetsuits,
      sticker kits and related accessories. Cost is determined using the average
      cost
      method. The inventory balance reflects management’s estimate of net realizable
      value. Management performs periodic assessments based on our understanding
      of
      market conditions and forecasts of future product demand to determine the
      existence of obsolete, slow moving and non-salable inventories, and records
      the
      necessary adjustment at the time of assessment directly to the statement of
      operations to reduce such inventories to their net realizable value. If the
      actual amount of obsolete inventory significantly exceeds the inventory balance,
      the Company’s costs of goods sold and gross profit and resulting net income or
      loss would be significantly adversely affected.




25





***Revenue
      recognition***





The
      Company recognizes revenue when the product is shipped. At that time, the title
      and risk of loss transfer to the customer, and collectability is reasonably
      assured. Collectability is evaluated on an individual customer basis taking
      into
      consideration historical payment trends, current financial position, results
      of
      independent credit evaluations and payment terms. Additionally, an estimate
      of
      product returns are recorded when revenue is recognized. Estimates are based
      on
      historical trends taking into consideration current market conditions, customer
      demands and product sell through.  If actual sales returns significantly
      exceed the recorded estimated expense, the Company’s sales would be adversely
      affected.





The
      Company recognizes revenue under the guidance provided by the SEC Staff
      Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” and the Emerging
      Issues Task Force (“EITF”) Abstract No. 99-19 “Reporting Revenue Gross as a
      Principal versus Net as an Agent” (“EITF 99-19”). Pursuant to EITF 99-19, the
      Company recognizes revenue from the sale of Sugar sand boats on a gross
      basis.





***Allowance
      for doubtful accounts***





The
      Company maintains an allowance for doubtful accounts for estimated losses
      resulting from the inability of its customers to make required payments. An
      estimate of uncollectible amounts is made by management based upon historical
      bad debts, current customer receivable balances and aging, the customer’s
      financial condition and current economic conditions. If a significant number
      of
      customers with significant receivable balances in excess of the allowance fail
      to make required payments, the Company’s operating results would be
      significantly adversely affected. Based on management’s assessment, the Company
      provides for estimated uncollectible amounts through a charge to earnings and
      a
      credit to the valuation allowance. Balances that remain outstanding after the
      Company has used reasonable collection efforts are written off through a charge
      to the valuation allowance and a credit to accounts receivable. The Company
      generally does not require collateral.





***Product
      Warranty***





The
      Company’s Watersports products carry a ninety-day warranty. Warranty costs are
      charged against sales in the period products are sold as a reduction in the
      selling price. Historically, warranty costs have been less than 1% of sales.
      In
      estimating its warranty obligations, the Company considers various relevant
      factors, including the Company’s stated warranty policies, the historical
      frequency of claims, and the cost to replace or repair the product. If the
      actual amount of warranty claims significantly exceeds the estimated expense,
      the Company’s costs of goods sold and gross profit and resulting net income or
      loss would be significantly adversely affected.




26





***Income
      taxes***





On
      November 1, 2004, the Company amended its Articles of Incorporation to make
      the
      transition from an S-Corporation to a C-Corporation. Prior to this transaction,
      the S Corporation was not a tax paying entity for federal or state income tax
      purposes and thus no provision for income taxes was recognized. The Company
      accounts for income taxes using the asset and liability method. Deferred tax
      assets and liabilities are recognized for the future tax consequences
      attributable to the differences between the financial statement carrying amounts
      of existing assets and liabilities and their respective tax bases and operating
      loss and tax credit carryforwards. Deferred tax assets and liabilities are
      measured using enacted rates 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. In assessing the realizability of
      deferred income tax assets, the Company considers whether it is more likely
      than
      not that some portion or all of the deferred income tax assets will be realized.
      The ultimate realization of deferred income tax assets is dependent upon the
      generation of future taxable income during the periods in which those temporary
      differences become deductible.  SFAS No. 109 requires a valuation allowance
      to be recorded when it is more likely than not that some or all of the deferred
      tax assets will not be realized. The Company has recorded a valuation allowance
      for the full amount of the net deferred tax asset because of uncertainties
      as to
      the amount of taxable income that would be generated in future
      years.





**Overview**





**Results
      of Operations**





THREE
      MONTHS ENDED MARCH 31, 2008 AND 2007





***Revenue***





Net
      Sales
      for the three months ended March 31, 2008 and 2007 were $1,804,954 and $553,482,
      respectively, representing a $1,251,472, or 226% increase. The three month
      year-over-year increase is due to $1,475,731 of sales related to Sugar Sand
      boats that were not part of the Company’s product portfolio during the same
      period in the previous year. Watersports sales decreased $224,259, or 41% from
      the previous year due to production delays that pushed deliveries in to the
      first quarter compared to the first quarter of 2007.





