---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2009

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT

For the transition period from __________ to __________

Commission file number 333-131531

PANGLOBAL BRANDS INC.(Name
of small business issuer in its charter)

|Delaware                                         | 20-8531711                       
|------------------------------------------------ | ---------------------------------
|(State or other jurisdiction of incorporation or | (IRS Employer Identification No.)
|organization)                                    |                                  

2853 E. Pico Blvd., Los Angeles CA
90023(Address of principal executive offices)

Issuers telephone number: 323 266-6500

N/A(Former name, former address and former fiscal
year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Nil                 | N/A                                      

Securities registered pursuant to Section 12(g) of the Act:

Common Shares, par value $0.0001(Title of
class)

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

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

Note  Checking the box above will not relieve any registrant
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act
from their obligations under those Sections.

---

- 2 -

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act of
1934 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 [X]    No [ 
 ]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).

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

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [   ] | Accelerated
      filer                  
      [   ]
|----------------------------- | -----------------------------------------------------
|Non-accelerated filer   [   ] | Smaller reporting company
[X]                        

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

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked prices of
such common equity, as of the last business day of the registrants most
recently completed second fiscal quarter.

Note: If determining whether a person is an affiliate will
involve an unreasonable effort and expense, the issuer may calculate the
aggregate market value of the common equity held by non-affiliates on the basis
of reasonable assumptions, if the assumptions are stated.

37,393,000 common shares @ $0.06(1)= $2,243,000

(1) Represents the average bid and asked prices of
our common stock on February 5,2010 as disclosed on Yahoo! Finance.

State the number of shares outstanding of each of the issuer's
classes of equity stock, as of the latest practicable date:

49,016,710 common shares issued and outstanding as of
February 12, 2010.

DOCUMENTS INCORPORATED BY REFERENCE

None

---

- 3 -

TABLE OF CONTENTS

|PART
      I                                                                                                                                                | 4 
|----------------------------------------------------------------------------------------------------------------------------------------------------------- | --
|                                                                                                                                                            |   
|ITEM
      1. DESCRIPTION OF BUSINESS                                                                                                                       | 4 
|                                                                                                                                                            |   
|ITEM
      1A. RISK FACTORS                                                                                                                                 | 8 
|                                                                                                                                                            |   
|ITEM
      2. DESCRIPTION OF PROPERTY                                                                                                                       | 13
|                                                                                                                                                            |   
|ITEM
      3. LEGAL PROCEEDINGS                                                                                                                             | 13
|                                                                                                                                                            |   
|ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                                                                          | 13
|                                                                                                                                                            |   
|PART
      II                                                                                                                                               | 13
|                                                                                                                                                            |   
|ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL
      BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.                      | 13
|                                                                                                                                                            |   
|ITEM
      6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.                                                                                    | 14
|                                                                                                                                                            |   
|ITEM
      7. FINANCIAL STATEMENTS.                                                                                                                         | 22
|                                                                                                                                                            |   
|ITEM
      8A. CONTROLS AND PROCEDURES                                                                                                                      | 23
|                                                                                                                                                            |   
|ITEM
      8B. OTHER INFORMATION                                                                                                                            | 24
|                                                                                                                                                            |   
|ITEM
      9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE.                                                   | 24
|                                                                                                                                                            |   
|PART
      III                                                                                                                                              | 25
|                                                                                                                                                            |   
|ITEM
      10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
      CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. | 25
|                                                                                                                                                            |   
|ITEM
      10. EXECUTIVE COMPENSATION                                                                                                                       | 27
|                                                                                                                                                            |   
|ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
      RELATED STOCKHOLDER MATTERS.                                        | 31
|                                                                                                                                                            |   
|ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE                                                              | 33
|                                                                                                                                                            |   
|ITEM
      13. EXHIBITS.                                                                                                                                    | 34
|                                                                                                                                                            |   
|ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                                       | 35
|                                                                                                                                                            |   
|SIGNATURES                                                                                                                                                  | 37

---

- 4 -

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Forward-Looking Statements

This annual report contains forward-looking statements that relate to future
events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as may, should, expects,
plans, anticipates, believes, estimates, predicts, potential or
continue or the negative of these terms or other comparable terminology. These
statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in the section entitled
Risk Factors beginning on page 8 of this report, that may cause our or our
industrys actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.

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

In this annual report, unless otherwise specified, all references to "common
shares" refer to the common shares in our capital stock.

As used in this annual report, the terms "we", "us", "our", means Panglobal
Brands Inc. and our wholly-owned subsidiary, Mynk Corporation unless otherwise
indicated.

Corporate Overview and History

We were incorporated on March 2, 2005, under the laws of the State of Delaware,
under the name EZ English Online Inc. Since incorporation we were engaged in
the development of an online teacher training course to teach English as a
second language. Our principal offices are located 2853 E. Pico Blvd. Los
Angeles, CA 90023, and our telephone number is (323) 266 -6500.

On July 3, 2006, our common stock was approved for quotation on the OTC Bulletin
Board.

On February 2, 2007, we affected a forward stock split of our authorized and
issued and outstanding shares on a six-for-one basis. The forward split resulted
in the increase of our authorized capital from 100,000,000 shares of common
stock with a par value of $0.0001 to 600,000,000 shares of common stock with a
par value of $0.0001.

On February 2, 2007, we completed a merger with our wholly owned subsidiary
Panglobal Brands Inc. As a result, we changed our name from EZ English Online
Inc. to Panglobal Brands Inc. Our subsidiary was incorporated on January 22,
2007, specifically for the purpose of the merger. The six-for-one forward stock
split, merger and name change became effective with our listing on NASDAQs OTC
Bulletin Board on February 6, 2007 and our trading symbol was changed to PNGB.

On May 11, 2007, we acquired all of the issued and outstanding shares of Mynk
Corporation. Mynk is now our wholly-owned, operating subsidiary. With the
acquisition of Mynk, we changed our business focus to that of our newly acquired
subsidiary and are now engaged in the business of the design, production and
sale of clothing and accessories. We intend to acquire and create brands for the
contemporary apparel market in the U.S. and international markets.

---

- 5 -

Our Current Business

Business Strategy

Our strategy is to build a series of apparel brands, consisting of mainly
womens apparel, and to build brand recognition by marketing our products to
fashion conscious consumers who shop in high-end boutiques and department stores
and who want to wear and be seen in the latest and most fashionable clothing and
accessories. We plan to update our product offerings continually to be seen as a
trend setter in fashionable clothing and accessories. We also are targeting the
junior market and design, have manufactured and sell junior denim, t-shirts,
dresses and other apparel. Lastly, based upon our branded products, we expect to
be offered the opportunity to manufacture private label womens apparel
including dresses, skirts and knit and woven tops.

We operate all of our apparel businesses through our wholly-owned subsidiary,
Mynk Corporation.

Our brands are aggregated into three major consumer market product groupings:
Sosik, Scrapbook and Contemporary.

The major consumer product groups are as follows:

SOSIK - Sosik designs, merchandises
and sells junior t-shirts, dresses, skirts and knit and woven tops and other
apparel manufactured in Asia. Junior apparel includes clothing for girls ages
14-22 as well as products for children ages 6-14. Sales of Sosik include
products that will be sold under private labels and commenced in October, 2007
and shipments commenced in January 2008. Approximately 52% of our revenue for
our fiscal year ended September 30, 2009 related to Sosik. Customers include
Charlotte Russe, Forever 21, Wet Seal, Ross, J.C. Penney, and Tillys.

SCRAPBOOK - Scrapbook, Scrapbook
Originals and Crafty Couture trademarks were acquired June 18, 2008. The
Scrapbook labels are aimed at junior (teen and early 20s) higher-end
contemporary markets and are known for mix and match prints and comfortable knit
fabrics. Scrapbook products can be found at better department stores and
boutiques. Major customers include Nordstroms, Dillards, Macys, Forever 21
and Hot Topic. The Crafty Couture label is lower priced and aimed at a younger
market, specifically early through late teens.

The following three product lines have been consolidated into the Contemporary
Group.

TEA AND HONEY - Tea and Honey designs,
merchandises and sells womens mid-priced contemporary dresses. Tea and Honey is
a more casual look for women ages 22-35 with a vintage feel easily convertible
for wear by the working woman by day and for evening wear, as well. Tea and
Honey products commenced sales in June 2008. We have decided to cease producing
new styles of Tea and Honey effective January 1, 2010 and all sales subsequent
to that date will relate to sales of existing products

HAVEN and PRIVATE LABEL - Based upon
our branded products, we started offering Haven lower priced dresses with
success and are beginning to be offered the opportunity by major department
stores to design, merchandise and manufacture private label womens apparel
including dresses, skirts and knit and woven tops. Our Haven shipments commenced
July, 2008 and include customers such as Nordstrom, Bloomingdales and
Macys.

HAUTEUR MYNK - Hauteur Mynk is a
trademarked brand name which sold selling premium denim jeans, skirts, dresses
and shorts. Hauteur Mynk had sales during the prior fiscal year, but is
currently dormant and current inventory has been depleted. . The Company decided
that the premium denim market was saturated with brands and decided to place
Hauteur Mynk on hold.

In each of our product groups, we purchase finished goods from numerous contract
  manufacturers and to a lesser extent raw materials directly from numerous textile
  mills and yarn producers and converters. We have not experienced difficulty
  in obtaining finished goods or raw materials essential to our business in any
  of our apparel product groups.

---

- 6 -

We outsource our warehousing and shipping functions to a third party warehousing
company designed to ship apparel products for multiple companies.

We maintain a company website at www.panglobalbrand.com where examples of our
products can be seen.

Consulting Agreement for Sosik Product Group

On August 20, 2007 we signed a consulting agreement with Lolly Factory, Inc. and
its sole shareholder, the Consultant, to provide sales and merchandising
consulting services for the Sosik and Juniors apparel divisions through December
31, 2010. We and the Consultant established sales targets totaling $30.0 million
for calendar year 2008, $45.0 million for calendar year 2009 and $60.0 million
for calendar year 2010. Pursuant to the Consulting Agreement, the Consultant
could have earned up to 1,500,000 additional common shares of Panglobal Brands
Inc. according to the following schedule:

| | (i)   | 500,000 shares upon meeting the sales target for calendar
      year 2008;     
| | ----- | -------------------------------------------------------------------------------
| | (ii)  | 500,000 shares upon meeting the sales target for calendar
      year 2009; and,
| | (iii) | 500,000 shares upon meeting the sales target for calendar
      year 2010.     

The sales target for calendar year 2008 was not met, and, we did not accrue an
expense for shares payable to the Consultant for that year. At June 30, 2009 we
had not accrued an expense for shares payable for meeting the sales target for
2009.

On August 19, 2009 the Company and Lolly Factory LLC agreed to terminate the
Consulting Agreement. As an inducement for early termination, the Company:

| | (a) | Compensated Lolly Factory LLC for 2009 commissions earned
        for the difference between the original 3.5% commission rate and the revised
        commission rate of 2.6% instituted this year. The company agreed to pay
        50% of the difference, which amounts to $42,940 in Common shares of the
        Company at a valuation of $0.20 per share. The amount of $42,940 was charged
        to expense in the period ending September 30, 2009 and the Company will
        issue 214,700 shares to Lolly Factory LLC. As of September 30, 2009 the
        company has not issued Common shares to Lolly Factory, LLC.                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (b) | Compensated Lolly Factory LLC in Common shares of the
        company based upon the original sales targets set for 2008 and 2009. For
        the calendar year 2008, Lolly Factory LLC had approximately $12.5 million
        in net sales versus a target of $30.0 million and the Company agreed to
        pro-rata compensate Lolly Factory LLC 207,500 shares and recorded an expense
        of $18,675 for the period ending September 30, 2009. For the calendar
        year 2009, the Company will calculate the net sales attributed to Lolly
        Factory LLC and pro rate the number of shares due based upon a target
        of $45.0 for the full year. Through September 30, 2009, Lolly Factory
        LLC has approximately $9.6 million in net sales and the Company will issue
        107,000 shares and recorded an expense of $10,300 in the period ending
        September 30, 2009. As of September 30, 2009 the company has not issued
        Common shares to Lolly Factory, LLC.

Manufacturing

We outsource all of our manufacturing to third parties on an order-by-order
basis. These contract manufacturers are found in Asia, Mexico and the United
States and they will manufacture our garments on an order-by-order basis. We
believe that we will be able to meet our production needs in this way. Although
the various fabrics that we intend to use in the manufacture of our products
will be of the high quality, they are available from many suppliers in the
United States and abroad.

---

- 7 -

Employees

As of February 5, 2010, we have 48 full-time employees: two (2) are executive,
nine (9) are design staff, fourteen (14) are production staff, thirteen (13) are
sewing staff, three (3) are sales staff, four (4) are customer service and
shipping staff and three (3) are accounting/administration staff. None of our
employees are subject to a collective bargaining agreement, and we believe that
our relations with our employees are good.

Quality Control

We intend to establish a quality control program to ensure that our products
meet our high quality standards. We intend to monitor the quality of our fabrics
prior to the production of garments and inspect prototypes of each product
before production runs commence. We also plan to perform random on-site quality
control checks during and after production before the garments leave the
contractor. We also plan to conduct final random inspections when the garments
are received in our distribution centers. We believe that our policy of
inspecting our products at our distribution centers and at the vendors
facilities will be important to maintain the quality, consistency and reputation
of our products.

Competition

The apparel industry is intensely competitive and fragmented. We compete against
other small companies like ours, as well as large companies that have a similar
business and large marketing companies, importers and distributors that sell
products similar to or competitive with ours.

We believe that our competitive strengths consist of the detailing of the
design, the quality of the fabric and the superiority of the fit.

Government Regulation and Supervision

Our operations are subject to the effects of international treaties and
regulations such as the North American Free Trade Agreement (NAFTA). We are also
subject to the effects of international trade agreements and embargoes by
entities such as the World Trade Organization. Generally, these international
trade agreements benefit our business rather than burden it because they tend to
reduce trade quotas, duties, taxes and similar impositions. However, these trade
agreements may also impose restrictions that could have an adverse impact on our
business, by limiting the countries from whom we can purchase our fabric or
other component materials, or limiting the countries where we might market and
sell our products.

Labelling and advertising of our products is subject to regulation by the
Federal Trade Commission. We believe that we are in compliance with these
regulations.

Information Systems

We believe that high levels of automation and technology are essential to
maintain our competitive position and support our strategic objectives and we
plan to invest in computer hardware, system applications and networks to provide
increased efficiencies and enhanced controls.

Trademarks

We own numerous trademarks for all of our brands including Sosik, Scrapbook,
Scrapbook Originals, Crafty Couture, Crafty by Scrapbook Tea and Honey, Haven,
Nela and have applications pending for the balance of our branded apparel
products.

Marketing

We market our products directly through our sales staff as well as through
showrooms which carry multiple lines of apparel products. In addition we attend
industry trade shows.

---

- 8 -

ITEM 1A. RISK FACTORS

Much of the information included in this annual report includes or is based upon
estimates, projections or other forward-looking statements. Such
forward-looking statements include any projections or estimates made by us and
our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions, or other future
performance suggested herein. We undertake no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.

Such estimates, projections or other forward-looking statements involve
various risks and uncertainties as outlined below. We caution readers of this
annual report that important factors in some cases have affected and, in the
future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward-looking statements. In evaluating us, our business and any
investment in our business, readers should carefully consider the following
factors.

Risks Related to our Business

Our continued operations depend on current fashion trends.
If our products and designs are not considered fashionable or desirable by
enough consumers, then our business could be adversely affected.

The acceptance by consumers of our products and design is important to our
success and competitive position, and the inability to continue to develop and
offer fashionable and desirable products to consumers could harm our business.
We cannot be certain that our high-fashion clothing and accessories will be
considered fashionable and desirable by enough consumers to make our operations
profitable. There are no assurances that our future designs will be successful,
and any unsuccessful designs could adversely affect our business. If we are
unable to respond to changing consumer demands in a timely and appropriate
manner, we may fail to establish or maintain our brand name and brand image.
Even if we react appropriately to changes in consumer preferences, consumers may
consider our brand image to be outdated or associate our brand with styles that
are no longer popular. Should trends veer away from our style of products and
designs, our business could be adversely affected.

We may be unable to achieve or sustain growth or manage our
future growth, which may have a material adverse effect on our future operating
results.

We cannot provide any assurances that our business plan will be successful and
that we will achieve profitable operations. Our future success will depend upon
various factors, including the strength of our brand image, the market success
of our current and future products, competitive conditions and our ability to
manage increased revenues, if any, or implement our growth strategy. In
addition, we anticipate significantly expanding our infrastructure and adding
personnel in connection with our anticipated growth, which we expect will cause
our selling, general and administrative expenses to increase in absolute dollars
and which may cause our selling, general and administrative expenses to increase
as a percentage of revenue. Because these expenses are generally fixed,
particularly in the short-term, operating results may be adversely impacted if
we do not achieve our anticipated growth.

Future growth may place a significant strain on our management and operations.
If we experience growth in our operations, our operational, administrative,
financial and legal procedures and controls may need to be expanded. As a
result, we may need to train and manage an increasing number of employees, which
could distract our management team from our business. Our future success will
depend substantially on the ability of our management team to manage our
anticipated growth. If we are unable to anticipate or manage our growth
effectively, our operating results could be adversely affected.

We face intense competition, including competition from
companies with significantly greater resources than ours, and if we are unable
to compete effectively with these companies, our business could be harmed.

We face intense competition in the apparel industry from other, more established
  companies. A number of our competitors have significantly greater financial,
  technological, engineering, manufacturing, marketing and distribution resources
  than we do. Their greater capabilities in these areas may enable them to better
  withstand periodic downturns in the apparel industry, compete more effectively
  on the basis of price and production and to develop new products in less time.
  In addition, new companies may enter the markets in which we compete, further
  increasing competition in the apparel industry.

---

- 9 -

We believe that our ability to compete successfully depends on a number of
factors, including the style and quality of our products and the strength of our
brand name, as well as many factors beyond our control. We may not be able to
compete successfully in the future, and increased competition may result in
price reductions, reduced profit margins, loss of market share and an inability
to generate cash flows that are sufficient to maintain or expand our development
and marketing of new products, which would adversely impact the trading price of
our common stock.

Our business could suffer if our manufacturers do not meet
our demand or delivery schedules.

Although we design and market our products, we outsource manufacturing to third
party manufacturers. Outsourcing the manufacturing component of our business is
common in the apparel industry and we compete with other companies for the
production capacity of our manufacturers. Because we are a small enterprise and
many of the companies with which we compete have greater financial and other
resources than we have, they may have an advantage in the competition for
production capacity. There is no assurance that the manufacturing capacity we
require will be available to us, or that if available it will be available on
terms that are acceptable to us. If we cannot produce a sufficient quantity of
our products to meet demand or delivery schedules, our customers might reduce
demand, reduce the purchase price they are willing to pay for our products or
replace our product with the product of a competitor, any of which could have a
material adverse effect on our financial condition and operations.

Government regulation and supervision could restrict our
business and decrease our profitability.

Any negative changes to international trade agreements and regulations such as
the North American Free Trade Agreement or any agreements affecting
international trade such as those made by the World Trade Organization which
result in a rise in trade quotas, duties, taxes and similar impositions or which
has the result of limiting the countries from whom we can purchase our fabric or
other component materials, or limiting the countries where we might market and
sell our products, could decrease our profitability.

Increases in the price of raw materials or their reduced
availability could increase our cost of sales and decrease our profitability.

