UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  FORM
10-Q
  (Mark
One)
  x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
  For the
quarter ended February 28, 2009
  o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
  For the
transition period from _____________ to ____________
  Commission
File Number:
  
  SEW
CAL LOGO, INC.
 (Exact
name of Registrant as specified in charter)
  Nevada
                46-0495298(State
      or other jurisdiction of
                  incorporation
      or organization)
                (I.R.S.
      Employer I.D. No.)
  207
W. 138th Street, Los Angeles, California 90061
 (Address
of principal executive offices) (Zip Code)
  Issuer's
telephone number, including area code: (310) 352-3300
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
  Yes xNo o
  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
                  o
                  
                  Accelerated
      filer
                  oNon-accelerated
      filer
                  o
                  (Do
      not check if a smaller reporting company)
                  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 oNo x
  APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
 PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
  Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
  Yes oNo o
  APPLICABLE
ONLY TO CORPORATE ISSUERS:
  State the
number of shares outstanding of each of the Issuer's classes of common equity as
of the latest practicable date: At May 31, 2008, there were 89,291,535
shares of the registrant's Common Stock outstanding and 300,000 shares of Series
A Preferred Stock outstanding.






1




Index
                Page
      NumberPART
      I
                FINANCIAL
      INFORMATION
                3ITEM
      1.
                Financial
      Statements
                3Report
      of Independent Registered Public Accountant
                4Consolidated
      Balance Sheets as of February 28, 2009
      (Unaudited) and August 31, 2008
                5Consolidated
      Statements of Operations (Unaudited) for the six and
      three months ended February 28, 2009 and
    2008
                6Consolidated
      Statements of Stockholders' Equity (Unaudited) cumulative from August
      31, 2005 (Inception) to February 28, 2009
                7Consolidated
      Statements of Cash Flows (Unaudited) for the six and three
      months ended February 28, 2009 and 2008
                8Notes
      to Financial Statements
                9ITEM
      2.
                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                17ITEM
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                19ITEM
      4T.
                Controls
      and Procedures
                20PART
      II
                OTHER
      INFORMATION
                20ITEM
      1.
                Legal
      Proceedings
                20ITEM
      1A.
                Risk
      Factors
                20ITEM
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                20ITEM
      3.
                Defaults
      Upon Senior Securities
                20ITEM
      4.
                Submission
      of Matters to Vote of Security Holders
                20ITEM
      5.
                Other
      Information
                20ITEM
      6.
                Exhibits
                21SIGNATURES
                21






2






PART
I
  ITEM
1. FINANCIAL STATEMENTS
  The
financial statements included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. However, in the opinion of management, all
adjustments (which include only normal recurring accruals) necessary to present
fairly the financial position and results of operations for the periods
presented have been made. The results for interim periods are not necessarily
indicative of trends or of results to be expected for the full year. These
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's most recent registration statement
on Form SB-2 as amended.












3




MOORE
& ASSOCIATES, CHARTERED
 ACCOUNTANTS AND
ADVISORS
 PCAOB
REGISTERED
  
  REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
  
 To the
Board of Directors
 Sew Cal
Logo, Inc.
 
 
 We have
reviewed the accompanying condensed consolidated balance sheet of Sew Cal Logo,
Inc. as of February 28, 2009, and the related statements of operations,
stockholders’ equity (deficit), and cash flows for the three-month and six-month
periods ended February 28, 2009 and February 29, 2008. These interim financial
statements are the responsibility of the Corporation’s management.
 
 We
conducted our reviews in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  A review of interim
financial information consists of principally applying analytical procedures and
making inquiries of persons responsible for the financials and accounting
matters.  It is substantially less in scope than an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.  Accordingly, we
do not express such an opinion.
 
 Based on
our reviews, we are not aware of any material modifications that should be made
to such condensed consolidated financial statements for them to be in conformity
with accounting principles generally accepted in the United States of
America.
 
 We have
previously audited, in accordance with standards of the Public Company
Accounting Oversight Board (United States), the balance sheet of Sew Cal Logo,
Inc. as of August 31, 2008, and the related consolidated statements of income,
stockholders’ equity and cash flows for the year then ended (not presented
herein); and in our report dated November 25, 200, we expressed a qualified
opinion with a going concern paragraph on those financial
statements.  In our opinion, the information set forth in the
accompanying balance sheet as of November 30, 2008 is fairly stated, in all
material respects, in relations to the balance sheet from which it has been
derived.
 