***Gross
      Margin***





Gross
      margin for the three months ended March 31, 2008 and 2007 was $153,700 or 9%
      of
      revenue and $212,535, or 38% of revenue, respectively. The $58,835 decrease
      in
      gross margin over the previous year was primarily due to Sugar Sand sales which
      have approximately a 5% gross margin compared to watersports whose gross margin
      is higher than Sugar Sand boats at 24% and 38% during the three months ended
      March 31, 2008 and 2007, respectively.




27





***Operating
      Expenses***





Selling,
      General and Administrative expenses for the three months ended March 31, 2008
      and 2007 was $401,442 and $363,828, respectively, representing a $37,614 or
      10%
      increase. The year-over-year increase was due to an increase of $100,100 related
      to depreciation and amortization of Sugar Sand offset by a decrease of $65,826
      primarily related to less stock based compensation expense in the current
      quarter compared to the same quarter in the prior year.





***Other
      Income and Expenses***





Other
      expense for the three months ended March 31, 2008 and 2007 was $323,081 and
      $520,909, respectively, representing a $197,828 or 38% decrease in expense.
      The
      decrease is due to $315,816 less in amortization expense related to our
      debentures offset by a $171,776 increase in interest expense primarily related
      to our outstanding debentures.





***Net
      Loss***





Net
      loss
      from continuing operations for the three months ended March 31, 2008 and 2007
      was $570,823 and $672,202, respectively, representing a $101,379, or 15%
      decrease in the net loss from continuing operations compared to the same period
      last year. The improvement in net loss is due primarily to decreased
      amortization costs related to our convertible debentures.





Net
      loss
      for the three months ended March 31, 2008 and 2007 was $570,823 and $465,511,
      respectively, representing a $105,312, or 23% increase in net loss compared
      to
      the same period last year. The net loss for the three months ended March 31,
      2007 includes a net gain of $206,691 recognized by the Company upon the
      disposition of the Academy brand.




***Financial
      Condition***





From
      inception to March 31, 2008, we incurred an accumulated deficit of $13,397,232,
      and we expect to incur additional losses for the foreseeable future. This loss
      has been incurred through a combination of convertible debenture amortization,
      selling and operating expenses related to expensing of stock, support of our
      plans to expand sales and distribution channels, development of new products
      and
      higher than anticipated cost of sales relative to sales.





We
      have
      financed our operations since inception primarily through a combination of
      debt
      and equity financing. During the three months ended March 31, 2008, we had
      a net
      decrease in cash of $321,153. Total cash resources as of March 31, 2008, were
      $78,102, compared with $399,255 at December 31, 2007. We currently do not have
      sufficient funds to continue for the next twelve months.





Our
      available working capital and capital requirements will depend on numerous
      factors, including progress in our distribution and sales of our products,
      the
      timing and cost of expanding into new markets, the cost of developing new
      products, changes in our existing collaborative and licensing relationships,
      the
      resources that we devote to developing new products and commercializing
      capabilities, the status of our competitors, our ability to establish
      collaborative arrangements with other organizations, our ability to attract
      and
      retain key employees, our management of inventory and our need to purchase
      additional capital equipment.





28





***The
      Company’s Liquidity Plan***





Recent
      operating results give rise to concerns about the Company’s ability to generate
      cash flow from operations sufficient to sustain ongoing viability. During 2007
      and the latter half of 2006, the Company’s cost control strategies focused on
      managing general and administrative expenses through keeping headcount to a
      minimum, amongst other things, and maintaining a focused marketing and sales
      strategy that leverages existing channel partnerships.





The
      Company’s need to raise additional equity or debt financing and the Company’s
      ability to generate cash flow from operations will depend on its future
      performance and the Company’s ability to successfully implement business and
      growth strategies. The Company’s performance will also be affected by prevailing
      economic conditions. Many of these factors are beyond the Company’s control. If
      future cash flows and capital resources are insufficient to meet the Company’s
      commitments, the Company may be forced to reduce or delay activities and capital
      expenditures or obtain additional equity capital. In the event that the Company
      is unable to do so, the Company may be left without sufficient liquidity.





Management
      is currently in the process of seeking additional debt and equity financing
      with
      related and unrelated parties. Management is also working with the holders
      of
      our convertible debentures to finance production and provide working capital
      when needed. There can be no assurance that such additional financing will
      be
      obtained. The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.





**ITEM
      3. CONTROLS AND PROCEDURES**





As
      of
      December 31, 2007, we conducted an evaluation, under the supervision and
      participation of our management, including the Company’s Chief Executive Officer
      (who is also the principal accounting officer) to evaluate the effectiveness
      of
      the Company’s disclosure controls and procedures and manage the Company’s
      operations as of the end of the period covered by this report, as required
      by
      Rule 13a-15(b) under the Exchange Act.