The principal fabrics used in our business are cotton, synthetics, wools and
blends. The prices we pay for these fabrics are dependent on the market price
for raw materials used to produce them, primarily cotton. The price and
availability of cotton may fluctuate significantly, depending on a variety of
factors, including crop yields, weather, supply conditions, government
regulation, economic climate and other unpredictable factors. Any raw material
price increases could increase our cost of sales and decrease our profitability
unless we are able to pass higher prices on to our customers. Moreover, any
decrease in the availability of cotton could impair our ability to meet our
production requirements in a timely manner.

If we are unable to enforce our intellectual property rights
or otherwise protect our intellectual property, then our business would likely
suffer.

Our success depends to a significant degree upon our ability to protect and
  preserve any intellectual property we develop or acquire, including copyrights,
  trademarks, patents, service marks, trade dress, trade secrets and similar intellectual
  property. We rely on the intellectual property, patent, trademark and copyright
  laws of the United States and other countries to protect our proprietary rights.
  However, we may be unable to prevent third parties from using our intellectual
  property without our authorization, particularly in those countries where the
  laws do not protect our proprietary rights as fully as in the United States.
  The use of our intellectual property or similar intellectual property by others
  could reduce or eliminate any competitive advantage we may develop, causing
  us to lose sales or otherwise harm our business. We may need to bring legal
  claims to enforce or protect such intellectual property rights. Any litigation,
  whether successful or unsuccessful, could result in substantial costs and diversions
  of resources.

---

- 10 -

In addition, notwithstanding the rights we have secured in our
  intellectual property, other persons may bring claims against us that we have
  infringed on their intellectual property rights or claims that our intellectual
  property right interests are not valid. Any claims against us, with or without
  merit, could be time consuming and costly to defend or litigate and therefore
  could have an adverse affect on our business. If any of these risks arise, our
  business would likely suffer.

We do not have sufficient
funds to ensure that we can continue our operations. If we do not obtain
sufficient cash, we will go out of business and our shareholders will lose their
entire investment in our company.

We rely on proceeds from sales and loans or the sales of equity in our Company
to acquire funds. There is no guarantee that we will be able to earn enough
proceeds from sales or borrow enough money or sell enough shares of our company
to continue to pay for our operations.

If we cannot fund all of our future operations through revenue, we may choose to
raise money through sales of our equity securities. However, many investors have
recently seen large decreases in the value of various investments due to
declining share prices across many economic sectors. Because of this and other
market factors, if we choose to raise funds through the sale of our equity
securities, potential investors may be less likely to buy our equity securities
or we may be need to sell our equity securities at low prices, resulting in
fewer proceeds. This would make it difficult for us to raise adequate amounts to
fund our operations through the sale of our equity securities.

If we are unable to fund all of our operations through revenues or the sale of
our equity securities, then we may choose to borrow money to pay for some of our
operations. A tightening of credit conditions has also been experienced in the
economy recently. Because of the recent credit crisis, it is possible that we
would not be able to borrow adequate amounts to fund our operations on terms and
at rates of interest we find acceptable and in the best interests of our
company.

If we cannot fund our planned operations from revenue, the sale of our equity
securities or through incurring debt on acceptable terms, then we will likely
have to scale down or cease our operations. If we scale down our operations, our
share price would likely decrease and if we cease our operations, shareholders
will lose their entire investment in our company.

The recent weakening of economic conditions in the U.S. and
around the world could have harmful effects on our business. If these harmful
effects cause us to scale down our operations, then our share price will likely
decrease. If these harmful effects cause us to cease our operations, then our
shareholders will likely lose their entire investment in our company.

The recent weakening of economic conditions in the U.S. and around the world,
including in the financial services and real estate industries, could have
harmful effects on our business. Weakening economic conditions generally lead to
less money being spent on clothing across the industry as a whole. Competition
for these limited resources will likely become more intense. If consumers spend
less and do not choose to spend their limited funds on our clothes, we will earn
less revenue and we will not be able to fund our future operations through
revenues from sales. If we have to cease our operations, then our shareholders
will likely lose their entire investment in our company.

The recent weakening of economic conditions in the U.S. and
around the world could have harmful effects on the operations of our customers
and suppliers and the confidence of end consumers, all of which could cause our
operations to suffer and our revenues to decrease.

Some of our customers or suppliers could experience serious cash flow problems
  due to the current economic situation. If our customers or suppliers attempt
  increase their prices, pass through increased costs, alter payment terms or
  seek other relief, our business may suffer from decreased sales to final consumers
  or increased costs to us. If any of our vendors or suppliers go out of business,
  we may not be able to replace them with other companies of the same quality
  and level of service. If the quality of our products and promptness of delivery
  deteriorates as a result, our revenue will likely decrease as retailers and
  consumers would be less likely to choose our products out of those available
  to them.

---

- 11 -

We do not expect that the difficult economic conditions are likely to improve
significantly in the near future, and further deterioration of the economy, and
even consumer fear that the economy will deteriorate further, could intensify
the adverse effects of these difficult market conditions.

We have a high concentration of sales to a number of key
department stores across all of our divisions. Loss of one of these key
customers would take time to replace and have a short term adverse impact on our
results of operations.

During the year ended September 30, 2009 sales to four customers accounted for
  16.6%, 14.6%, 9.7% and 7.0% of our net sales. The acceptance by consumers of
  our products and design is important to our success and competitive position,
  and the loss of one of these key customers would have a short-term adverse impact
  on our results from operations.

Risks Related to Our Company

We lack an operating history and have losses which we expect
to continue into the future. We have incurred a loss from operations and
negative cash flows from operations that raise substantial doubt about our
ability to continue as a going concern. There is no assurance our future
operations will result in profitable revenues. If we cannot generate sufficient
revenues to operate profitably, we may suspend or cease operations.

As of September 30, 2009, our accumulated losses since inception amount to
$19,378,987. In its audit report dated February 12, 2010, our auditors stated
that we have incurred losses from operations and we have negative working
capital, stockholders (deficit) equity and negative cash flows from operations
which raise substantial doubt about our ability to continue as a going
concern.

We will continue to incur expenses and may incur operating losses in the future.
We cannot guarantee that we will be successful in becoming or remaining
profitable in the future. Failure to become and remain profitable would cause us
to go out of business.

Our management found the following weaknesses in our
disclosure controls and procedures, which could result in accidental or
intentional misstatements. If any of these things happen, we and our investors
may lose money.

There is not adequate division or segregation of duties in our accounting
department that has three staff members, which includes the Chief Financial
Officer. Therefore our internal control over financial reporting may not prevent
accidental or intentional misstatements. This could cause our financial
reporting to be in error and to cause investors to make decisions based on
incorrect information. It could also cause us extra expense in having the
financial and disclosure documents redone and refilled. It also could allow
someone in the company to embezzle or improperly use funds. If any of these
things happen, then our company and our investors may lose money.

Risks Related to Our Securities

Our stock price is highly volatile and stockholders may be
unable to sell their shares, or may be forced to sell them at a loss.

The trading price of our common stock has fluctuated significantly since our
incorporation (March 2, 2005), and is likely to remain volatile in the future.
The trading price of our common stock could be subject to wide fluctuations in
response to many events or factors, including the following:

- quarterly variations in our operating results;
- changes in financial estimates by securities analysts;
- changes in market valuations or financial results of apparel companies;
- announcements by us or our competitors of new products, or significant
  acquisitions, strategic partnerships or joint ventures;
- any deviation from projected growth rates in revenues;

---

- 12 -

- any loss of a major customer or a major customer order;
- additions or departures of key management or design personnel;
- any deviations in our net revenue or in losses from levels expected by
  securities analysts;
- activities of short sellers and risk arbitrageurs; and,
- future sales of our common stock.

The equity markets have, on occasion, experienced significant price and volume
fluctuations that have affected the market prices for many companies' securities
and that have often been unrelated to the operating performance of these
companies. Any such fluctuations may adversely affect the market price of our
common stock, regardless of our actual operating performance. As a result,
stockholders may be unable to sell their shares, or may be forced to sell them
at a loss.

The U.S. Securities and Exchange Commission imposes
additional sales practice requirements on brokers who deal in our shares which
are penny stocks, some brokers may be unwilling to trade them. This means that
you may have difficulty reselling your shares and this may cause the price of
the shares to decline.

Our shares are classified as penny stocks and are covered by Section 15(g) of
the Securities Exchange Act of 1934 and the Rules which impose additional sales
practice requirements on brokers/dealers who sell our securities in this
offering or in the aftermarket. For sales of our securities, the broker/dealer
must make a special suitability determination and receive from you a written
agreement prior to making a sale for you. Because of the imposition of the
foregoing additional sales practices, it is possible that brokers will not want
to make a market in our shares. This could prevent you from reselling your
shares and may cause the price of the shares to decline.

We do not intend to pay dividends and there will be less
ways in which you can make a gain on any investment in our company.

We have never paid any cash dividends and currently do not intend to pay any
dividends for the foreseeable future. To the extent that we require additional
funding currently not provided for in our financing plan, our funding sources
may likely prohibit the payment of a dividend. Because we do not intend to
declare dividends, any gain on an investment in our company will need to come
through appreciation of the stocks price.

The recent weakening of economic conditions in the U.S. and
around the world could have harmful effects on the operations of our customers
and suppliers and the confidence of end consumers, all of which could cause our
operations to suffer and our revenues to decrease.

Some of our customers or suppliers could experience serious cash flow problems
due to the current economic situation. If our customers or suppliers attempt
increase their prices, pass through increased costs, alter payment terms or seek
other relief, our business may suffer from decreased sales to final consumers or
increased costs to us. If any of our vendors or suppliers go out of business, we
may not be able to replace them with other companies of the same quality and
level of service. If the quality of our products and promptness of delivery
deteriorates as a result, our revenue will likely decrease as retailers and
consumers would be less likely to choose our products out of those available to
them.

We do not expect that the difficult economic conditions are likely to improve
significantly in the near future, and further deterioration of the economy, and
even consumer fear that the economy will deteriorate further, could intensify
the adverse effects of these difficult market conditions.

Our management beneficially own approximately 15% of the
shares of common stock may be able to control matters requiring approval by our
stockholders. The interests of management could conflict with those of other
investors, which could cause investors to lose all or part of their investments
in our company.

As of September 30, 2009, our directors and officers as a group beneficially
  owned approximately 15% of our outstanding common stock. Therefore, our directors
  and officers may be able to control matters requiring approval by our stockholders.
  Matters that require the approval of our stockholders include the election of
  directors and the approval of mergers or other business combination transactions.
  Our directors and officers also have control over our management and affairs.

---

- 13 -

As a result of such control, certain transactions are effectively
  not possible without the approval of our directors and officers, including,
  proxy contests, tender offers, open market purchase programs or other transactions
  that could give our stockholders the opportunity to realize a premium over the
  then-prevailing market prices for their shares of our common stock. If the interests
  of our directors and officers conflict with those of our investors, investors
  could lose some or all of the potential benefit of their investment.

ITEM 2. DESCRIPTION OF PROPERTY

Our executive and head office is located at 2853 E. Pico Blvd., Los Angeles, CA.
This operating facility functions as our main operating facility and is adequate
for our needs.

Commencing October 1, 2007, we leased 499 square feet for three years as a sales
showroom for our Sosik division at California Market Center, 110 East Ninth
Street, Suite A0823, Los Angeles, CA 90079.

Commencing November 1, 2007, we leased 2,609 square feet for 5 years as a sales
showroom for our Nela/Mynk/Tea and Honey divisions at 250 West 39th Street, New
York, New York. We closed this sales showroom in July, 2009.

Commencing December 1, 2007, we leased 1,337 square feet for 3 years, eight
months as a sales showroom for our Sosik division at 530 7th Avenue 27th Floor,
New York, New York.

ITEM 3. LEGAL PROCEEDINGS.

Other than as described below, we know of no material, existing or pending legal
proceedings against our company, nor are we involved as a plaintiff in any
material proceeding or pending litigation. There are no proceedings in which any
of our directors, officers or affiliates, or any registered or beneficial
stockholder, is an adverse party or has a material interest adverse to our
interest. The outcome of open unresolved legal proceedings is presently
indeterminable. Any settlement resulting from resolution of these contingencies
will be accounted for in the period of settlement. We do not believe the
potential outcome from these legal proceedings will significantly impact our
financial position, operations or cash flows.

On September 19, 2008 Mynk Corporation, our wholly-owned subsidiary, sued
Delias Inc., a customer in the Superior Court of the State of California, for
goods shipped, but unpaid, in the amount of $604,081. On January 26, 2010 the
Company and Delias agreed to a monetary settlement and signed a confidentiality
agreement.

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

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock was originally quoted on the OTC Bulletin Board under the
symbol "EZEO", but there had not been a trade of our common stock under that
symbol. On February 6, 2007 the symbol was changed to PNGB. Our CUSIP number
is 69841Q 10 0.

Our common stock is quoted on the Financial Industry Regulatory Authoritys OTC
Bulletin Board under the symbol "PNGB". The following quotations obtained from
Yahoo! Finance reflect the highs and low bids for our common stock based on
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions. Shares trade on average 90,000 shares per day.

The high and low bid prices of our common stock for the previous two fiscal
years are as follows:

---

- 14 -

Quarter Ended
      High
      LowSeptember 30, 2009
    $0.16
    $0.06June 30, 2009
    $0.22
    $0.07March 31, 2009
    $0.18
    $0.05December 31, 2008
    $0.33
    $0.06September 30, 2008
    $0.66
    $0.27June 30, 2008
    $1.30
    $0.52March 31, 2008
    $0.90
    $0.53December 31, 2007
    $1.09
    $0.65


Transfer Agent

Our transfer agent for our common stock is the Nevada Agency and Trust Company
at 50 West Liberty Street, Suite 880, Reno, NV 89501, Tel: 775-322-0626 Fax:
775-322-5623.

Holders of Common Stock

As of February 10, 2010, we have 562 registered shareholders holding 49,016,710
shares of our common stock. We have no other classes of securities.

Dividends

We have not declared any dividends since incorporation and do not anticipate
that we will do so in the foreseeable future. Our directors will determine if
and when dividends should be declared and paid in the future based on our
financial position at the relevant time. All shares of our common stock are
entitled to an equal share of any dividends declared and paid.

Recent Sales of Unregistered Securities; Use of Proceeds
from Registered Securities

Please refer to our previous filings on our Quarterly Reports on Form 10-Q, or
on our Current Reports on Form 8-K for information regarding all of our sales of
our equity securities during the fiscal year that ended September 30, 2009.

ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.

The following discussion should be read in conjunction with our audited
consolidated financial statements and the related notes for year ended September
30, 2009 and the factors that could affect our future financial condition and
results of operations. Historical results may not be indicative of future
performance.

The following discussion contains forward-looking statements that reflect our
plans, estimates and beliefs. Our actual results could differ materially from
those discussed in the forward looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and elsewhere in this annual report, particularly in the section entitled
"Risk Factors" beginning on page 8 of this annual report on Form 10-K.

Our audited financial statements are stated in United States Dollars and are
prepared in accordance with United States Generally Accepted Accounting
Principles.

Financial Condition, Liquidity and Capital Resources

At September 30, 2009, we had negative working capital of ($1,610,555).

---

- 15 -

At September 30, 2009, our total assets were $3,736,988.

At September 30, 2009, our total liabilities were $4,737,402.

Cash Flows

The following is a summary of our cash flows for the periods set forth
below:

| |                                              |   | Year ended |   |   | Year ended |  
| | -------------------------------------------- | - | ---------- | - | - | ---------- | -
| |                                              |   | September  |   |   | September  |  
| |                                              |   | 30, 2009   |   |   | 30,2008    |  
| | Net Cash used in Operating Activities        | $ | (2,159,336 | ) | $ | (6,581,424 | )
| | Net Cash used in Investing Activities        |   | (22,211    | ) |   | (1,654,129 | )
| | Net Cash provided by in Financing Activities |   | 2,198,479  |   |   | 7,065,339  |  
| | Net Increase(decrease) in Cash               | $ | 16,932     |   | $ | (1,170,214 | )

Assets

Our current assets totaled $2,056,530 and $3,257,508 at September 30, 2009 and
September 30, 2008, respectively. Total assets were $3,736,988 and $5,157,255 at
September 30, 2009 and September 30, 2008, respectively. The decrease in current
assets is primarily due to the decrease in inventory and management of factor
collections resulting in a lower amount of funds due from the factor.

Liabilities and Working Capital

The following is a summary of our working capital at September 30 2009 and
September 30, 2008:

September
    
    
    September30, 2009
    
    
    30, 2008Current Assets
    $
    2,056,530
    
    $
    3,257,508Current Liabilities
    
    3,667,085
    
    
    4,783,083Working Capital (Deficit)
      $
      (1,610,555
    )
      $
      (1,525,575
      )


Our current liabilities totaled $3,667,085 and $4,783,083 at September 30, 2009
  and September 30, 2008, respectively. We had negative working capital of ($1,610,555)
  at September 30, 2009. Current assets decreased as inventory was decreased and
  due from factor decreased based on strong collections but we were unable to
  decrease current liabilities and loans were necessary to fund losses.

Cash Requirements and Additional Funding

Our estimated cash requirements for the next 12 months are as follows:

Expense
    
    CostDesign and development
    $
    2,400,000Selling and Shipping
      
    2,000,000General and administrative (excludes
      non-cash compensation)
      
      1,800,000TOTAL
      $
      6,200,000


---

- 16 -

As of September 30, 2009, we had $16,932 in cash. As a result of our plans to
reduce costs, we estimate that we will require $6,200,000 to carry out our
planned operations over the next 12 months. We have been able to decrease our
future operating expenses by consolidating staff positions, by terminating our
agreement with Lolly Factory LLC, and by dropping the Haven and Tea and Honey
product lines. In addition, we need to decrease our Accounts Payable by $1.0
million with our product vendors. We expect that most of those expenses will be
paid by the money we receive from our net sales. However, the current weakness
of the U.S. and world economies could have harmful effects on our business. This
year, we expect consumers to spend less money on clothing than they have spent
in recent years. Competition for these limited expenditures will likely become
more intense. If consumers spend less and do not choose to spend their limited
funds on our clothes, we will earn less revenue and we will not be able to fund
our future operations through revenues from sales. Further, we have $3.6 million
in accounts payable and accrued expenses, and vendors are beginning to shorten
credit terms and demand paydown of accounts payable, which we may be unable to
do without significant profitability or injection of new equity or debt capital.

If we are unable to pay for our operations with our revenues, we will need to
raise money by the sale of additional equity or debt securities or by borrowing
money.

There can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely basis,
we will not be able to meet our other obligations as they become due and we will
be forced to scale down or perhaps even cease the operation of our business.

There is substantial doubt about our ability to continue as a going concern as
the continuation of our business is dependent upon a combination of our ability
to obtain further long-term financing, the successful and sufficient market
acceptance of any product offerings that we may introduce, the continuing
successful development of our product offerings, and, finally, our ability to
achieve a profitable level of operations. At this time, we have a backlog for
shipments of our products sales orders in excess $7.5 million for shipments
through June 2010. The issuance of additional equity securities by us could
result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, would increase our liabilities and future cash commitments.

Debt

On March 3, 2008, we entered into a Revolving Loan Agreement with two of our
  shareholders. The loan allows us to borrow and repay, on a revolving basis,
  up to an outstanding amount of $750,000. The outstanding principal balance of
  the Loan bears interest, payable monthly, at a rate of 8% per annum. The Loan
  was due to be repaid in full by November 30, 2008. On April 9, 2009 we agreed
  to convert $375,000 plus accrued interest to April 30, 2009 into our common
  stock at a conversion price of $0.10 per share. In addition, we agreed to issue
  one warrant to purchase one Common share for every two shares to be issued at
  an exercise price of $0.25 per warrant exercisable for twelve months. The conversion
  is effective April 30, 2009 and we authorized the issuance of 4,025,000 shares
  of Common stock and 2,125,000 warrants.

On January 16, 2009 we entered into a revolving loan agreement with Providence
Wealth Management Ltd, a British Virgin Islands company, whereby Providence
agreed to loan us the aggregate principal amount of US$1,000,000 for general
corporate purposes. The first advance of $700,000 occurred on January 16, 2009
and a second advance of $300,000 occurred on January 27, 2009. The loan may be
converted at any time after the first advance and before the maturity date into
our companys shares of common stock at a conversion price of $0.10 per share.
In addition, we agreed to issue one warrant to purchase one Common share for
every two shares to be issued at an exercise price of $0.25 per warrant
exercisable for twelve months. On April 9, the borrower converted $187,500 of
the loan plus accrued interest to April 30, 2009 into our common shares.

On June 15, 2009, the Company entered into a convertible loan agreement, dated
  for reference April 9, 2009, with 15 new lenders, whereby the lenders agreed
  to loan the Company the aggregate principal amount of US$1,000,000 bearing interest
  at 9% per annum, compounded and payable bi-annually, on the outstanding principal,
  and repayable on or before April 30, 2011. At the same time, the remaining outstanding
  balance of US$1,187,500 under loan agreements with Sinecure Holdings Limited,
  Peter Hough and Providence Wealth Management Ltd., (see above) was conformed
  from the terms of those previous loan agreements to the same terms as the June
  15, 2009 convertible loan agreement under the Pari Passu and Loan Modification
  Agreement described below.

---

- 17 -

On November 24, 2009, we entered into a loan agreement with Providence Wealth
Management Ltd., a company incorporated under the laws of the British Virgin
Islands, whereby Providence agreed to loan our company the aggregate principal
amount of US$290,000 bearing interest 9% per annum calculated and compounded
monthly, payable in full 30 days after advance, unless sooner prepaid or
accelerated upon. As of February 12, 2010, the loan has not been repaid.

As security for the Loan, we entered into a Trade-Mark Assignment Agreement
dated November 24, 2009, with Providence whereby we will assign to Providence
all of our right, title and interest to the Scrapbook trademark as a secured
charge behind Merchant Factors Inc.

On January 29, 2010, we entered into a loan agreement with Charles Lesser, an
officer of the Company, whereby Mr. Lesser agreed to loan our company the
aggregate principal amount of US$260,000 bearing interest 9% per annum
calculated and compounded monthly, payable in full 30 days after advance, unless
sooner prepaid or accelerated upon.

As security for the Loan, we entered into a Security Agreement January 29, 2010,
with Charles Lesser whereby we granted a security interest in the trademarks
Crafty Couture and Crafty by Scrapbook behind the interest of Merchant
Factors Inc.

The Year Ended September 30, 2009 Compared to the Year Ended
September 30, 2008

Revenue

Net sales for the year ended September 30, 2009 totaled $24,746,841 versus
$13,939,264 for 2008. Sales of Sosik apparel totaled $12,743,099, sales of
Scrapbook apparel totaled $8,342,750 and the remainder of the sales were Tea and
Honey, and Haven dresses. During the year ended September 30, 2008, sales of
Sosik apparel totaled $9,345,000 and sales of Scrapbook totaled $3,041,000.
Gross profit was $5,920,063 (23.9%) and 2,187,542 (15.7%) for the year ended
September 30, 2009 and 2008, respectively. At this time, we have a backlog of
sales orders in excess $7.5 million for shipments through June, 2010. With the
addition of Scrapbook, our sales mix is changing. Approximately 29% of these
orders are for Sosik products including skirts and knit and woven tops, 56% are
for Scrapbook apparel, and the balance is for contemporary brands. Our Sosik
products are sold through in-house sales staff and we have corporate sales
showrooms in Los Angeles and New York. Our Scrapbook apparel is sold through
in-house sales staff and independent sales showrooms in Chicago, Dallas, Atlanta
and Miami. Our Haven/Tea and Honey products are sold through contract outside
sales showrooms in Los Angeles earning sales commissions of 10-12%.

Expenses

The major components of our operating expenses are outlined in the table below:

Year ended
    
    
    Year ended
    
    
    PercentSeptember 30,
    
    
    September 30,
    
    
    Increase/2009
    
    
    2008
    
    
    DecreaseDesign & Development
    $
    2,932,305
    
    $
    3,698,948
    
    
    (20.7)%Selling & Shipping
    
    2,734,206
    
    
    2,473,374
    
    
    10.6%General and Administrative
    
    4,304,678
    
    
    5,448,317
    
    
    (21.0)%Depreciation & Amortization
    
    128,174
    
    
    95,589
    
    
    33.6%Total Expenses
      $
      10,099,363
    
      $
      11,716,228
    
      
      (13.8)%


---

- 18 -

The decrease in our total expenses for the year ended September 30, 2009 was due
to a reduction of $1,1,84,465 in non-cash stock compensation expense and
approximately $700,000 in design and development expenses.

For the year ended September 30, 2009, our design and development expenses
totaled $2,932,305, of which $1,446,000 was for design expenses and $1,486,000
was for production and development expenses. Major expense categories included
salaries, samples, contract labor and supplies. We paid total salaries of
$1,955,000. Purchases of sample fabric and garments totaled $603,000. Contract
labor and consulting totaled $260,000 and manufacturing and design supplies
totaled $162,000. For the year ended September 30, 2008 we paid total salaries
of $2,475,000. Purchases of sample fabric and garments totaled $522,000.
Contract labor and consulting totaled $338,000 and manufacturing and design
supplies totaled $123,000.

For the year ended September 30, 2009, our selling and shipping expense totaled
$2,734,206 compared to $2,473,374 for the year ended September 30, 2008 due to
the increase in sales volume. Major expense categories include travel and trade
show expenses, showroom expenses, salaries and sales commissions. During the
year ended September 30, 2009, travel and trade show expenses totaled $288,000,
sales showroom expense totaled $261,000, sales salaries totaled $493,000 and
sales commissions totaled $943,000. Included in sales commission expenses for
the year ended September 30, 2009 was $367,132 paid to Lolly Factory, Inc.
Selling expenses for the year ended September 30, 2008 consisted of travel and
trade show expenses totaling $208,000, sales showroom expense totaled $218,000,
sales salaries totaled $582,000 and sales consulting totaled $368,175. Included
in sales consulting expenses for the nine months ended June 30, 2008 was
$360,675 paid to Lolly Factory, Inc.

Our general and administrative expenses consist of accounting, information
technology, website development, marketing and promotion, travel, meals and
entertainment, rent, insurances, office maintenance, communication expenses
(cellular, internet, fax, and telephone), office supplies, and courier and
postage costs.

For the year ended September 30, 2009, our general and administrative expenses
(including non-cash compensation costs of $991,969) totaled $4,304,678. Key
components included salaries for executive, accounting and customer service
totaling $700,000, payroll taxes of $245,000, professional (accounting and
legal) fees of $507,000 due to two lawsuits, postage and delivery of $170,000,
insurance, including health, liability and directors & officers liability
of $254,000 and rent of $143,000. Also in general and administrative expenses is
factor fees of $312,000 and provision for doubtful accounts of $340,608. Not
included in general and administrative expenses is $128,174 in depreciation
expense. For the year ended September 30, 2008 general and administrative
expenses totaled $5,448,317, of which $2,176,434 was non-cash compensation
expenses. Key components included salaries of $718,000, payroll taxes of
$306,000, postage and delivery of $237,000 insurance $228,000, rent of $131,000,
bad debt expense of $544,000 and professional fees of $393,000.

For the year ended September 30, 2009 interest expense amounted to $796,000.
This is comprised of $304,000 of factor interest, $136,000 of interest on notes
and $356,344 of non-cash interest amortizing the discount on notes payable due
to the beneficial conversion feature of the notes.

Off Balance-Sheet Arrangements

The Company uses a factor for credit administration and cash flow purposes.
  Under the factoring agreement, the factor purchases a portion of the Companys
  domestic wholesale sales invoices and assumes most of the credit risks with
  respect to such accounts for a charge of 0.75% of the gross invoice amount.
  The Company can draw cash advances from the factor based on a pre-determined
  percentage, which is 75% of eligible outstanding accounts receivable. The factor
  holds as security substantially all assets of the Company and charges interest
  at a rate of prime plus 1.0% on the outstanding advances. Effective October
  27, 2008, the interest charge was increased to prime plus 2%. At March 31, 2008,
  the Company had cash account in the amount of $400,000 with the factor to be
  used as collateral for the loans advanced. On May 5, 2008 the cash collateral
  was reduced to $300,000. The Company is liable to the factor for merchandise
  disputes and customer claims on receivables sold to the factor. The factoring
  agreement expired on March 4, 2009, but was automatically renewed for one additional
  year.

At times, our customers place orders that exceed the credit that they have available
  from the factor. We evaluate those orders to consider if the customer is worthy
  of additional credit based on our past experience with the customer. If we decide
  to sell merchandise to the customer on credit, we take the credit risk for the
  amounts that are above their approved credit limit with the factor. As of September
  30, 2009, the amount of Due from Factor for which we bear the credit risk is
  $76,976.

---

- 19 -

For the year ended September 30, 2009 and 2008, the Company paid a total of
approximately $304,443 and $73,515, respectively, of interest to the factor
which is reported as a component of interest expense in the consolidated
statements of income. Due from factor, net of reserve for chargebacks and
estimated sales returns as presented in the balance sheet at September 30, 2009
and September 30, 2008 is summarized below:

September 30,
    
    
    September 30,2009
    
    
    2008Outstanding factored receivables
    $
    2,451,702
    
    $
    3,126,405Cash collateral reserve
    
    303,426
    
    
    303,4262,755,128
    
    
    3,429,831Less: advances
    
    (1,572,380
    )
    
    (1,689,387
    )Reserves for chargeback and sales returns
    
    (315,000
    )
    
    (328,988
      )$
      867,748
    
      $
      1,411,456


Critical Accounting Policies

Our consolidated financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles used in the United
States. Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by managements
application of accounting policies. We believe that understanding the basis and
nature of the estimates and assumptions involved with the following aspects of
our consolidated financial statements is critical to an understanding of our
financials.

Revenues

Revenue from product sales is recognized as title passes to the customer upon
shipment. Sales returns and allowances for the year ended September 30, 2009
totaled $2,424,539, approximately 10% of sales. We have accrued an additional
$315,000 as of September 30, 2009 for estimated chargebacks and sales
returns.

Stock-Based Compensation

The cost of employee services received in exchange for equity awards are based
on the grant date fair value of the awards, with the cost to be recognized as
compensation expense in our financial statements over the period of
benefit, which is generally the vesting period of the awards.

The Company accounts for stock option and warrant grants issued and vesting to
non-employees based on the fair value of the stock compensation at the
measurement date as determined at either (a) the date at which a performance
commitment is reached or (b) at the date at which the necessary performance to
earn the equity instruments is complete.

Concentration of Credit Risks

During the year ended September 30, 2009 sales to four customers accounted for
16.6%, 14.6%, 9.7% and 7.0% of the Companys net sales. During the year ended
September 30, 2009, purchases from one supplier totaled $7,788,000, or 41% of
the cost of sales.

---

- 20 -

Accounts Receivable

The Company extends credit to customers whose sales invoices have not been sold
to our factor based upon an evaluation of the customers financial condition and
credit history and generally require no collateral. Management performs regular
evaluations concerning the ability of our customers to satisfy their obligations
and records a provision for doubtful accounts based on these evaluations. Based
on historical losses, existing economic conditions and collection practices, our
allowance for doubtful accounts has been estimated to be $650,000 at September
30, 2009. The Companys credit losses for the periods presented have not
significantly exceeded managements estimates.

Inventory

Inventory is valued at the lower of cost or market, cost being determined by the
first-in, first-out method. We continually evaluate our inventories by assessing
slow moving product as well as prior seasons inventory. Market value of
non-current inventory is estimated based on historical sales trends for each
category of inventory of our companys individual product lines, the impact of
market trends, an evaluation of economic conditions and the value of current
orders relating to the future sales of this type of inventory. At September 30,
2009, inventories consisted of finished goods, work-in-process and raw
materials.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for major renewals and
improvements that extend the useful lives of property and equipment are
capitalized. Expenditures for maintenance and repairs are charged to expense as
incurred. When assets are retired or sold, the property accounts and related
accumulated depreciation and amortization accounts are relieved, and any
resulting gain or loss is included in operations.

Depreciation is computed on the straight-line method based on the estimated
useful lives of the assets of five years. Leasehold improvements are amortized
over the remaining life of the related lease, which has been determined to be
shorter than the useful life of the asset.

Convertible Notes Payable

Three notes were modified on June 15, 2009 to conform to a new financing repayable
  on or before April 30, 2011. The notes are now convertible into common shares
  at $.10 per share and when converted the company will issue warrants equal to
  one half of the shares converted exercisable at $0.15 per share for a period
  of 24 months. These features gave rise to the assignment of value to the warrants
  and beneficial conversion feature, which is accounted for as discount on the
  notes and an increase to additional paid in capital. The value of the warrants
  were determined by the Black Scholes option pricing method using the current
  stock price, exercise price of the warrants, volatility of 210% and a risk free
  interest rate of 1.1%. The Beneficial conversion feature value was set at its
  intrinsic value after consideration of the relative value of the warrants and
  the notes. The discount is being amortized on the interest method over the life
  of the loan.

Recent Accounting Pronouncements

Effective July 1, 2009, the FASB ASC became the single official source of
authoritative, nongovernmental U.S. GAAP. The historical U.S. GAAP hierarchy was
eliminated and the ASC became the only level of authoritative U.S. GAAP, other
than guidance issued by the SEC. The Companys accounting policies were not
affected by the conversion to ASC. However, references to specific accounting
standards in the notes to our consolidated financial statements have been
changed to refer to the appropriate section of the ASC.

In April 2008, the FASB issued a pronouncement on what now is codified as FASB
  ASC Topic 350, Intangibles  Goodwill and Other. This pronouncement
  amends the factors to be considered in determining the useful life of intangible
  assets accounted for pursuant to previous topic guidance. Its intent is to improve
  the consistency between the useful life of an intangible asset and the period
  of expected cash flows used to measure its fair value. This Company will be
  required to adopt this pronouncement on October 1, 2009. The adoption of this
  standard is not expected to have a material effect on the Companys consolidated
  financial statements.

---

- 21 -

In June 2008, the FASB amended FASB Topic ASC 815, Sub-Topic 40, "Contracts in
Entitys Own Equity to clarify how to determine whether certain instruments or
features were indexed to an entity's own stock under ASC Topic 815. The
amendment applies to any freestanding financial instrument (or embedded feature)
that has all of the characteristics of a derivative, for purposes of determining
whether that instrument (or embedded feature) qualifies for the scope exception.
It is also applicable to any freestanding financial instrument (e.g., gross
physically settled warrants) that is potentially settled in an entity's own
stock, regardless of whether it has all of the characteristics of a derivative,
for purposes of determining whether to apply ASC 815. The Company will be
required to adopt this pronouncement on October 1, 2009. The Company has not
determined the extent that the adoption of this standard will have on its
financial statements for the quarter ending December 31, 2009 and afterwards.

In April 2009, the FASB issued a pronouncement on what is now codified as FASB
ASC Topic 805, Business Combinations. This pronouncement provides new
guidance that changes the accounting treatment of contingent assets and
liabilities in business combinations under previous topic guidance. This
pronouncement will be effective for the Company for any business combinations
that occur on or after October 1, 2009

In April 2009, the FASB issued a pronouncement on what is now codified as FASB
ASC Topic 825, Financial Instruments. This pronouncement amends previous
topic guidance to require disclosures about fair value of financial instruments
for interim reporting periods of publicly traded companies, as well as in annual
financial statements. The pronouncement was effective for interim reporting
periods ending after June 15, 2009 and its adoption did not have any significant
effect on the consolidated financial statements.

In December 2007, the FASB issued ASC 805 Business Combinations and 810
Consolidation (ASC 810), which require that ownership interests in
subsidiaries held by parties other than the parent, and the amount of
consolidated net income, be clearly identified, labeled and presented in the
consolidated financial statements. ASC 805 and ASC 810 also require that once a
subsidiary is deconsolidated, any retained non-controlling equity investment in
the former subsidiary be initially measured at fair value. Sufficient
disclosures are required to clearly identify and distinguish between the
interests of the parent and the interests of the non-controlling owners. ASC 805
and ASC 810 amend ASC 260 to provide that the calculation of earnings per share
amounts in the consolidated financial statements will continue to be based on
the amounts attributable to the parent. ASC 805 and ASC 810 are effective for
financial statements issued for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008, and require retroactive
adoption of the presentation and disclosure requirements for existing minority
interests. All other requirements are applied prospectively. The Company adopted
ASC 805 and ASC 810 on January 1, 2009. The adoption of this standard did not
have a material effect on the Companys consolidated financial statements.

In May 2009, the FASB issued a pronouncement on what is now codified as FASB ASC
Topic 855, Subsequent Events. This pronouncement establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before the financial statements are issued or are
available to be issued. FASB ASC Topic 855 provides guidance on the period after
the balance sheet date during which management of a reporting entity should
evaluate events or transactions that may occur for potential recognition or
disclosure in the financial statements, the circumstances under which an entity
should recognize events or transactions occurring after the balance sheet date
in its financial statements and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. The
pronouncement was effective for the Company during the annual period ended
September 30, 2009. The Company has evaluated subsequent events for the period
from September 30, 2009, the date of these financial statements, through
February XX, 2010, which represents the date these financial statements are
filed with the SEC.

In June 2009, the FASB issued ASC Topic 810-10, "Amendments to FASB Interpretation
  No. 46(R)" (ASC 810-10). ASC 810-10 is intended to (1) address
  the effects on certain provisions of FASB Interpretation No. 46 (revised December
  2003), Consolidation of Variable Interest Entities, as a result
  of the elimination of the qualifying special-purpose entity concept in ASC 860-20,
  and (2) constituent concerns about the application of certain key provisions
  of Interpretation 46(R), including those in which the accounting and disclosures
  under the Interpretation do not always provided timely and useful information
  about an enterprise's involvement in a variable interest entity. This statement
  will be effective for the Company on October 1, 2010. The Company does not expect
  the adoption of 810-10 to have a material impact on its results of operations,
  financial condition or cash flows.

---

- 22 -

Other recent accounting pronouncements issued by the FASB (including its
Emerging Issues Task Force), and the United States Securities and Exchange
Commission did not or are not believed to have a material impact on the
Company's present or future consolidated financial statements.

ITEM 7. FINANCIAL STATEMENTS.

| | Report of Independent Registered
      Public Accounting Firm Crowe Horwath LLP | F-1
| | ------------------------------------------------------------------------------- | ---
| |                                                                                 |    
| | Consolidated Balance Sheets                                                     | F-2
| | Consolidated Statements of Operations                                           | F-3
| | Consolidated Statement
      of Stockholders (Deficit) Equity                  | F-4
| | Consolidated Statements of Cash Flows                                           | F-5
| | Notes To Consolidated Financial
      Statements                                | F-7

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders 
  Panglobal Brands Inc. and Subsidiary

We have audited the accompanying consolidated balance sheets
  of Panglobal Brands Inc. and Subsidiary as of September 30, 2009 and 2008, and
  the related statements of operations, changes in stockholders (deficit)
  and cash flows for the years then ended. These consolidated financial statements
  are the responsibility of the Companys management. Our responsibility
  is to express an opinion on these consolidated financial statements based on
  our audits.