**MANAGEMENT'S
      REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**





The
      management of Execute Sports, Inc. is responsible for establishing and
      maintaining adequate internal control over financial reporting. Internal control
      over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated
      under the Securities Exchange Act of 1934 as a process designed by, or under
      the
      supervision of, the company's principal executive and principal financial
      officers and effected by the company's board of directors, management and other
      personnel, to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for external
      purposes in accordance with accounting principles generally accepted in the
      United States of America and includes those policies and procedures that:





*
      Pertain
      to the maintenance of records that in reasonable detail accurately and fairly
      reflect the transactions and dispositions of the assets of the
      company;




29





*
      Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with accounting principles
      generally accepted in the United States of America and that receipts and
      expenditures of the company are being made only in accordance with
      authorizations of management and directors of the company; and





*
      Provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use or disposition of the company's assets that could have a
      material effect on the financial statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. 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. All internal control systems, no matter
      how well designed, have inherent limitations. Therefore, even those systems
      determined to be effective can provide only reasonable assurance with respect
      to
      financial statement preparation and presentation. Because of the inherent
      limitations of internal control, there is a risk that material misstatements
      may
      not be prevented or detected on a timely basis by internal control over
      financial reporting. However, these inherent limitations are known features
      of
      the financial reporting process. Therefore, it is possible to design into the
      process safeguards to reduce, though not eliminate, this risk.





Management
      assessed the effectiveness of the Company's internal control over financial
      reporting as of March 31, 2008. In making this assessment, management used
      the
      criteria set forth by the Committee of Sponsoring Organizations of the Treadway
      Commission in Internal Control-Integrated Framework.





Inherent
      in small business is the pervasive problem of segregation of duties. Given
      that
      the Company only employs two executive officers, one of which is a director,
      segregation of duties is not possible at this stage in the corporate lifecycle.





Based
      on
      its assessment, management concluded that, as of March 31, 2008, the Company's
      internal control over financial reporting is effective based on those criteria.





Changes
      in internal Control over Financial Reporting





Our
      Chief
      Executive Officer (who is also the Principal Accounting Officer) has indicated
      that there were no significant changes in our internal controls or other factors
      that could significantly affect such controls subsequent to the date of their
      evaluation, and there were no such control actions with regard to significant
      deficiencies and material weaknesses.





30


**Part
      II - Other Information**





**Item
      1.**  **Legal
      Proceedings**





No
      change
      since previous filing.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**





There
      were no unregistered sales of equity securities during the three months ended
      March 31, 2008.





**Item
      3. Defaults Upon Senior Notes.**





Due
      to
      our inability to pay, the Company is currently in default on the following
      Notes:


Unsecured
                  demand note payable bearing interest at 2% per year; currently
                  in
                  default.
              
              $
              9,538Unsecured
                  demand note payable to New Heart Ministries, bearing interest at
                  4% per
                  year; currently in default.
              
              $
              2,925Unsecured
                  demand note payable to Pacific Sports Investors LLC, bearing interest
                  at
                  15% per year; currently in default.
              
              $
              48,923Secured
                  demand note payable to Hector Peneda, bearing interest at 12% per
                  year
                  collateralized by 40,000 shares of common stock; currently in
                  default.
              
              $
              8,800Secured
                  demand note payable to Craig Hudson, bearing interest at 12% per
                  year
                  collateralized by 116,000 shares of common stock; currently in
                  default.
              
              $
              32,065**TOTAL**
              
              $
              102,251


**Item
      4. Submission of Matters to A Vote of Security
      Holders.**





None.





**Item
      5. Other Information.**





There
      were no matters required to be disclosed on a current report on Form 8-K during
      the period covered by this report that were not so disclosed.





There
      were no changes to the procedures by which security holders may recommend
      nominees to the Company’s Board of Directors since the Company last disclosed
      these procedures.





31




**Item
      6. Exhibits**





**Exhibit
                Number**
            
            **Description**
            
            **Incorporated
                By Reference to**10.1
            
            Departure
                of director Craig Washington, effective February 1, 2008.
            
            Form
                8-K filed February 7, 200810.2
            
            Departure
                of director Benjamin Amendolara, effective February 8,
                2008.
            
            Form
                8-K filed February 8, 200831.1
            
            Certification
                of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
                of
                the Exchange Act
            
            *32.1
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002
            
            *





*
            Filed
                herewith





32





SIGNATURES





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





Signature
            
            Title
            
            Date/s/
              Geno M. Apicella
            
            Chief
              Executive OfficerName: Geno M. Apicella
            
            and Principle Accounting Officer
            
            April
                30,
                2008




33


**INDEX
      TO EXHIBITS**





**Exhibit
                Number**
            
            **Description**
            
            **Incorporated
                By Reference to**10.1
            
            Departure
                of director Craig Washington, effective February 1, 2008.
            
            Form
                8-K filed February 7, 200810.2
            
            Departure
                of director Benjamin Amendolara, effective February 8,
                2008.
            
            Form
                8-K filed February 8, 200831.1
            
            Certification
                of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
                of
                the Exchange Act
            
            *32.1
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002
            
            *





*
            Filed
                herewith




34