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

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Panglobal Brands Inc. and Subsidiary as of September 30, 2009 and 2008, and
  the results of their operations and their cash flows for the years then ended
  in conformity with United States generally accepted accounting principles.

The accompanying consolidated financial statements have been
  prepared assuming the Company will continue as a going concern. As discussed
  in Note 2 to the consolidated financial statements, the Company has been dependent
  on debt and equity financing, has incurred losses from operations and has negative
  working capital, a stockholders (deficit) and negative cash flows from
  operations that raise substantial doubt about its ability to continue as a going
  concern. Managements plans in regard to these matters are also described
  in Note 2. The consolidated financial statements do not include any adjustments
  that might result from the outcome of this uncertainty.

/s/ Crowe Horwath LLP

Sherman Oaks, California 
  February 12, 2010

F-1

---

PANGLOBAL BRANDS INC. 
  AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                              |   | September   |   |   | September   |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|                                                                                                                                                                                              |   | 30,         |   |   | 30,         |  
|                                                                                                                                                                                              |   | 2009        |   |   | 2008        |  
|                                                                                                                                                                                              |   |             |   |   |             |  
|ASSETS                                                                                                                                                                                        |   |             |   |   |             |  
|Current assets:                                                                                                                                                                               |   |             |   |   |             |  
|Cash and cash equivalents                                                                                                                                                                     | $ | 16,932      |   | $ | ---         |  
|Accounts receivable, net of allowance of $ 650,000 and $544,000
      as of September 30, 2009 and 2008, respectively                                                                         |   | 221,661     |   |   | 444,291     |  
|Due from factor, net                                                                                                                                                                          |   | 867,748     |   |   | 1,411,456   |  
|Inventory                                                                                                                                                                                     |   | 821,467     |   |   | 1,304,407   |  
|Prepaid expenses and other current assets                                                                                                                                                     |   | 128,722     |   |   | 97,354      |  
|Total
      current assets                                                                                                                                                                    |   | 2,056,530   |   |   | 3,257,508   |  
|                                                                                                                                                                                              |   |             |   |   |             |  
|Property and equipment,net                                                                                                                                                                    |   | 428,030     |   |   | 587,992     |  
|Trademarks and intangible assets                                                                                                                                                              |   | 1,177,235   |   |   | 1,177,235   |  
|Deposits                                                                                                                                                                                      |   | 75,193      |   |   | 134,520     |  
|Total assets                                                                                                                                                                                  | $ | 3,736,988   |   | $ | 5,157,255   |  
|                                                                                                                                                                                              |   |             |   |   |             |  
|LIABILITIES AND STOCKHOLDERS (DEFICIT)
      EQUITY                                                                                                                                          |   |             |   |   |             |  
|Current liabilities:                                                                                                                                                                          |   |             |   |   |             |  
|Bank overdraft                                                                                                                                                                                | $ | ---         |   | $ | 171,521     |  
|Accounts payable and accrued expenses                                                                                                                                                         |   | 3,667,085   |   |   | 3,861,562   |  
|Convertible note payable to shareholders                                                                                                                                                      |   | ---         |   |   | 750,000     |  
|Total
      current liabilities                                                                                                                                                               |   | 3,667,085   |   |   | 4,783,083   |  
|                                                                                                                                                                                              |   |             |   |   |             |  
|Convertible notes payable to shareholders-long term                                                                                                                                           |   | 1,070,317   |   |   | ---         |  
|                                                                                                                                                                                              |   |             |   |   |             |  
|Commitments and contingencies                                                                                                                                                                 |   |             |   |   |             |  
|                                                                                                                                                                                              |   |             |   |   |             |  
|Stockholders (deficit) equity :                                                                                                                                                              |   |             |   |   |             |  
|Common stock $0.0001 par value, 600,000,000
      shares authorized, 49,016,710 and 37,671,710 shares issued and outstanding
      at September 30, 2009 and September 30, 2008, respectively |   | 4,903       |   |   | 3,767       |  
|                                                                                                                                                                                              |   |             |   |   |             |  
|Additional paid-in capital                                                                                                                                                                    |   | 18,373,670  |   |   | 14,741,439  |  
|Accumulated deficit                                                                                                                                                                           |   | (19,378,987 | ) |   | (14,371,034 | )
|Total stockholders (deficit) equity                                                                                                                                                          |   | (1,000,414  | ) |   | 374,172     |  
|Total
      liabilities and stockholders (deficit) equity                                                                                                                                    | $ | 3,736,988   |   | $ | 5,157,255   |  

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

F-2

---

PANGLOBAL BRANDS INC. 
  AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                                                                                                    |   | Year Ended    |   |   | Year Ended    |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | - | - | ------------- | -
|                                                                                                                                                                    |   | September 30, |   |   | September 30, |  
|                                                                                                                                                                    |   | 2009          |   |   | 2008          |  
|                                                                                                                                                                    |   |               |   |   |               |  
|Net sales                                                                                                                                                           | $ | 24,746,841    |   | $ | 13,939,264    |  
|Cost of sales                                                                                                                                                       |   | 18,826,778    |   |   | 11,751,722    |  
|Gross profit                                                                                                                                                        |   | 5,920,063     |   |   | 2,187,542     |  
|                                                                                                                                                                    |   |               |   |   |               |  
|Costs and expenses:                                                                                                                                                 |   |               |   |   |               |  
|Design and development                                                                                                                                              |   | 2,932,305     |   |   | 3,698,948     |  
|Selling and shipping                                                                                                                                                |   | 2,734,206     |   |   | 2,473,374     |  
|General and administrative, including $991,969 and $2,176,434
      of stock-based compensation for the year ended September 30, 2009 and 2008,
      respectively; |   | 4,304,678     |   |   | 5,448,317     |  
|Depreciation and amortization                                                                                                                                       |   | 128,174       |   |   | 95,589        |  
|Total costs and expenses                                                                                                                                            |   | 10,099,363    |   |   | 11,716,228    |  
|                                                                                                                                                                    |   |               |   |   |               |  
|Loss from operations                                                                                                                                                |   | (4,179,300    | ) |   | (9,528,686    | )
|                                                                                                                                                                    |   |               |   |   |               |  
|Interest income                                                                                                                                                     |   | 305           |   |   | 22,176        |  
|Interest (expense)                                                                                                                                                  |   | (796,019      | ) |   | (106,417      | )
|Loss on extinguishment of debt                                                                                                                                      |   | (32,939       | ) |   | ---           |  
|                                                                                                                                                                    |   | (828,653      | ) |   | (84,241       | )
|                                                                                                                                                                    |   |               |   |   |               |  
|Net loss                                                                                                                                                            | $ | (5,007,953    | ) | $ | (9,612,927    | )
|                                                                                                                                                                    |   |               |   |   |               |  
|Net loss per common share - basic and diluted                                                                                                                       | $ | (0.12         | ) | $ | (0.31         | )
|Weighted average number of common shares outstanding - basic
      and diluted                                                                                      |   | 43,401,100    |   |   | 31,459,500    |  
|                                                                                                                                                                    |   |               |   |   |               |  

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

F-3

---

PANGLOBAL BRANDS INC. 
  AND SUBSIDIARY

CONSOLIDATED STATEMENT OF STOCKHOLDERS (DEFICIT) EQUITY

Common Stock
      
      
      Additional Paid-in
      
      
      Accumulated
      
      
      Total Stockholders’Shares
      
      
      Amount
      
      
      Capital
      
      
      Deficit
      
      
      (Deficit) EquityBalance, October 1, 2007
      
      26,731,771
      
      $
      2,673
      
      $
      6,363,418
      
      $
      (4,758,107
      )
      $
      1,607,984Shares issued in private placement
      
      10,871,759
      
      
      1,087
      
      
      6,152,731
      
      
      ---
      
      
      6,153,818Shares issued as loan fees
      
      68,180
      
      
      7
      
      
      48,856
      
      
      ---
      
      
      48,863Stock-based compensation
      
      ---
      
      
      ---
      
      
      2,176,434
      
      
      ---
      
      
      2,176,434Net loss for the year ended September 30, 2008
      
      
      
      
      
      
      
      
      
      
      (9,612,927
      )
      
      (9,612,927
      )Balance, September 30, 2008
      
      37,671,710
      
      $
      3,767
      
      $
      14,741,439
      
      $
      (14,371,034
      )
      $
      374,172Shares issued in private placement
      
      3,700,000
      
      
      370
      
      
      369,630
      
      
      ---
      
      
      370,000Conversion of shareholder loans
      
      6,145,000
      
      
      616
      
      
      762,049
      
      
      ---
      
      
      762,665Conversion of Accounts Payable
      
      1,500,000
      
      
      150
      
      
      149,850
      
      
      ---
      
      
      150,000Stock-based compensation
      
      ---
      
      
      ---
      
      
      991,969
      
      
      ---
      
      
      991,969Discount on notes payable due to beneficial
        conversion and warrants
      
      ---
      
      
      ---
      
      
      1,358,733
      
      
      ---
      
      
      1,358,733Net loss for the year ended September 30,
        2009
      
      ---
      
      
      ---
      
      
      ---
      
      
      (5,007,953
      )
      
      (5,007,953
      )Balance, September 30, 2009
      
      49,016,710
      
      $
      4,903
      
      $
      18,373,670
      
      $
      (19,378,987
      )
      $
      (1,000,414
      )


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

F-4

---

PANGLOBAL BRANDS INC. 
  AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                 |   | Year Ended |   |   | Year Ended |  
|------------------------------------------------ | - | ---------- | - | - | ---------- | -
|                                                 |   | September  |   |   | September  |  
|                                                 |   | 30,        |   |   | 30,        |  
|                                                 |   | 2009       |   |   | 2008       |  
|Cash flows from operating activities             |   |            |   |   |            |  
|Net loss                                         | $ | (5,007,953 | ) | $ | (9,612,927 | )
|Adjustments to reconcile net loss to net         |   |            |   |   |            |  
|cash used in operating activities:               |   |            |   |   |            |  
|Depreciation and amortization                    |   | 128,174    |   |   | 95,589     |  
|Bad debt expense                                 |   | 340,608    |   |   | 529,501    |  
|Provision for sales returns                      |   | (13,988    | ) |   | 328,988    |  
|Stock-based compensation                         |   | 991,969    |   |   | 2,176,434  |  
|Amortization of beneficial conversion            |   | 241,550    |   |   | ---        |  
|Amortization of discount due to warrants         |   | 114,792    |   |   | ---        |  
|Loss on extinguishment of debt                   |   | 32,939     |   |   | ---        |  
|Stock issued as loan fees                        |   | ---        |   |   | 48,863     |  
|Loss on abandoned leasehold improvements         |   | ---        |   |   | 4,243      |  
|Cancellation of website development contract     |   | 53,999     |   |   | ---        |  
|Stock issued as interest expense                 |   | 52,434     |   |   | ---        |  
|Changes in operating assets and liabilities:     |   |            |   |   |            |  
|(Increase) decrease in -                         |   |            |   |   |            |  
|Accounts receivable                              |   | (117,978   | ) |   | (943,817   | )
|Due
      from factor                            |   | 557,696    |   |   | (1,565,360 | )
|Inventory                                        |   | 482,940    |   |   | (994,707   | )
|Prepaid
      expenses and other current assets  |   | (31,368    | ) |   | (46,350    | )
|Deposits                                         |   | 59,327     |   |   | (66,455    | )
|Increase (decrease) in -                         |   |            |   |   |            |  
|Accounts payable and accrued expenses            |   | (44,477    | ) |   | 3,464,574  |  
|Net cash used in operating activities            |   | (2,159,336 | ) |   | (6,581,424 | )
|                                                 |   |            |   |   |            |  
|Cash flows from investing activities             |   |            |   |   |            |  
|Purchase of property and equipment               |   | (22,211    | ) |   | (476,894   | )
|Purchase of trademarks and intangible assets     |   | ---        |   |   | (1,177,235 | )
|Net cash used in investing activities            |   | (22,211    | ) |   | (1,654,129 | )
|                                                 |   |            |   |   |            |  
|Cash flows from financing activities             |   |            |   |   |            |  
|Bank overdraft                                   |   | (171,521   | ) |   | 171,521    |  
|Proceeds from private placements                 |   | 370,000    |   |   | 6,153,818  |  
|Loan from related party-officer                  |   | --         |   |   | 400,000    |  
|Proceeds from shareholder notes                  |   | 2,000,000  |   |   | 750,000    |  
|Repayment of related party loans                 |   | --         |   |   | (410,000   | )
|Net cash provided by financing activities        |   | 2,198,479  |   |   | 7,065,339  |  
|                                                 |   |            |   |   |            |  
|Net increase (decrease) in cash                  |   | 16,932     |   |   | (1,170,214 | )
|Cash and cash equivalents at beginning of period |   | ---        |   |   | 1,170,214  |  
|Cash and cash equivalents at end of period       | $ | 16,932     |   | $ | ---        |  

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

F-5

---

PANGLOBAL BRANDS INC. 
  AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

|                                                                               |   | Year          |  |   | Year          | 
|------------------------------------------------------------------------------ | - | ------------- |  | - | ------------- | 
|                                                                               |   | Ended         |  |   | Ended         | 
|                                                                               |   | September 30, |  |   | September 30, | 
|                                                                               |   | 2009          |  |   | 2008          | 
|                                                                               |   |               |  |   |               | 
|Supplemental disclosures of non-cash investing
      and financing activities: |   |               |  |   |               | 
|Discount of notes payable due to beneficial conversion feature                 | $ | 1,358,733     |  |   | ---           | 
|Non cash conversion of notes and interest to
      Common Stock                | $ | 762,665       |  |   | ---           | 
|                                                                               |   |               |  |   |               | 
|                                                                               |   |               |  |   |               | 
|                                                                               |   |               |  |   |               | 
|                                                                               |   |               |  |   |               | 
|Common stock issued as loan fees                                               | $ | ---           |  | $ | 48,863        | 
|Supplemental disclosures of cash flow information:                             |   |               |  |   |               | 
|Cash paid for -                                                                |   |               |  |   |               | 
|Interest                                                                       | $ | 439,457       |  | $ | 106,417       | 
|                                                                               |   |               |  |   |               | 
|Income taxes                                                                   | $ | ---           |  | $ | ---           | 

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

F-6

---

PANGLOBAL BRANDS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

Organization and Nature of Operations

EZ
  English Online Corp, a Delaware corporation (EZ English), was incorporated
  in the State of Delaware on March 2, 2005. EZ English sold common stock pursuant
  to a registration statement on Form SB-2 declared effective by the Securities
  and Exchange Commission on February 28, 2006, and raised gross proceeds of approximately
  $85,000. Through September 30, 2006, EZ English was a development stage company
  offering a teacher training course to teach English as a second language over
  the Internet.

Beginning
  in December 2006, in conjunction with a new controlling shareholder acquiring
  approximately 79% of the issued and outstanding common shares, EZ English began
  a program to discontinue its existing business operations and prepare to enter
  the fashion industry. On February 2, 2007, in order to better reflect its future
  business operations and prepare for its acquisition of Mynk Corporation, a privately-held
  Nevada corporation (Mynk), EZ English completed a merger with its
  wholly-owned Delaware subsidiary, in order to effect a name change to Panglobal
  Brands Inc. (Panglobal). Mynk was incorporated in Nevada on February
  3, 2006 to engage in the business of design, manufacture and distribution of
  clothing and accessories throughout the United States and Canada.

Unless
  the context indicates otherwise, Panglobal and Mynk are hereinafter referred
  to as the Company.

The
  Company has one segment sells its apparel products through a network of wholesale
  accounts.

2. Business Operations and Summary of Significant Accounting
  Policies

Going Concern and Plan of Operations

The
  Companys consolidated financial statements have been presented on the
  basis that it is a going concern, which contemplates the realization of assets
  and satisfaction of liabilities in the normal course of business. The Company
  has incurred substantial losses from operations and has negative working capital,
  a stockholders (deficit) equity at September 30, 2009, and has incurred negative
  cash flows from operating activities. In addition, the Company has been dependent
  upon debt and equity financing which raises substantial doubt about its ability
  to continue as a going concern. The Companys ability to continue as a
  going concern is dependent upon its ability to achieve profitable operations
  and continue to raise capital through debt or equity financing, to which there
  is no guarantee. The accompanying financial statements do not include any adjustments
  that might result from the outcome of these uncertainties.

The
  Company has undertaken a number of specific steps to achieve profitable operations
  in the future. These actions include elimination of highly compensated individuals,
  streamlining operations, termination of the agreement with Lolly Factory LLC,
  reduction of personnel costs, deciding to eliminate the contemporary dress product
  group in 2010, concentrating on higher margin lines of business, better margin
  customers and reducing returns and allowances by examining allowances offered.
  In addition, management will continue to search for additional debt and equity
  financing.

Principles of Consolidation

The
  accompanying consolidated financial statements include the financial statements
  of Panglobal Brands, Inc. and its wholly-owned subsidiary, Mynk Corporation.
  All intercompany balances and transactions have been eliminated in consolidation.

F-7

---

Use of Estimates

The
  preparation of financial statements in conformity with accounting principles
  generally accepted in the United States of America requires management to make
  estimates and assumptions that affect the reported amounts of assets and liabilities
  at the date of the financial statements and the reported amounts of expenses
  during the reporting period. Significant estimates include depreciation and
  the allowance for doubtful accounts and factor receivables, asset impairment,
  valuation of warrants and options, inventory valuation, and the determination
  of revenue and costs. We base our estimates on historical experience and on
  various other assumptions that we believe are reasonable under the circumstances,
  the results of which form the basis for making judgments about the carrying
  values of assets and liabilities that are not readily apparent from other sources.
  Actual results could differ from those estimates.

Fair Value of Financial Instruments

The
  fair value of the financial instruments disclosed herein is not necessarily
  representative of the amount that could be realized or settled, nor does the
  fair value amount consider the tax consequences of realization or settlement.

For
  certain financial instruments, including cash, accounts receivable, due from
  factor, accounts payable and accrued expenses, the Company estimates that the
  carrying amounts approximate fair value because of the nature of the assets
  and short- term maturities of the obligations. The carrying value of short-term
  and long-term convertible notes approximate fair value due to the short time
  period to maturity (long-term notes terms do not exceed five years.)

Cash and Cash Equivalents

The
  Company considers all highly liquid investments with an original maturity of
  three months or less when purchased to be cash equivalents. At times, such cash
  and cash equivalents may exceed federally insured limits. The Company has not
  experienced a loss in such accounts to date. The Company maintains its accounts
  with financial institutions with high credit ratings. The cash held by the factor
  is not included in cash and cash equivalents (see Note 5).

Accounts Receivable

The
  Company extends credit to customers whose sales invoices have not been sold
  to our factor based upon an evaluation of the customers financial condition
  and credit history and generally require no collateral. Management performs
  regular evaluations concerning the ability of our customers to satisfy their
  obligations and records a provision for doubtful accounts based on these evaluations.
  Based on existing economic conditions and collection practices, the Companys
  allowance for doubtful accounts has been estimated to be $650,000 and $544,000
  at September 30, 2009 and September 30, 2008, respectively.

Concentration of Credit Risks

During
  the year ended September 30, 2009 sales to four customers accounted for 16.6%,
  14.6%, 9.7% and 7.0%of the Companys net sales. During the year ended September
  30, 2009, purchases from one supplier totaled $7,788,000, or 41% of the cost
  of sales. During the year ended September 30, 2008 three customers accounted
  for 22.0%, 19.7% and 12.4%, respectively.

Inventory

Inventories
  are valued at the lower of cost or market, with cost being determined by the
  first-in, first-out method. The Company continually evaluates its inventories
  by assessing slow-moving product and records mark-downs as appropriate. At September
  30, 2009 and 2008, inventories consisted of finished goods, work-in-process
  and raw materials.

F-8

---

Property and Equipment

Property
  and equipment are recorded at cost. Expenditures for major renewals and improvements
  that extend the useful lives of property and equipment are capitalized. Expenditures
  for maintenance and repairs are charged to expense as incurred. When assets
  are retired or sold, the property accounts and related accumulated depreciation
  and amortization accounts are relieved, and any resulting gain or loss is included
  in operations.

Depreciation
  is computed on the straight-line method based on the estimated useful lives
  of the assets of five years. Leasehold improvements are amortized over the remaining
  life of the related lease, which has been determined to be shorter than the
  useful life of the asset.

Trademarks and Intangibles

Trademarks
  and intangibles (including trademarks) with indefinite lives are not amortized,
  but instead tested for impairment. Intangible assets are reviewed for impairment
  annually or whenever events or changes in business circumstances indicate the
  carrying value of the assets may not be recoverable. Impairment losses are recognized
  if future cash flows of the related assets are less than their carrying values.

Impairment of Long-Lived Assets and Intangibles

Long-lived
  assets, including purchased intangible assets, are reviewed for impairment whenever
  events or changes in circumstances indicate that the carrying amount of an asset
  may not be recoverable. Recoverability of assets to be held and used is measured
  by a comparison of the carrying amount of an asset to future net cash flows
  expected to be generated by the asset. If such assets are considered to be impaired,
  the impairment to be recognized is measured by the amount by which the carrying
  amount of the assets exceeds the fair value of the assets. Assets to be disposed
  of are reported at the lower of the carrying amount or fair value less costs
  to sell. Management has considered the net losses incurred for the years ended
  September30, 2009 and 2008 and has concluded that there is no impairment of
  long lived assets or intangibles at September 30, 2009 and 2008.

Revenue Recognition

The
  Company recognizes revenue from the sale of merchandise to its wholesale accounts
  when products are shipped and the customer takes title and assumes the risk
  of loss, collection of the relevant receivable is reasonably assured, pervasive
  evidence of an arrangement exists, and the sales price is fixed or otherwise
  determinable. Sales allowances are recorded as a reduction to revenue. Management
  has evaluated the effects of estimating and accruing for sales returns in the
  current and prior periods and provides for an estimated allowance for returns.

Design and Development

Design
  and development costs related to the development of new products are expensed
  as incurred.

Advertising

The
  Company expenses advertising costs, consisting primarily of placement in publications,
  along with design and printing costs of sales materials when incurred. Advertising
  expense for the years ended September 30, 2009 and 2008 amounted to $1,515 and
  $39,886, respectively.

Shipping and Handling Costs

The
  Company records shipping and handling costs billed to customers in selling and
  shipping expenses. Shipping and handling costs incurred by the Company for inbound
  freight are recorded in cost of sales and costs for outbound freight are recorded
  in selling and shipping expenses. Total shipping and handling costs amounted
  to $186,874 and $147,725for the years ended September 30, 2009 and 2008, respectively.

F-9

---

Stock-Based Compensation

The
  Company grants stock options to employees and stock options and warrants to
  non-employees in non-capital raising transactions for services and for financing
  costs. All grants are recorded at fair value at the grant date. The Company
  utilizes the Black-Scholes option pricing model to determine fair value. The
  resulting amount is charged to expense on the straight-line basis over the period
  in which the Company expects to receive benefit, which is generally the vesting
  period.

Income Taxes

The
  Company accounts for income taxes using an asset and liability approach whereby
  deferred tax assets and liabilities are recognized for the future tax consequences
  attributable to differences between the financial statement carrying amounts
  of existing assets and liabilities and their respective tax bases. Deferred
  tax assets and liabilities are measured using enacted tax rates applicable to
  taxable income in the years in which those temporary differences are expected
  to be recovered or settled. The effect on deferred tax assets and liabilities
  of a change in tax rates is recognized in income in the period that includes
  the enactment date. The Company will provide a valuation allowance for the full
  amount of the deferred tax asset since there is no assurance of future taxable
  income.

The
  Company recognizes a tax benefit associated with an uncertain tax position when,
  in managements judgment, it is more likely than not that the position
  will be sustained upon examination by a taxing authority. For a tax position
  that meets the more-likely-than-not recognition threshold, the Company initially
  and subsequently measures the tax benefit as the largest amount that it judges
  to have a greater than 50% likelihood of being realized upon ultimate settlement
  with a taxing authority. The liability associated with unrecognized tax benefits
  is adjusted periodically due to changing circumstances, such as the progress
  of tax audits, case law developments and new or emerging legislation. Such adjustments
  are recognized entirely in the period in which they are identified. The effective
  tax rate includes the net impact of changes in the liability for unrecognized
  tax benefits and subsequent adjustments as considered appropriate by management.

Loss per Common Share

Loss
  per common share is computed by dividing net loss by the weighted average number
  of shares of common stock outstanding during the respective periods. Basic and
  diluted loss per common share are the same for all periods presented because
  all warrants and stock options outstanding are anti-dilutive. The related party
  loans continues to be convertible to common shares and are not repaid at September
  30, 2009, but the conversion is anti-dilutive.

New Accounting Pronouncements

Effective
  July 1, 2009, the FASB ASC became the single official source of authoritative,
  nongovernmental U.S. GAAP. The historical U.S. GAAP hierarchy was eliminated
  and the ASC became the only level of authoritative U.S. GAAP, other than guidance
  issued by the SEC. The Companys accounting policies were not affected
  by the conversion to ASC. However, references to specific accounting standards
  in the notes to our consolidated financial statements have been changed to refer
  to the appropriate section of the ASC.

In
  April 2008, the FASB issued a pronouncement on what now is codified as FASB
  ASC Topic 350, Intangibles  Goodwill and Other. This pronouncement
  amends the factors to be considered in determining the useful life of intangible
  assets accounted for pursuant to previous topic guidance. Its intent is to improve
  the consistency between the useful life of an intangible asset and the period
  of expected cash flows used to measure its fair value. This Company will be
  required to adopt this pronouncement on October 1, 2009. The adoption of this
  standard is not expected to have a material effect on the Companys consolidated
  financial statements.

In
  June 2008, the FASB amended FASB Topic ASC 815, Sub-Topic 40, "Contracts in
  Entitys Own Equity to clarify how to determine whether certain instruments
  or features were indexed to an entity's own stock under ASC Topic 815. The amendment
  applies to any freestanding financial instrument (or embedded feature) that
  has all of the characteristics of a derivative, for purposes of determining
  whether that instrument (or embedded feature) qualifies for the scope exception.

F-10

---

It is also applicable to any freestanding financial instrument
  (e.g., gross physically settled warrants) that is potentially settled in an
  entity's own stock, regardless of whether it has all of the characteristics
  of a derivative, for purposes of determining whether to apply ASC 815. The Company
  will be required to adopt this pronouncement on October 1, 2009. The Company
  has not determined the extent that the adoption of this standard will have on
  its financial statements for the quarter ending December 31, 2009 and afterwards.

In
  April 2009, the FASB issued a pronouncement on what is now codified as FASB
  ASC Topic 805, Business Combinations. This pronouncement provides new
  guidance that changes the accounting treatment of contingent assets and liabilities
  in business combinations under previous topic guidance. This pronouncement will
  be effective for the Company for any business combinations that occur on or
  after October 1, 2009

In
  April 2009, the FASB issued a pronouncement on what is now codified as FASB
  ASC Topic 825, Financial Instruments. This pronouncement amends previous
  topic guidance to require disclosures about fair value of financial instruments
  for interim reporting periods of publicly traded companies, as well as in annual
  financial statements. The pronouncement was effective for interim reporting
  periods ending after June 15, 2009 and its adoption did not have any significant
  effect on the consolidated financial statements.

In
  December 2007, the FASB issued ASC 805 Business Combinations
  and 810 Consolidation (ASC 810), which require
  that ownership interests in subsidiaries held by parties other than the parent,
  and the amount of consolidated net income, be clearly identified, labeled and
  presented in the consolidated financial statements. ASC 805 and ASC 810 also
  require that once a subsidiary is deconsolidated, any retained non-controlling
  equity investment in the former subsidiary be initially measured at fair value.
  Sufficient disclosures are required to clearly identify and distinguish between
  the interests of the parent and the interests of the non-controlling owners.
  ASC 805 and ASC 810 amend ASC 260 to provide that the calculation of earnings
  per share amounts in the consolidated financial statements will continue to
  be based on the amounts attributable to the parent. ASC 805 and ASC 810 are
  effective for financial statements issued for fiscal years, and interim periods
  within those fiscal years, beginning on or after December 15, 2008, and require
  retroactive adoption of the presentation and disclosure requirements for existing
  minority interests. All other requirements are applied prospectively. The Company
  adopted ASC 805 and ASC 810 on January 1, 2009. The adoption of this standard
  did not have a material effect on the Companys consolidated financial
  statements.

In
  May 2009, the FASB issued a pronouncement on what is now codified as FASB ASC
  Topic 855, Subsequent Events. This pronouncement establishes general
  standards of accounting for and disclosure of events that occur after the balance
  sheet date but before the financial statements are issued or are available to
  be issued. FASB ASC Topic 855 provides guidance on the period after the balance
  sheet date during which management of a reporting entity should evaluate events
  or transactions that may occur for potential recognition or disclosure in the
  financial statements, the circumstances under which an entity should recognize
  events or transactions occurring after the balance sheet date in its financial
  statements and the disclosures that an entity should make about events or transactions
  that occurred after the balance sheet date. The pronouncement was effective
  for the Company during the annual period ended September 30, 2009. The Company
  has evaluated subsequent events for the period from September 30, 2009, the
  date of these financial statements, through February 12, 2010, which represents
  the date these financial statements are filed with the SEC.

In
  June 2009, the FASB issued ASC Topic 810-10, "Amendments to FASB Interpretation
  No. 46(R)" (ASC 810-10). ASC 810-10 is intended to (1) address
  the effects on certain provisions of FASB Interpretation No. 46 (revised December
  2003), Consolidation of Variable Interest Entities, as a result
  of the elimination of the qualifying special-purpose entity concept in ASC 860-20,
  and (2) constituent concerns about the application of certain key provisions
  of Interpretation 46(R), including those in which the accounting and disclosures
  under the Interpretation do not always provided timely and useful information
  about an enterprise's involvement in a variable interest entity. This statement
  will be effective for the Company on October 1, 2010. The Company does not expect
  the adoption of 810-10 to have a material impact on its results of operations,
  financial condition or cash flows.

Other
  recent accounting pronouncements issued by the FASB (including its Emerging
  Issues Task Force), and the United States Securities and Exchange Commission
  did not or are not believed to have a material impact on the Company's present
  or future consolidated financial statements.

F-11

---

3. Private Placements

On
  July 11, 2008, the Company closed a private placement, selling 8,000,000 shares
  of common stock at a price of $0.50 per share for proceeds of $4,000,000. The
  Company issued 560,000 shares pursuant to the exemption from registration under
  the United States Securities Act of 1933 provided by Section 4(2), Section 4(6)
  and/or Rule 506 of Regulation D promulgated under the 1933 Act to four (4) investors
  who are accredited investors within the respective meanings ascribed
  to that term in Rule 501(a) under the 1933 Act. The Company issued 7,440,000
  shares to eighteen (18) non U.S. persons (as that term is defined in Regulation
  S of the Securities Act of 1933) in an offshore transaction relying on Regulation
  S and/or Section 4(2) of the Securities Act of 1933.

On
  February 6, 2009, the Company raised $370,000 in a private placement selling
  3,700,000 units consisting of 3,700,000 common shares at a price of $0.10 per
  share plus 1,850,000 warrants to purchase common shares at a price of $0.25
  per share. The warrants are exercisable for twelve months. The Company issued
  3,700,000 shares to four (4) non U.S. persons (as that term is defined in Regulation
  S of the Securities Act of 1933) in an offshore transaction relying on Regulation
  S and/or Section 4(2) of the Securities Act of 1933.

Stock Options

On
  May 29, 2009, the Company granted to Gary Bub, an employee of the company, stock
  options to purchase an aggregate of 500,000 shares of common stock, exercisable
  for a period of five years at $0.10 per share, vesting immediately. The fair
  value of this option, as calculated pursuant to the Black-Scholes option-pricing
  model, was determined to be $85,000 ($0.17 per share), and was charged to operations
  in the period ending June 30, 2009.

The
  fair value of these stock options were calculated using the following Black-Scholes
  input variables: stock price on date of grant - $0.19; exercise price - $0.1075;
  expected life  5.00 years; expected volatility -210%; expected dividend
  yield - 0%; risk-free interest rate  3.0% .

On
  May 29, 2009, the Company granted to Dru Narwani, a consultant to the company,
  stock options to purchase an aggregate of 500,000 shares of common stock, exercisable
  for a period of one year at $0.10 per share, vesting immediately. The fair value
  of this option, as calculated pursuant to the Black-Scholes option-pricing model,
  was determined to be $60,000 ($0.12 per share), and was being charged to operations
  during the period ended June 30, 2009. The fair value of these stock options
  were calculated using the following Black-Scholes input variables: stock price
  on date of grant - $0.19; exercise price - $0.10; expected life  1.0 year;
  expected volatility -210%; expected dividend yield - 0%; risk-free interest
  rate  3.0% .

On
  May 29, 2009, the Company granted to two directors of the Company, stock options
  to purchase an aggregate of 750,000 shares of common stock (375,000 per director),
  exercisable for a period of one year at $0.15 per share, with 125,000 shares
  for each director vesting June 30, 2009, September 30, 2009 and December 31,
  2009, respectively. The fair value of this option, as calculated pursuant to
  the Black-Scholes option-pricing model, was determined to be $75,000 ($0.10
  per share), and is being charged to operations in the amount of $25,000 at June
  30, September 30, and December 31, 2009, respectively.

The
  fair value of these stock options were calculated using the following Black-Scholes
  input variables: stock price on date of grant - $0.19; exercise price - $0.15;
  expected life  1.0 year; expected volatility -210%; expected dividend
  yield - 0%; risk-free interest rate  3.0% .

On
  June 8, 2009, the Company granted to Kelly Fountain, an employee, stock options
  to purchase an aggregate of 500,000 shares of common stock, exercisable for
  a period of five years at $0.18 per share, with 100,000 shares vesting monthly
  commencing June 8, 2009 through November 7, 2009. The fair value of this option,
  as calculated pursuant to the Black-Scholes option-pricing model, was determined
  to be $75,000 ($0.15 per share), and is being charged to operations monthly
  from June through October, 2009. During the year ended September 30, 2009 the
  Company recorded a charge to operations of $60,000 with respect to this option.

F-12

---

The
  fair value of these stock options were calculated using the following Black-Scholes
  input variables: stock price on date of grant - $0.18; exercise price - $0.18;
  expected life  5.0 years; expected volatility -210%; expected dividend
  yield - 0%; risk-free interest rate  3.0% .

A
  summary of stock option activity for the year ended September 30, 2009 and 2008
  is as follows:

| |                                           |  |           |   |   |          |  |  | Weighted     | 
| | ----------------------------------------- |  | --------- | - | - | -------- |  |  | ------------ | 
| |                                           |  |           |   |   | Weighted |  |  | Average      | 
| |                                           |  |           |   |   | Average  |  |  | Remaining    | 
| |                                           |  | Number of |   |   | Exercise |  |  | Contractual  | 
| |                                           |  | Shares    |   |   | Price    |  |  | Life (Years) | 
| | Options outstanding at October 1, 2007    |  | 2,337,500 |   | $ | 0.333    |  |  | 4.48         | 
| | Granted                                   |  | 2,860,000 |   |   | 0.750    |  |  | 4.80         | 
| | Exercised                                 |  | ---       |   |   | ---      |  |  | ---          | 
| | Cancelled                                 |  | (312,500  | ) |   | 0.420    |  |  | ---          | 
| | Options outstanding at October 1, 2008    |  | 4,160,000 |   | $ | 0.540    |  |  | 4.00         | 
| | Granted                                   |  | 2,250,000 |   | $ | 0.143    |  |  | 1.66         | 
| | Exercised                                 |  | ---       |   |   | ---      |  |  | ---          | 
| | Cancelled                                 |  | (735,000  | ) |   | 0.750    |  |  | 3.00         | 
| | Options outstanding at September 30, 2009 |  | 5,675,000 |   | $ | 0.360    |  |  | 3.52         | 
| | Options exercisable at September 30, 2009 |  | 4,146,334 |   | $ | 0.301    |  |  | 3.57         | 

The
  weighted-average grant-date fair value of options granted during the year ended
  September 30, 2009, and 2008 was $0.131 and $0.75, respectively.

The
  aggregate intrinsic value of stock options outstanding at September 30, 2009
  was $0.

Share Purchase Agreements

On
  May 11, 2007, Craig Soller and David Long, two consultants to the Company, acquired
  the beneficial rights to 125,000 shares and 100,000 shares of common stock,
  respectively, from Jacques Ninio, the controlling shareholder of Panglobal at
  that time, at a price of $0.0001 per share. Pursuant to related Escrow Agreements,
  the 225,000 shares are to vest and be released to the consultants at the rate
  of 75,000 shares annually beginning on May 11, 2008, provided that the underlying
  consulting agreements have not been terminated. The fair value of these transactions,
  as calculated pursuant to the Black-Scholes option-pricing model, was initially
  determined to be $101,250 ($0.45 per share), reflecting the difference between
  the $0.0001 purchase price and the $0.45 private placement price. Compensation
  arrangements granted to consultants are valued each reporting period to determine
  the amount to be recorded as an expense in the respective period. On September
  30, 2009, the fair value of the transaction, as calculated pursuant to the Black-Scholes
  option-pricing model, was determined to be $0.12 per share.. As the restricted
  shares vest, they will be valued on each vesting date and an adjustment will
  be recorded for the difference between the value already recorded and the then
  current value on the date of vesting. On October 31, 2007 the relationship of
  one of the consultants with the Company ended and the right to acquire 100,000
  shares of common stock has ceased and previously calculated compensation related
  to this right to acquire 100,000 shares of common stock in the amount of $14,116
  had been reversed during the three months ended December 31, 2007. Accordingly,
  there will be no further non-cash compensation expenses charged relating to
  those 100,000 shares.

On
  October 23, 2007, Charles Lesser, the Companys Chief Financial Officer
  and Chief Executive Officer acquired the beneficial rights to 250,000 shares
  of common stock from Jacques Ninio, the controlling shareholder of Panglobal
  at that time, at a price of $0.0001 per share. Pursuant to a related Escrow
  Agreement, the shares are to vest and be released to Mr. Lesser according to
  the following schedule: 100,000 shares on June 30, 2008 and 75,000 shares on
  December 31, 2008 and June 30, 2009, provided that Mr. Lessers underlying
  employment status has not been terminated. The fair value of this transaction,
  as calculated pursuant to the Black-Scholes option-pricing model, was determined
  to be $220,000 ($0.88 per share), reflecting the difference between the $0.0001
  purchase price and the fair market value of $0.88 on October 23, 2007, and was
  being charged to operations ratably from November 1, 2007 through June 30, 2009.
  During the year ended September, 2009, the Company recorded a charge to operations
  of $99,000.

F-13

---

4. Accounts Receivable

Accounts
  receivable are as follows:

September 30,
      
      
      September 30,2009
      
      
      2008Outstanding accounts receivable
      $
      872,661
      
      $
      988,291Less: allowance for doubtful
      
      (651,000
      )
      
      (544,000
      )accounts$
      221,661
      
      $
      444,291


5. Due from Factor

The
  Company uses a factor for credit administration and cash flow purposes. Under
  the factoring agreement, the factor purchases a portion of the Companys
  domestic wholesale sales invoices and assumes most of the credit risks with
  respect to such accounts for a charge of 0.75% of the gross invoice amount.
  The Company can draw cash advances from the factor based on a pre-determined
  percentage, which is 75% of eligible outstanding accounts receivable. The factor
  holds as security substantially all assets of the Company and charges interest
  at a rate of prime plus 2.0% on the outstanding advances. The Company maintains
  a cash collateral account in the amount of $303,426 with the factor to be used
  as collateral for the loans advanced. The Company is liable to the factor for
  merchandise disputes and customer claims on receivables sold to the factor.
  The factoring agreement expires on March 4, 2010.

At
  times, our customers place orders that exceed the credit that they have available
  from the factor. We evaluate those orders to consider if the customer is worthy
  of additional credit based on our past experience with the customer. If we decide
  to sell merchandise to the customer on credit, we take the credit risk for the
  amounts that are above their approved credit limit with the factor. As of September
  30, 2009 and 2008, the amount of Due from Factor for which we bear the credit
  risk was $76,976 and $123,837.

For
  the year ended September 30, 2009 and 2008, the Company paid a total of approximately
  $304,443 and $73,515, respectively, of interest to the factor which is reported
  as a component of interest expense in the consolidated statements of income.
  Due from factor, net of reserve for chargebacks and estimated sales returns
  is summarized below:

September 30 ,
      
      
      September 30,2009
      
      
      2008Outstanding factored receivables
      $
      2,451,702
      
      $
      3,126,405Cash collateral reserve
      
      303,426
      
      
      303,4262,755,128
      
      
      3,429,831Less: advances
      
      (1,572,380
      )
      
      (1,689,387
      )Reserves for chargebacks and sales returns
      
      (315,000
      )
      
      (328,988
      )$
      867,748
      
      $
      1,411,456


6. Inventory

Inventory consists of the following:

| |                 |   | September 30, 2009 |  |   | September 30, 2008 | 
| | --------------- | - | ------------------ |  | - | ------------------ | 
| | Finished goods  | $ | 631,478            |  | $ | 1,006,116          | 
| | Work-in-process |   | 81,281             |  |   | 156,697            | 
| | Raw materials   |   | 108,708            |  |   | 141,594            | 
| |                 | $ | 821,467            |  | $ | 1,304,407          | 

F-14

---

7. Property and Equipment

A
  summary of property and equipment consists of the following:

September 30,
      
      
      September 30,2009
      
      
      2008Machinery and equipment
      $
      172,025
      
      $
      167,486Computer hardware and software
      
      257,727
      
      
      301,949Furniture and fixtures
      
      82,189
      
      
      76,699Leasehold improvements
      
      151,988
      
      
      149,583663,929
      
      
      695,717Less accumulated depreciation and amortization
      
      (235,899
      )
      
      (107,725
      )$
      428,030
      
      $
      587,992


Depreciation
  and amortization expense for the year ended September 30, 2009 and 2008 was
  $128,174 and $95,589, respectively.

8. Asset Purchase

On
  June 18, 2008, the Company purchased certain assets, including trademarks and
  office equipment, originally belonging to a company in foreclosure directly
  from the financial institution holding a security interest in the foreclosed
  assets. The Company obtained a release of all claims which the financial institution
  had in any intellectual property and customer information which it purchased.

The
  Company purchased the following assets:

| | (a) | certain computers, office equipment and furniture;                                                                                                                                                                                                                                                                
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                   
| | (b) | all intangible property, trademarks (or rights or claims
        therein), copyrights, artwork, designs, graphics, patterns, markers, blocks
        and designs which were formerly used in marketing apparel products under
        the Scrapbook , Scrapbook Originals and Crafty
        Couture labels;
| |     |                                                                                                                                                                                                                                                                                                                   
| | (c) | all open and unshipped orders relating to Scrapbook
        and Crafty Couture apparel products, all customer lists, and information
        regarding customer requirements and specifications.                                                                                                                  

The
  Company paid $1,200,000 as consideration for both the purchase of the purchased
  assets and the release of all claims or rights to the three trademarks, Scrapbook,
  Scrapbook Originals and Crafty Couture. The purchase
  price was allocated as follows:

Office equipment and furniture
      $
      22,765Trademarks and intangible assets
      
      1,177,235Total Purchase price
      $
      1,200,000


The
  Company engaged an independent firm of appraisers to perform a valuation of
  the purchased assets and determined that the price paid represented a fair price
  and that no adjustment needs to be made.

9. Related Party Transactions

Craig
  Soller, the brother of the Companys Chief Executive Officer, Stephen Soller,
  is a consultant to the Company. See Note 3 for transactions involving Craig
  Soller.

Effective
  May 21, 2009, the Company appointed Dru Narwani and Charles Shaker to our board
  of directors and to our audit committee. Dru Narwani has been a consultant to
  the Company and received 500,000 stock options as a consultant. See note 3 for
  transactions involving Dru Narwani. We have not been party to any other transaction
  with either of Dru Narwani or Charles Shaker, since the beginning of our last
  fiscal year, or any currently proposed transaction with either of Dru Narwani
  or Charles Shaker, in which we were or will be a participant and where the amount
  involved exceeds the lesser of $120,000 or one percent of the average of our
  total assets at year-end for the last two completed fiscal years.

F-15

---

Charles Shaker is an owner of Providence Wealth Management Ltd.,
  from whom we have borrowed $1,000,000 under the terms of a Convertible Loan
  Agreement dated for reference January 15, 2009 and is one of the 15 lenders
  of a convertible loan agreement dated June 15, 2009.

Convertible Notes Payable

Effective
  March 3, 2008 the Company entered into a Revolving Loan Agreement with two of
  the shareholders of the Company, Sinecure Holdings, Inc. and Capella Investments,
  Inc. (changed to Peter Hough, an individual). The loan allows the Company to
  borrow and repay, on a revolving basis, up to an outstanding amount of $750,000.
  The outstanding principal balance of the Loan bears interest, payable monthly,
  at a rate of 8% per annum. The loan is secured by a lien on the assets of the
  Company, except for factored receivables.

The
  Loan was due to be repaid in full by November 30, 2008. As consideration for
  the loan, the Company agreed to pay 68,180 of its Common shares as loan fees.
  At March 31, 2008, $500,000 was advanced and the Company recorded an expense
  of $25,000 included in operating expenses equivalent to the issuance of 45,454
  shares of the Companys common stock at the fair market value of $0.55
  per share, the closing price of the Companys common shares on the first
  advance date of February 26, 2008. The Company drew a further advance on April
  10, 2008 and recorded an expense in general and administrative expenses of $23,863
  equivalent to the issuance of 22,726 shares of its common stock at the fair
  market value of $1.05, the closing price of the Companys common stock
  on April 10, 2008.

At
  any time after August 31, 2008, if there was an outstanding amount on the Loan,
  the lenders may convert, by written notice, either a portion or the total amount
  of the outstanding loan to common shares of the Company at a price per share
  equal to the lesser of:

| | (a) | the average closing bid for the five (5) trading days
        immediately preceding the first advance date of February 26, 2008; or,
| | --- | ------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                     
| | (b) | the average closing bid price for the five (5) trading
        days immediately preceding the notice of intent to convert.          

On April
  9, 2009 the Company agreed to convert $375,000 plus accrued interest to April
  30, 2009 into common shares of the Company at a conversion price of $0.10 per
  share. In addition, the Company agreed to issue one warrant to purchase one
  Common share for every two shares to be issued at an exercise price of $0.25
  per warrant exercisable for twelve months from issuance. The conversion was
  effective April 30, 2009 and the Company issued 4,025,000 shares of Common stock
  and 2,125,000 warrants.

The
  Loan was modified on June 15, 2009 to conform to a new financing and now bears
  interest at 9% per annum, compounded and payable bi-annually, on the outstanding
  principal, and repayable on or before April 30, 2011. The note is now convertible
  into common shares at $.10 per share ( 3,750,000 shares of stock) and when converted
  the company will issue warrants equal to one half of the shares converted or
  a maximum of 1,875,000 warrants exercisable at $0.15 per share for a period
  of 24 months. These features gave rise to the assignment of the beneficial conversion
  feature equal to $203,746 and the warrant amounting to $16,246 which is accounted
  for as discount on the note and a credit to additional paid in capital. The
  value of the warrants were determined by the Black Scholes option pricing method
  using the current stock price, exercise price of the warrants, volatility of
  210% and a risk free interest rate of 1.1%. The Beneficial conversion feature
  value was set at its intrinsic value after consideration of the relative value
  of the warrants and the notes. The discount is being amortized on the interest
  method over the life of the loan.

F-16

---

Convertible Revolving Loan Agreement Payable to Shareholder

On
  January 15, 2009 the Company entered into a revolving loan agreement with Providence
  Wealth Management Ltd, a British Virgin Islands Company (Providence),
  whereby Providence agreed to loan the Company the aggregate principal amount
  of $1,000,000 for general corporate purposes. The loan is issued as follows:

| | (i)   | The first advance of $700,000 on the date of execution
        of the loan agreement;                           
| | ----- | ----------------------------------------------------------------------------------------------------------------
| | (ii)  | subject to the fulfillment of certain conditions, by
        advance of up to an additional US$300,000; and,    
| | (iii) | bearing interest at 9% per annum on the outstanding
        principal, and repayable on or before July 31, 2009.

The
  first advance of $700,000 occurred on January 16, 2009 and a second advance
  of $300,000 occurred on January 27, 2009.

On
  June 12, 2008 the Company had entered into a revolving loan agreement dated
  effective March 3, 2008, with Sinecure Holdings Limited, a British Virgin Islands
  company, and Capella Investments Inc., a Nevada company, whereby Sinecure and
  Capella agreed to loan us the aggregate principal amount of US$750,000 for general
  corporate purposes. Also on June 12, 2008, we entered into a security agreement
  dated effective March 3, 2008, with Sinecure and Capella, whereby we agreed
  to create a security interest by way of priority security interest in our present
  and after-acquired personal property and such other collateral described in
  the Security Agreement in favor of Sinecure and Capella. On January 16, 2009
  we entered into a pari passu agreement with Providence, Sinecure and Capella,
  whereby Panglobal, Providence, Sinecure and Capella agree that all security
  interests issued will have equal priority and that the creation, registration,
  filing and existence of the security interests will not constitute an event
  of default under either of the two security agreements.

In
  connection with the Providence loan agreement, the Company entered into a security
  agreement dated to be effective back to March 3, 2008, with Providence, whereby
  the Company agreed to create a security interest by way of priority security
  interest in our present and after-acquired personal property and other collateral
  described in the security agreement in favor of Providence.

The
  Providence loan may be converted at any time after the first advance and before
  the maturity date into common shares of the Company at a conversion price of
  $0.10 per share. In addition, the Company had agreed to issue one warrant to
  purchase one Common share for every two shares to be issued at an exercise price
  of $0.25 per warrant exercisable for twelve months from issuance. On April 9,
  2009, Providence offered to convert $187,500 of the loan plus accrued interest
  to April 30, 2009 into common shares of the Company. The conversion was effective
  April 30, 2009 and the Company issued 2,120,000 shares of Common stock and 1,060,000
  warrants.

The
  terms of the Loan were modified on June 15, 2009 to conform to a new financing
  and now bears interest at 9% per annum, compounded and payable bi-annually,
  on the outstanding principal, and repayable on or before April 30, 2011. The
  note is now convertible into common shares at $.10 per share (8,125,000 shares
  of stock) and when converted the company will issue warrants equal to one half
  of the shares converted or a maximum of 4,062,000 warrants exercisable at $.15
  per share for a period of 24 months. These features gave rise to the assignment
  of value to the beneficial conversion feature equal to $535,493 and a warrant
  value of $35,493 which is accounted for as discount on the note and a credit
  to additional paid in capital. In addition, a loss on extinguishment of debt
  of $32,939 was credited to additional paid in capital. The value of the warrants
  were determined by the Black Scholes option pricing method using the current
  stock price , exercise price of the warrants, volatility of 210% and an risk
  free interest rate of 1.1%. The Beneficial conversion feature value was set
  at its intrinsic value after consideration of the relative value of the warrants
  and the notes. The discount is being amortized on the interest method over the
  life of the loan.

F-17

---

Convertible Loan Agreement and Subscription Agreements

On
  June 15, 2009, the Company entered into a convertible loan agreement, dated
  for reference April 9, 2009, with 15 new lenders, whereby the lenders agreed
  to loan the Company the aggregate principal amount of US$1,000,000 bearing interest
  at 9% per annum, compounded and payable bi-annually, on the outstanding principal,
  and repayable on or before April 30, 2011. At the same time, the remaining outstanding
  balance of US$1,187,500 under loan agreements with Sinecure Holdings Limited,
  Peter Hough and Providence Wealth Management Ltd., (see above) was conformed
  from the terms of those previous loan agreements to the same terms as the June
  15, 2009 convertible loan agreement under the Pari Passu and Loan Modification
  Agreement described below.

Interest
  on all of the loans may be paid in cash or shares of our common stock, or any
  combination thereof, at our discretion. If interest is paid in shares, the conversion
  price will be US$0.15 in value of interest per share.

At
  any time on or before April 30, 2011, any of the lenders may give us written
  notice and convert all or a portion of the loan into units, consisting of one
  share of our common stock and one common share purchase warrant, at a price
  per unit of US$0.10 for a potential total of conversion 10,000,000 shares. Each
  common share purchase warrant is exercisable into one share of our common stock
  at a price of US$0.15 per share for a period of 24 months.

These
  features gave rise to the assignment of values to the warrant and the beneficial
  conversion feature equal to $533,878 and a warrant value of $33,877 which is
  accounted for as a discount on the note and a credit to additional paid in capital.
  The value of the warrants were determined by the Black Scholes option pricing
  method using the current stock price , exercise price of the warrants, volatility
  of 210% and an risk free interest rate of 1.1% . The Beneficial conversion feature
  value was set at its intrinsic value after consideration of the relative value
  of the warrants and the notes. The discount is being amortized on the interest
  method over the life of the loan.

The
  three loans that were modified on June 15, 2009 are repayable on or before April
  30, 2011. The notes are now convertible into common shares at $.10 per share
  and when converted the company will issue warrants equal to one half of the
  shares converted exercisable at $0.15 per share for a period of 24 months. These
  features gave rise to the assignment of value to the warrants and the beneficial
  conversion feature equal to $1,358,733 which is accounted for as discount on
  the notes and a credit to additional paid in capital. The value of the warrants
  were determined by the Black Scholes option pricing method using the current
  stock price, exercise price of the warrants, volatility of 210% and a risk free
  interest rate of 1.1% . The Beneficial conversion feature value was set at its
  intrinsic value after consideration of the relative value of the warrants and
  the notes. The discount is being amortized on the interest method over the life
  of the loan.

F-18

---

The following schedule details the convertible notes payable,
  discount on notes due to the beneficial conversion discount and warrants, and
  amortization of the discount at September 30, 2009:

Convertible Notes
      Sinecure/Capella
      Providence Wealth January, 15, 2009
      Providence Wealth June 15, 2009
      TotalsFace Value of Notes
      $375,000
      $812,500
      $ 1,000,000
      $2,187,500Discount on notes payable due to Beneficial Conversion discount
        and warrant
      ($219,992)
      ($570,986)
      ($567,755)
      ($1,358,733)Amortization of Beneficial Conversion
      $39,108
      $101,507
      $100,935
      $241,550Value per Balance
        Sheet
      $194,116
      $343,021
      $533,180
      $1,070,317


Pari Passu and Loan Modification Agreement

On
  June 15, 2009, the Company entered into a pari passu and loan modification agreement,
  dated for reference April 9, 2009, with Providence Wealth Management Ltd., Sinecure
  Holdings Limited, Peter Hough, an individual, and Chelsea Capital Corporation
  (representing the 15 new lenders described above), whereby it was agreed that:

| | (a) | US$1,187,500, representing the aggregate balance of
        the outstanding loans to the company pursuant to: (i) the loan agreement
        dated effective March 4, 2008 with Sinecure Holdings Limited and Capella
        Investments Inc. (Capella Investments subsequently transferred all its
        interest under such loan agreement to Peter Hough), and (ii) the loan
        agreement dated January 16, 2009 with Providence Wealth Management Ltd.,
        would be converted from the terms of the such previous loan agreements
        to the terms of the convertible loan agreement described above; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (b) | all security interests created pursuant to: (i) the
        security agreement dated for reference April 9, 2009 for the benefit of
        Chelsea Capital; (ii) the security agreement dated March 4, 2008 for the
        benefit of Sinecure Holdings and Peter Hough; and (iii) the security agreement
        dated January 16, 2009 for the benefit of Providence Wealth Management,
        will have equal priority and that the creation, registration, filing and
        existence of the security interests will not constitute an event of default
        under any of such security agreements.               

Conversion of Accounts Payable to Common Shares

On
  April 9, 2009 the Company agreed to convert an amount of $150,000 owed to one
  of the Companys apparel vendors into common shares of the Company at a
  conversion price of $0.10 per share. In addition, the Company agreed to issue
  one warrant to purchase one Common share for every two shares to be issued at
  an exercise price of $0.25 per warrant exercisable for twelve months. The conversion
  is effective April 30, 2009 and the Company authorized the issuance of 1,500,000
  shares of Common stock and 750,000 warrants.

F-19

---

10. Consulting Agreement for Sosik

On
  August 20, 2007 the Company signed a consulting agreement with Lolly Factory,
  LLC and its sole shareholder (Consultant) to provide sales and merchandising
  consulting services for the Sosik apparel division through December 31, 2010.
  The Consultant and the Company have established sales targets totaling $30.0
  million for calendar year 2008, $45.0 million for calendar year 2009 and $60.0
  million for calendar year 2010. The Consultant can earn up to 1,500,000 additional
  common shares of Panglobal Brands Inc. according to the following schedule:

| | (i)   | 500,000 shares upon meeting the sales target for calendar
        year 2008;     
| | ----- | ---------------------------------------------------------------------------------
| |       |                                                                                  
| | (ii)  | 500,000 shares upon meeting the sales target for calendar
        year 2009; and,
| |       |                                                                                  
| | (iii) | 500,000 shares upon meeting the sales target for calendar
        year 2010.     

The
  sales target for calendar 2008 was not met and the Company had not accrued an
  expense for issuing shares for meeting the sales target for 2008 and at June
  30, 2009 had not accrued an expense for issuing shares for meeting the sales
  target for 2009. On August 19, 2009 the Company and Lolly Factory LLC agreed
  to terminate the Consulting Agreement. As an inducement to for early termination,
  the Company :

| | (a) | Compensated Lolly Factory LLC for 2009 commissions earned
        for the difference between the original 3.5% commission rate and the revised
        commission rate of 2.6% instituted this year. The company agreed to pay
        50% of the difference, which amounts to $42,940 in Common shares of the
        Company at a valuation of $0.20 per share. The amount of $42,940 was charged
        to expense in the period ending September 30, 2009 and the Company will
        issue 214,700 shares to Lolly Factory LLC. As of September 30, 2009 the
        Company had not yet issued the Common shares to Lolly Factory LLC.                                                                                                                                                                                                                                                                                                                                                                               
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (b) | Compensated Lolly Factory LLC in Common shares of the
        company based upon the original sales targets set for 2008 and 2009. For
        the calendar year 2008, Lolly Factory LLC had approximately $12.5 million
        in net sales versus a target of $30.0 million and the Company agreed to
        pro-rata compensate Lolly Factory LLC 207,500 shares and recorded an expense
        of $18,675 for the period ending September 30, 2009. For the calendar
        year 2009, the Company will calculate the net sales attributed to Lolly
        Factory LLC and pro rate the number of shares due based upon a target
        of $45.0 for the full year. Through September 30, 2009, Lolly Factory
        LLC has approximately $9.6 million in net sales and the Company will issue
        107,000 shares and recorded an expense of $10,300 in the period ending
        September 30, 2009. As of September 30, 2009 the Company had not yet issued
        the Common shares to Lolly Factory LLC.

11. Commitments and Contingencies

The
  Companys executive and head office moved on February 15, 2008 to 2853
  E. Pico Blvd., Los Angeles, CA 90023. The Company has signed a three year lease
  for the head office measuring 18,200 square feet at a monthly rental of $11,500.
  The lease began on January 1, 2008 and the Company moved into the new premises
  on February 15, 2008. . Total rent expense including sales showrooms for the
  year ended September 30, 2009 and 2008 was $355,069 and $320,040, respectively.

F-20

---

The
  table below sets forth the Companys lease obligations through 2012.

Year ending
      
      LeaseSeptember 30,
      
      Obligation2010
      $
      274,4732011
      
      126,8592012
      
      24,396$
      425,728


The
  Company is periodically subject to various pending and threatened legal actions
  that arise in the normal course of business. The Companys management believes
  that the impact of any such litigation will not have a material adverse impact
  on the Companys financial position or results of operations.

**12. Income Taxes**

Potential
  benefits of income tax losses are not recognized in the accounts until realization
  is more likely than not. The Company has adopted Accounting Standards Codification
  (ASC) 740 as of its inception. Pursuant to ASC 740, the Company is required
  to compute tax asset benefits for net operating losses carried forward. The
  potential benefits of net operating losses have not been recognized in these
  consolidated financial statements because the Company cannot be assured it is
  more likely than not it will utilize the net operating losses carried forward
  in future years.

The
  deferred tax benefit resulting primarily from net operating losses is composed
  of the following:

|                                   |   | September 30, 2009 |   |   | September 30, 2008 |  
|---------------------------------- | - | ------------------ | - | - | ------------------ | -
|Deferred tax benefit: Federal      | $ | 6,434,000          |   | $ | 4,913,000          |  
|Deferred tax benefit: State        |   | 1,673,000          |   |   | 1,276,000          |  
|Total benefit of NOL carry forward |   | 8,107,000          |   |   | 6,189,000          |  
|Valuation allowance                |   | (8,107,000         | ) |   | (6,189,000         | )
|Total                              | $ | ---                |   | $ | ---                |  

As
  of September 30, 2009 unused net operating losses equal to $18,587,000 are available
  for 16 years to offset future years federal and state taxable income.
  ASC 740 requires that the tax benefit of such NOLs be recorded using current
  tax rates as an asset to the extent management assesses the utilization of such
  NOLs to be more likely than not. Based upon the Company's short term historical
  operating performance, the Company provided a full valuation allowance against
  the deferred tax asset.

The
  difference between the (benefit) provision for income taxes and the expected
  income tax (benefit) provision determined by applying the statutory Federal
  and state income tax rates to pre-tax accounting loss for the years ended September
  30, 2009 and 2008 are as follows:

|                                   |  | 2009   |   |  | 2008   |  
|---------------------------------- |  | ------ | - |  | ------ | -
|Federal statutory rate             |  | (34.0% | ) |  | (34.0% | )
|State taxes net of Federal benefit |  | (6.0%  | ) |  | (6.0%  | )
|Valuation allowance                |  | 40.0%  |   |  | 40.0%  |  
|                                   |  | 0%     |   |  | 0%     |  

The
  Company is required to file Federal and California income tax returns. All periods
  subsequent to September 30, 2008 are subject to examination by the taxing authorities.
  The company believes that its income tax filing positions and deductions will
  be sustained on audit and does not anticipate any adjustments that will result
  in a material change. Therefore, no reserves for uncertain tax positions have
  been recorded pursuant to FASB ASC Topic 740 Income Taxes. In addition, the
  company does not anticipate that the total amount of unrecognized tax benefit
  related to any particular tax position will change significantly within the
  next twelve months. The company’s policy for recording interest and penalties,
  if any, associated with tax authority audits, is to record such items as a component
  of income taxes.

F-21

---

**13. Subsequent events**

Based
  upon insufficient sales, the Company has decided to cease producing two of its
  contemporary product lines. Tea and Honey dresses will cease production January
  1, 2010 and Haven dresses will cease production by June 30, 2010. Carrying amounts
  of assets relating to these product lines as of September 30, 2009 are as follows:

Haven
      
      
      Tea and HoneyAccounts receivable, net
      $
      13,156
      
      $
      18,267Due from factor, net
      $
      44,010
      
      $
      34,036Inventory
      $
      111,022
      
      $
      54,096


On
  November 24, 2009, we entered into a loan agreement with Providence Wealth Management
  Ltd., a company incorporated under the laws of the British Virgin Islands, whereby
  Providence agreed to loan our company the aggregate principal amount of US$290,000
  bearing interest 9% per annum calculated and compounded monthly, payable in
  full 30 days after advance, unless sooner prepaid or accelerated upon. As of
  February 12, 2010, the loan has not been repaid.

As
  security for the Loan, we entered into a Trade-Mark Assignment Agreement dated
  November 24, 2009, with Providence whereby we will assign to Providence all
  of our right, title and interest to the Scrapbook trademark as a
  secured charge behind Merchant Factors Inc.

On
  January 17, 2010 Stephen Soller and Dru Narwani resigned as directors of the
  Company.

On
  September 19, 2008 Mynk Corporation, our wholly-owned subsidiary, sued Delias
  Inc., a customer in the Superior Court of the State of California, for goods
  shipped, but unpaid, in the amount of $604,081. On January 26, 2010 the Company
  and Delias agreed to a monetary settlement which has been accounted for
  in accounts receivable and signed a confidentiality agreement.

On
  January 29, 2010, we entered into a loan agreement with Charles Lesser, an officer
  of the Company, whereby Mr. Lesser agreed to loan our company the aggregate
  principal amount of US$260,000 bearing interest 9% per annum calculated and
  compounded monthly, payable in full 30 days after advance, unless sooner prepaid
  or accelerated upon.

As
  security for the Loan, we entered into a Security Agreement January 29, 2010,
  with Charles Lesser whereby we granted a security interest in the trademarks
  Crafty Couture and Crafty by Scrapbook behinds the interest
  of Merchant Factors Inc.

F-22

---

- 23 -

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms and that such information
is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow for timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
is required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Our disclosure controls and procedures were
designed to provide reasonable assurance that the controls and procedures would
meet their objectives.

As required by SEC Rule 13a-15(b), our management carried out an evaluation,
with the participation of our Chief Executive and Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report. Based on the
foregoing, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were not effective at the reasonable
assurance level.

Management found the following deficiencies in our disclosure controls and
procedures:

There is not adequate division or segregation of duties in our accounting
department that has three staff members, which includes the Chief Financial
Officer.

Changes in Internal Control over Financial Reporting

We have made the following changes in our internal controls over financial
reporting during our most recent fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal controls over
financial reporting:

To compensate for the inadequate segregation of duties, during the quarter, we
instituted a system of sign-offs and checks and balances within the accounting
department. More specifically, the Chief Financial Officer and Chief Executive
Officer has a series of written sign-offs to ensure that a multiple members of
management have reviewed and agreed to financial transactions before they are
recorded. We recognize that there is still an inadequate division of duties and
that we continue to have the weakness stated above.

We intend to determine how to address our weaknesses in the future. At this
time, we do not know when we will take further action to address out weaknesses,
what measures we will take or how much it will cost.

Managements Annual Report on Internal Control over
Financial Reporting

Management is responsible for establishing and maintaining adequate internal
control over our financial reporting. In order to evaluate the effectiveness of
internal control over financial reporting, as required by Section 404 of the
Sarbanes-Oxley Act, management has conducted an assessment, including testing,
using the criteria in Internal Control  Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our
system of internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements.

---

- 24 -

Management has used the framework set forth in the report entitled Internal
Control-Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission, known as COSO, to evaluate the
effectiveness of our internal control over financial reporting. Based on this
assessment, management has concluded that our internal control over financial
reporting was not effective as of September 30, 2008.

This annual report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Our internal control over financial reporting was not subject to
attestation by our independent registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only managements report in
this annual report.

Certificates.

Certificates with respect to disclosure controls and procedures and internal
control over financial reporting under Rules 13a-14(a) or 15d-14(a) of the
Exchange Act are attached to this Annual Report on Form 10-K.

ITEM 8B. OTHER INFORMATION

None.

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

On January 8, 2009, Panglobal Brands Inc. was notified that effective December
8, 2008, the personnel of Grobstein Horwath & Company LLP have joined with
Crowe Horwath LLP resulting in the resignation of Grobstein Horwath as
independent registered public accounting firm for our company. Crowe was
appointed as our new independent registered public accounting firm.

The audit reports of Grobstein Horwath on the financial statements of our
company as of and for the years ended to September 30, 2007 and 2006 did not
contain an adverse opinion or a disclaimer of opinion, and were not qualified or
modified as to uncertainty, audit scope or accounting principles with the
exception of a statement regarding the uncertainty of our companys ability to
continue as a going concern. The decision to engage Crowe was approved by our
board of directors on January 8, 2009.

During our companys most two recent fiscal years ended September 30, 2007 and
2006 and through the date of resignation, January 8, 2009, we did not consult
with Crowe regarding the application of accounting principles to a specific
completed or contemplated transaction or regarding the type of audit opinion
that might be rendered by Crowe on our financial statements, and Crowe did not
provide any written or oral advice that was an important factor considered by
our company in reaching a decision as to any such accounting, auditing or
financial reporting issue.

In connection with the audits of our financial statements for the fiscal year
ended September 30, 2007 and 2006 and through the date of this current report,
there were: (i) no disagreements between our company and Grobstein Horwath on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements, if not
resolved to the satisfaction of Grobstein Horwath, would have caused Grobstein
Horwath to make reference to the subject matter of the disagreement in their
reports on our financial statements for such years, and (ii) no reportable
events within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

We have provided Grobstein Horwath a copy of the disclosures in this Form 8-K
and have requested that Grobstein Horwath furnish us with a letter addressed to
the Securities and Exchange Commission stating whether or not Grobstein Horwath
agrees with our statements in this Item 4.01(a) . A copy of the letter dated
January 8, 2009, furnished by Grobstein Horwath in response to that request is
filed as Exhibit 16.2 to our Form 8-K filed on January 13, 2009.

---

- 25 -

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL
PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT.

Directors

As at February 12, 2010, we have one director. His name, age and appointment
details are as follows:

Name
    Position Held with the Company
    Age
    Date First Elected or AppointedCharles Shaker
    Director
    30
    May
      21, 2009


Executive Officers

As at February 12, 2010, we have one Executive Office. His name, age and
appointment details are as follows:

Name
    Position Held with the Company
    Age
    Date First Elected or AppointedCharles A. Lesser
    Chief Financial Officer, Chief Executive
      Officer
    63
    October 22, 2007


Significant Employee

As at February 12, 2010, we have a Significant Employee whose name, age and date
of employment are set out below:

Name
    Position Held with the Company
    Age
    Date First Elected or AppointedKelly Fountain
    President, Scrapbook/Sosik
    50
    June
      8, 2009


Business Experience

The following is a brief account of the education and business experience for at
least the past five years of our director and our executive officer, indicating
each persons business experience, principal occupation during the period, and
the name and principal business of the organization by which they were
employed.

Charles A. Lesser, Chief Financial Officer

Charles Lesser was the Chief Financial Officer of True Religion Apparel, Inc.
(Nasdaq:TRLG) and its wholly-owned subsidiary, Guru Denim Inc. from 2003 to
March, 2007 and as a consultant to True Religion Apparel, Inc. to September,
2007. Prior to that, Mr. Lesser was Acting President and a Director of Alpha
Virtual Inc., a software development company listed on the OTCBB and from 1997
until 2002, Mr. Lesser was Chief Financial Officer and a Director of CBCom,
Inc., an internet service provider listed on the OTCBB. Mr. Lesser holds a B.A.
degree from the University of Pittsburgh and an M.B.A. from the University of
the Witwatersrand. Mr Lesser was appointed Chief Executive Officer (and remains
Chief Financial Officer) on August 17, 2009.

---

- 26 -

Charles Shaker, Director

Mr. Shaker is a financial advisor and private wealth manager, focused on
ultra-high net worth individuals. Since 2004, Mr. Shaker has been the President
and founder of Providence Wealth Corporation, which is both a shareholder and
noteholder of the Company. Mr. Shaker graduated from the Canadian Institute of
financial Planning in 2000. Mr. Shaker has no previous experience as a director
or officer of a public company.

Family Relationships

There are no family relationships among our directors or officers.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not been involved in
any of the following events during the past five years:

| | 1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;                                                                                                            
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                
| | 2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offences);                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                
| | 3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
| |    |                                                                                                                                                                                                                                                                                                                                
| | 4. | being found by a court of competent jurisdiction (in a
      civil action), the Securities and Exchange Commission or the Commodity
      Futures Trading Commission to have violated a federal or state securities
      or commodities law, and the judgment has not been reversed, suspended, or
      vacated.             

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act requires our executive officer and
director, and persons who own more than 10% of our common stock, to file reports
regarding ownership of, and transactions in, our securities with the Securities
and Exchange Commission and to provide us with copies of those filings. Based
solely on our review of the copies of such forms received by us, or written
representations from certain reporting persons, we believe that during fiscal
year ended September 30, 2009, all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with,
with the exception of the following:

Name
    Number of Late Reports
    Number of Transactions Not Reported on a
      Timely Basis
    Failure to File Requested FormsStephen Soller Charles A. Lesser Charles Shaker
      Dru Narwani
    Nil Nil Nil Nil
    Nil Nil Nil Nil
    Nil Nil Nil Nil


Code of Ethics

We have not adopted a code of ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. There is no reason why we
have not adopted such a code of ethics and we intend to do so during the year to
end September 30, 2010.

---

- 27 -

Nominating Committee

We do not have standing nominating or compensation committees, or committees
performing similar functions. Our board of directors believe that it is not
necessary to have a standing compensation committee at this time because the
functions of such committee are adequately performed by our board of directors.

Our board of directors also is of the view that it is appropriate for us not to
have a standing nominating committee because our board of directors has
performed and will perform adequately the functions of a nominating committee.
Our board of directors has not adopted a charter for the nomination committee.
There has not been any defined policy or procedure requirements for stockholders
to submit recommendations or nomination for directors. Our board of directors
does not believe that a defined policy with regard to the consideration of
candidates recommended by stockholders is necessary at this time because we
believe that, given the early stages of our development, a specific nominating
policy would be premature and of little assistance until our business operations
are at a more advanced level. There are no specific, minimum qualifications that
our board of directors believes must be met by a candidate recommended by our
board of directors. The process of identifying and evaluating nominees for
director typically begins with our board of directors soliciting professional
firms with whom we have an existing business relationship, such as law firms,
accounting firms or financial advisory firms, for suitable candidates to serve
as directors. It is followed by our board of directors review of the
candidates resumes and interview of candidates. Based on the information
gathered, our board of directors then makes a decision on whether to recommend
the candidates as nominees for director. We do not pay any fee to any third
party or parties to identify or evaluate or assist in identifying or evaluating
potential nominee.

Audit Committee and Audit Committee Financial Expert

We do not have a standing audit committee at the present time, however during
the previous fiscal year we did have audit committee meetings. Our board of
directors has determined that we only have one member at this time and do not
have a board member that qualifies as audit committee financial expert as
defined in SEC Release No. 33-8 177 SEC. II(A)(4)(c).

We believe that our board of directors is capable of analyzing and evaluating
our financial statements and understanding internal controls and procedures for
financial reporting. The board of directors of our company does not believe that
it is necessary to have an audit committee at this time because management
believes that the functions of an audit committee can be adequately performed by
the board of directors.

ITEM 10. EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table summarizes the compensation of our executive officers,
directors and the President of two of our product lines during the last fiscal
year ended September 30, 2009. No other officers or directors received annual
compensation in excess of $100,000 during the fiscal year.

---

- 28 -

Name and Principal
      Position
      Year
      Salary ($)
      Bonus($)
      Stock **Awards**($)
      Option**Awards**
      ($)
      Non-Equity **Incentive Plan****Compensation** ($)
      Nonqualified Deferred
      **Compensation**Earnings ($)
      All Other **Compensa-**
      tion ($)
      Total ($)(a)
    (b)
    (c)
    (d)
    (e)
    (f)
    (g)
    (h)
    (i)
    (j)Stephen Soller, 
        Chief Executive Officer(1)
    2009  182,307
      Nil
    Nil
      Nil
      Nil
      Nil
      Nil
      182,307Charles A. Lesser, 
        Chief Financial Officer (2)
    2009
    85,954
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    85,954Kelly Fountain(3)
        President of Scrapbook and Sosik product lines
      2009
      5,287
    Nil
    Nil
    90,000
    Nil
    Nil
    Nil
    145,287Charles Shaker(4)Director
    2009
    $20,000
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil


| | (1) | Stephen Soller was appointed as our Chief Executive
      Officer, Secretary and a director on February 12, 2007. Stephen Soller
      ceased to be the Chief Executive Officer on August 17, 2009 and remained
      on the Board of Directors until January 18, 2010. Mr. Soller received a
      base salary of $225,000. The Company has not achieved profitability and no
      bonus or other compensation has been paid. No equity compensation was
      granted during 2009.                                                                                                                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (2) | Charles A. Lesser was appointed as our Chief Financial
      Officer on October 22, 2007 and additionally as Chief Executive Officer on
      August 17, 2009. Mr. Lesser was originally compensated in line with
      similar early stage public entities. During FY 2009 Mr. Lesser only worked
      part-time while the Company sought to re-define its business objectives.
      In August, 2009 Mr. Lesser attained the additional title of Chief
      Executive Officer, works full- time, and earns a salary of $200,000 in
      line with other senior executives at the Company. No bonuses were paid and
      no additional equity compensation was offered at this time as the Company
      reorganizes its business.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (3) | Kelly Fountain was appointed President of Scrapbook and
      Sosik product lines on June 8, 2009.Ms. Fountain earns $200,000 annual
      salary in line with other senior executives in the Company. Ms. Fountain
      receives additional compensation in the form of 1% commission for all
      Sosik sales and Scrapbook sales in excess of $5.0 million for sales booked
      and shipped under her management. Ms. Fountain has line authority for
      sales and merchandising for the Sosik and scrapbook product lines. She
      received 500,000 share options at the then FMV in line with other senior
      executives.                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (4) | Charles Shaker was appointed as a director on May 21,
        2009. Initially, Mr. Shaker received $5,000 per month from June-October,
        2009 for extensive Board services as the Company reorganized its management.
        The board decided to subsequently forego compensation due to the financial
        condition of the company. Mr Shaker received stock options of 375,000
        for Board service in line with other outside directors for service through
        December, 2009. There are no further equity grants planned.                                                                                                                                                                                    

Outstanding Equity Awards at Fiscal Year-End

The following table sets out each grant of an award made to a named executive
officer in the last fiscal year ended September 30, 2009 under any plan,
including awards that subsequently have been transferred:

---

- 29 -

Options
        Awards
      Stock
        AwardsName
      Number of Securities UnderlyingUnexercised
        Options (#) Exercisable
      Number of Securities Underlying **Unexercised**Options (#) **Unexercisable**
      Equity Incentive Plan Awards: Number of
        Securities **Underlying****Unexercised**UnearnedOptions (#)
      **Option** **Exercise** Price($)
      Option **Expiration**Date
      Number
        of Shares or Units of Stock
        That Have Not **Vested**
        (#)
      MarketValue of Sharesor Units of
        Stock That Have Not Vested ($)
      Equity Incentive Plan Awards: **Number** of
        **Unearned**Shares,Units or
        OtherRights That Have NotVested (#)
      Equity Incentive
        Plan Awards: **Market or** **Payout Value** of Unearned **Shares,
        Units** or Other Rights **That
        Have** Not Vested ($)(a)
      (b)
      (c)
      (d)
      (e)
      (f)
      (g)
      (h)
      (i)
      (j)Stephen Soller, 
        Chief Executive Officer(1)
      1,500,000
      300,000
      Nil
      $0.30
      February 12, 2014
      N/A
      N/A
      N/A
      N/ACharles A. Lesser, 
        Chief Financial Officer (2)
      573,000
      567,000
      0
      $0.75
      October 22, 2012
      N/A
      N/A
      N/A
      N/AKelly Fountain(3)
        President of
        Scrapbook and Sosik product lines
      400,000
      100,000
      0
      $0.18
      June 8, 2014
      N/A
      N/A
      N/A
      N/A


| | (1) | Stephen Soller was appointed as our Chief Executive
      Officer, Secretary and a director on February 12, 2007. Stephen Soller
      ceased to be the Chief Executive Officer on August 17, 2009 and remained
      on the Board of Directors until January 18, 2010
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                       
| | (2) | Charles A. Lesser was appointed as our Chief Financial
      Officer on October 22, 2007 and additionally as Chief Executive Officer on
      August 17, 2009.                                                                                                        
| |     |                                                                                                                                                                                                                                                                       
| | (3) | Kelly Fountain was appointed President of Scrapbook and
      Sosik product lines on June 8, 2009.                                                                                                                                                                    

Director Compensation

Employment/Consulting Agreements

We have not entered into any employment agreement or consulting agreements with
our directors and executive officers at this time. There are no arrangements or
plans in which we provide pension, retirement or similar benefits for directors
or executive officers. Our directors and executive officers may receive stock
options at the discretion of our board of directors in the future. We do not
have any material bonus or profit sharing plans pursuant to which cash or
non-cash compensation is or may be paid to our directors or executive officers,
except that stock options may be granted at the discretion of our board of
directors. Directors shall be elected at each annual meeting of stockholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until his or her successor is
elected and qualified or until his or her earlier resignation or removal.

We have no plans or arrangements in respect of remuneration received or that may
be received by our executive officers to compensate such officers in the event
of termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control, where
the value of such compensation exceeds $60,000 per executive officer.

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension, retirement or
  similar benefits for directors or executive officers, except that our directors
  and executive officers may receive stock options at the discretion of our board
  of directors and in accordance with our stock option plan, which was adopted
  by our board of directors on January 16, 2007.

---

- 30 -

Director Compensation

We reimburse our directors for expenses incurred in connection with attending
board meetings. We paid Dru Narwani and Charles Shaker $20,000 each for the
period from May 21, 2009-September 30, 2009. We did not pay any other directors
fees or other cash compensation for services rendered as a director for the
fiscal year ended September 30, 2008.

We have no formal plan for compensating our directors for their service in their
capacity as directors past October 31, 2009, although such directors are
expected in the future to receive stock options to purchase common shares as
awarded by our board of directors or (as to future stock options) a compensation
committee which may be established. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of our board of directors. Our board of directors may
award special remuneration to any director undertaking any special services on
our behalf other than services ordinarily required of a director. No director
received and/or accrued any compensation for their services as a director,
including committee participation and/or special assignments.

Report on Executive Compensation

Our compensation program for our executive officers is administered and reviewed
by our board of directors. We intend to determine executive compensation based
on a combination of base salary, equity compensation and bonuses.

Base Salary

We provide base salaries in order to retain executives, with the intention of
being consistent with our business plan and attempting to achieve our financial
and strategic goals. We compensate officers and other key employees within
salary ranges that are generally based on similar positions in companies of
comparable size and complexity to that of our company, based on information
gathered by members of our board of directors. The annual compensation for each
officer is based on our companys performance and individual performance. The
performance markers considered may include but are not limited to the growth of
our companys market capitalization and completion of strategic initiatives as
determined by our board of directors. Our board of directors also takes into
account prevailing general economic conditions, marketplace trends, and other
relevant factors, including the fact that our company does not offer a defined
benefit retirement or other similar plans and perquisites to its senior
management employees.

Base salaries are established upon the commencement of employment with our
company and are adjusted from time to time by our board of directors.

Equity Compensation

We may grant amounts of stock options that are approved by our board of
directors. We believe that this may provide long-term incentive compensation to
its senior management. In determining the size of the awards, our board of
directors will consider the companys growth in market capitalization,
individual performance, salary level and length of service to the company into
account. Our board of directors believes that employee ownership of our stock
may encourage executives and key employees to continue their employment with our
company. We also may use stock options because our board of directors believes
that equity compensation in this form aligns the interests of stockholders with
senior management to ensure the Companys long-term success.

Discretionary Bonus

We may pay discretionary bonuses that are approved by our board of directors.
  We intend to base any discretionary bonuses to be awarded to senior management
  primarily upon the financial and strategic performance of our company or, as
  the case may be, on the performance of the operating units for which the individual
  in question is directly responsible. To determine the amount of a particular
  bonus, our board of directors will consider several factors, including individual
  performance, company performance, achievement of strategic goals and other facets
  of individual and company achievements and other strategic and financial goals.

---

- 31 -

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following tables set forth certain information concerning the number of
shares of our common stock known by us to be owned beneficially as of December
30, 2008 by: (i) each person (including any group) that owns more than 5% of any
class of the voting securities of our company; (ii) each director and officer of
our company; and (iii) directors and officers as a group. Unless otherwise
indicated, the stockholders listed possess sole voting and investment power with
respect to the shares shown.

Security ownership of Management

Name and Addressof Beneficial Owner
      Title of Class
      Amount and Natureof Beneficial Owner
      Percentof Class(1)Charles A. Lesser(2)Chief
      Executive and Financial Officer, 911 Linda Flora Drive Los
      Angeles, CA 90049
    Common Stock
    1,349,000 Direct(3)
    2.7%Charles Shaker(3)Director
      
        1, India Quay road
        London England
    Common Stock
    4,273,000 Direct and Indirect
    8.7%Directors and Officers (as a group)
    Common Stock
    5,622,000
    11.5%


|(1) | Based upon 49, 016,710 issued and outstanding shares of
      common stock as of March 31, 2010.                                                                                                                                                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                              
|(2) | Charles Lesser holds 650,000 shares of common stock. Mr.
      Lesser has the right to exercise 429,000 Incentive stock options at an
      exercise price of $0.75 per share by March 31, 2010. In addition, Mr.
      Lesser has the right to exercise 270,000 shares of non-qualified stock
      options at an exercise price of $0.75 by March 31, 2010.
|    |                                                                                                                                                                                                                                                                                                                                                              
|(3) | Charles Shaker holds 375,000 options at $0.15 that may
        be exercised within 60 days in his own name and is President of Providence
        Wealth Management, which holds 3,898,000 shares.                                                                                                                                                           

Security ownership of certain beneficial owners

Name and Addressof Beneficial Owner(1)
    Title of Class
    Amount and Natureof Beneficial Owner
    Percentof Class(1) (2)Peter Hough 5226 Connaught Drive
      Vancouver, BC Canada
    Common Stock
    5,114,090 Direct and Indirect
    10.4%


|(1) | A beneficial owner of a security is any person who,
        directly or indirectly, through any contract, arrangement, understanding,
        relationship, or otherwise, has or shares: (i) voting power, which includes
        the power to vote, or to direct the voting of shares; and (ii) investment
        power, which includes the power to dispose or direct the disposition of
        shares. Certain shares may be deemed to be beneficially owned by more
        than one person (if, for example, persons share the power to vote or the
        power to dispose of the shares). In addition, shares are deemed to be
        beneficially owned by a person if the person has the right to acquire
        the shares (for example, upon exercise of an option) within 60 days of
        the date as of which the information is provided. In computing the percentage
        ownership of any person, the amount of shares outstanding is deemed to
        include the amount of shares beneficially owned by such person (and only
        such person) by reason of these acquisition rights. As a result, the percentage
        of outstanding shares of any person as shown in this table does not necessarily
        reflect the persons actual ownership or voting power with respect
        to the number of shares of common stock actually outstanding on February
        12, 2010.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

- 32 -

|(2) | Based upon 49,016,710 issued and outstanding shares
        of common stock as of February 12, 2010.
|--- | ----------------------------------------------------------------------------------------------------

Cancellation of Shares, Cancelled Debt

On August 21, 2007 Felix Wasser resigned as Chief Financial Officer. Mr. Wasser
had previously been granted 250,000 stock options, which have subsequently been
cancelled. On October 31, 2007 David Long, formerly President and Chief
Executive of Mynk Corporation resigned from Corporation. Mr. Long had previously
been granted 250,000 stock options which have been cancelled. Additionally, Mr.
Long had been granted 100,000 of restricted stock which had not vested at the
time of his separation. We agreed to grant Mr. Long 20,000 shares as part of his
separation.

Future Changes in Control

We are unaware of any contract or other arrangement, the operation of which may,
at a subsequent date, result in a change in control of our company.

Securities authorized for issuance under equity
compensation plans.

We have no long-term incentive plans, other than the Stock Option Plan described
below.

Stock Option Plan

On January 16, 2007, our directors adopted the 2007 Stock Option Plan for our
employees and consultants, reserving a total of 5,000,000 shares of its common
stock for issuance pursuant to grants to be made under the stock option plan. As
of September 30, 2008, 4,160,000 options are currently issued to employees,
directors and officers of our company and 840,000 options were available for
future grant under this plan.

The following table summarizes certain information regarding our equity
compensation plan as at September 30, 2008:

Plan Category
      Number of Securities to be Issued
      Upon Exercise of Outstanding Options, Warrants and
      Rights
      Weighted-Average Exercise Price
      of Outstanding Options, Warrants and Rights
      Number of Securities Remaining Available for
      Future Issuance Under Equity Compensation
      Plans (Excluding Securities Reflected in
      Column)Equity compensation plans approved by security holders
    not applicable
    not applicable
    not applicableEquity compensation plans not approved by security holders
    5,675,000
    $0.360
    NilTotal
    5,675,000
    $0.360
    Nil


---

- 33 -

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.

Transactions with Related Persons

During our last fiscal year and except as disclosed below, none of the following
persons has had any direct or indirect material interest in any transaction
worth more than $120,000 to which our company was or is a party, or in any
proposed transaction to which our company proposes to be a party:

| | (a) | any director or officer of our company;                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                          
| | (b) | any proposed director of officer of our
company;                                                                                                         
| |     |                                                                                                                                                          
| | (c) | any person who beneficially owns, directly or indirectly,
      shares carrying more than 5% of the voting rights attached to our common
      stock; or,
| |     |                                                                                                                                                          
| | (d) | any member of the immediate family of any of the
      foregoing persons (including a spouse, parents, children, siblings, and
      in-laws).           

Board meetings and committees; annual meeting attendance

The board of directors of our company held three formal meetings during the year
ended September 30, 2009. In addition, proceedings of the board of directors
were conducted by resolutions consented to in writing by all the directors and
filed with the minutes of the proceedings of the directors. Such resolutions
consented to in writing by the directors entitled to vote on that resolution at
a meeting of the directors are, according to Delaware Corporate Law and our
By-laws, as valid and effective as if they had been passed at a meeting of the
directors duly called and held.

We currently do not have standing nominating or compensation committees, or
committees performing similar functions. The board believes that it is not
necessary to have a standing compensation or nominating committees at this time
because the functions of such committees are adequately performed by the entire
board.

Audit Committee

Currently our audit committee consists of our board of directors. We currently
do not have nominating, compensation committees or committees performing similar
functions. There has not been any defined policy or procedure requirements for
shareholders to submit recommendations or nominations for directors.

Our audit committee currently does not have a member who is an audit committee
financial expert" as defined in SEC Release No. 33-8 177 SEC. II(A)(4)(c) and
who is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A
under the Securities Exchange Act of 1934, as amended. We believe that retaining
an independent director who would qualify as an "audit committee financial
expert" would be overly costly and burdensome and is not warranted in our
circumstances given the early stages of our development.

For the year ended September 30, 2009, there were three meetings held by the
audit committee. The business of the audit committee was conducted by
resolutions consented to in writing by all the members and filed with the
minutes of the proceedings of the audit committee.

Director Independence

Our common stock is quoted on the OTC Bulletin Board interdealer quotation
system, which does not have director independence requirements. Under NASDAQ
Rule 4200(a)(15), a director is not considered to be independent if he or she is
also an executive officer or employee of the corporation.

We have three (1) directors: Charles Shaker. Charles Shaker is considered to be
an independent director.

---

- 34 -

ITEM 13. EXHIBITS.

Exhibits required by Item 601 of Regulation S-K

Exhibit Number
      Description(3)
    Articles of Incorporation and Bylaws3.1
    Articles of Incorporation of Panglobal Brands Inc.
      (formerly EZ English Online) (attached as an exhibit to our Form SB-2
      filed January 3, 2006).3.2
    Bylaws of Panglobal Brands Inc. (formerly EZ English
      Online) (attached as an exhibit to our Form SB-2 filed January 3, 2006).3.3
    Articles of Incorporation of Mynk Corp. (attached as an
      exhibit to our Form SB- 2 filed February 3, 2006).3.4
    Bylaws of Mynk Corp. (attached as an exhibit to our Form
      SB-2 filed February 3, 2006).3.5
    Certificate of Amendment (attached as an exhibit to our
      Current Report on Form 8-K filed on February 6, 2007).3.6
    Certificate of Ownership (attached as an exhibit to our
      Current Report on Form 8-K filed on February 6, 2007).(10)
    Material Contracts10.1
    PayPal User Agreement (attached as an exhibit to our Form
      SB-2 filed February 3, 2006).10.2
    Affiliated Stock Purchase Agreement dated December 12,
      2006 (attached as an exhibit to our Current Report on Form 8-K filed on
      December 13, 2006).10.3
    Share Exchange Agreement between Panglobal Brands Inc.
      and Mynk Corporation, dated February 15, 2007 (attached as an exhibit to
      our Current Report on Form 8-K filed on February 20, 2007).10.4
    Consulting Agreement between our company, Lolly Factory,
      LLC and Mark Cywinski dated September 16, 2007 (attached as an exhibit to
      our Form 8-K filed September 27, 2006).10.5
    Lease Agreement with RFS Investments LLC, dated January
      11, 2007 (attached as an exhibit to our Current Report on Form 8-K filed
      on February 20, 2007).10.6
    Lease Agreement with YMI Jeanswear (attached as an
      exhibit to our Annual Report on Form 10-KSB filed on January 15, 2008)10.7
    Lease Agreement with Jamison California Market Center,
      L.P. (attached as an exhibit to our Annual Report on Form 10-KSB filed on
      January 15, 2008)10.8
    Lease Agreement with Steven Goldstein (attached as an
      exhibit to our Annual Report on Form 10-KSB filed on January 15, 2008)10.9
    Lease Agreement with TR 39th St. Land Corp. (attached as
      an exhibit to our Annual Report on Form 10- KSB filed on January 15, 2008)(31)
    Section 302 Certifications


---

- 35 -

Exhibit Number
      Description31.1*
      Certification under Sarbanes-Oxley Act of 2002.(32)
      Section 906 Certifications32.1*
      Certification under Sarbanes-Oxley Act of 2002.


* filed hereto

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The following table sets forth the fees billed to the Company for professional
services rendered by the Company's independent registered public accounting
firm, for the years ended September 30, 2008 and September 30, 2007:

Fees
    
    2009
    
    
    2008Grobstein Horwath &Company LLPAudit fees
    $
    ---
    
    $
    45,000Audit Related Fees
    $
    ---
    
    $
    ---Tax fees
    $
    ---
    
    $
    ---All other fees
    $
    ---
    
    $
    ---Crowe Horwath LLPAudit fees
    $
      120,000
    
    $
    85,000Audit Related
      Fees
    $
    ---
    
    $
    ---Tax fees
    $
    ---
    
    $
    ---All other fees
    $
    ---
    
    $
    ---Total Fees
    $
      120,000
    
    $
      130,000


Audit Fees. Consist of fees billed for professional
services rendered for the audits of our financial statements, reviews of our
interim consolidated financial statements included in quarterly reports,
services performed in connection with filings with the Securities and Exchange
Commission and related comfort letters and other services that are normally
provided by Crowe Horwath LLP for the fiscal year ended September 30, 2009 and
2008 Tax Fees. Neither Crowe Horwath LLP nor Grobstein Horwath &
Company LLP provided us with professional services for tax compliance, tax
advice and tax planning. These services include assistance regarding federal,
state and local tax compliance and consultation in connection with various
transactions and acquisitions.

Policy on Pre-Approval by Audit Committee of Services
Performed by Independent Auditors

We have not used Crowe Horwath LLP or Grobstein Horwath & Company LLP for
financial information system design and implementation. These services, which
would include designing or implementing a system that aggregates source data
underlying the financial statements or generates information that is significant
to our financial statements, are provided internally or by other service
providers. We do not engage Crowe Horwath LLP or Grobstein Horwath & Company
LLP to provide compliance outsourcing services.

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that
require that before our independent auditors are engaged by us to render any
auditing or permitted non-audit related service, the engagement be:

---

- 36 -

- approved by our audit committee (the functions of which are performed by
  our entire board of directors); or
- entered into pursuant to pre-approval policies and procedures established
  by the board of directors, provided the policies and procedures are detailed
  as to the particular service, the board of directors is informed of each
  service, and such policies and procedures do not include delegation of the
  board of directors' responsibilities to management.

Our entire board of directors pre-approves all services provided by our
independent auditors. All of the above services and fees were reviewed and
approved by our directors either before or after the respective services were
rendered.

Our board of directors have considered the nature and amount of fees billed by
Crowe Horwath LLP and Grobstein Horwath & Company LLP and believe that the
provision of services are compatible with maintaining Crowe Horwath LLPs and
Grobstein Horwath & Company LLPs independence.

---

- 37 -

SIGNATURES

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

Panglobal Brands Inc.

By: /s/ Charles Lesser
  Charles Lesser
  Chief Executive Officer and Financial Officer
  (Principal Executive Officer, Principal Financial Officer and Principal Accounting
  Officer) 
  Dated: February 12, 2010

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

By: /s/ Charles Lesser
  Charles Lesser
  Chief Executive Officer and Financial Officer
  (Principal Executive Officer, Principal Financial Officer and Principal Accounting
  Officer) 
  Dated: February 12, 2010

By: /s/ Charles Shaker
  Charles Shaker 
  Director 
  Dated: February 12, 2010

---