 /s/
Moore & Associates, Chartered
 Moore
& Associates, Chartered
 Las
Vegas, Nevada
 April 16,
2009
  
   6490
WEST DESERT INN ROAD, LAS VEGAS, NEVADA 89146 (702) 253-7499 Fax:
(702)253-7501








4





SEW
      CAL LOGO, INC.BALANCE SHEETSFebruary
      28,
                                                                                          
                                                                                          August
      31,2008
                                                                                          
                                                                                          2008ASSETSCurrent
      AssetsCash
      and cash equivalents
                                                                                          
                                                                                          $
                                                                                          2,267
                                                                                          
                                                                                          
                                                                                          $
                                                                                          15,716Accounts
      Receivable, net
                                                                                          
                                                                                          
                                                                                          133,628
                                                                                          
                                                                                          
                                                                                          
                                                                                          216,108Inventory
                                                                                          
                                                                                          
                                                                                          46,388
                                                                                          
                                                                                          
                                                                                          
                                                                                          70,902Prepaid
      Expenses
                                                                                          
                                                                                          
                                                                                          2,200
                                                                                          
                                                                                          
                                                                                          
                                                                                          2,200Total
      current assets
                                                                                          
                                                                                          
                                                                                          184,483
                                                                                          
                                                                                          
                                                                                          
                                                                                          304,926Equipment
      and machinery, net
                                                                                          
                                                                                          
                                                                                          114,911
                                                                                          
                                                                                          
                                                                                          
                                                                                          141,977Security
      Deposits
                                                                                          
                                                                                          
                                                                                          6,000
                                                                                          
                                                                                          
                                                                                          
                                                                                          6,000Total
      assets
                                                                                          
                                                                                          $
                                                                                          305,394
                                                                                          
                                                                                          
                                                                                          $
                                                                                          452,903LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilitiesAccounts
      payable
                                                                                          
                                                                                          
                                                                                          207,755
                                                                                          
                                                                                          
                                                                                          
                                                                                          98,693Note
      Payable-shareholder
                                                                                          
                                                                                          
                                                                                          328,884
                                                                                          
                                                                                          
                                                                                          
                                                                                          353,884Other
      current liabilities
                                                                                          
                                                                                          
                                                                                          450,542
                                                                                          
                                                                                          
                                                                                          
                                                                                          443,220Current
      Poriton of Long Term Debt
                                                                                          
                                                                                          
                                                                                          139,780
                                                                                          
                                                                                          
                                                                                          
                                                                                          158,290Total
      current liabilities
                                                                                          
                                                                                          
                                                                                          1,126,961
                                                                                          
                                                                                          
                                                                                          
                                                                                          1,054,087Long-term
      liabilitiesNote
      Payable-related party
                                                                                          
                                                                                          
                                                                                          21,552
                                                                                          
                                                                                          
                                                                                          
                                                                                          25,135Convertible
      Debentures
                                                                                          
                                                                                          
                                                                                          2,637,247
                                                                                          
                                                                                          
                                                                                          
                                                                                          2,655,975Discount
      on Convertible Debentures
                                                                                          
                                                                                          
                                                                                          (646,899
                                                                                          )
                                                                                          
                                                                                          
                                                                                          (646,899
                                                                                          )Equipment
      Loans
                                                                                          
                                                                                          
                                                                                          7,329
                                                                                          
                                                                                          
                                                                                          
                                                                                          9,101Total
      liabilities
                                                                                          
                                                                                          
                                                                                          3,146,190
                                                                                          
                                                                                          
                                                                                          
                                                                                          3,097,399Stockholders'
      Equity (Deficit)Preferred
      stock, authorized 12,000,000 shares,Par
      value $0.001, issued and outstanding at02/28/2009
      and 8/31/08 is 22,300,000 and 300,000respectively
                                                                                          
                                                                                          
                                                                                          22,300
                                                                                          
                                                                                          
                                                                                          
                                                                                          300Common
      stock, authorized 2,000,000,000 shares,$0.001
      par value,  issued and outstanding atFebruary
      28, 2009 and August 31, 2008 is271,873,638
      and 143,124,535 shares respectively.
                                                                                          
                                                                                          
                                                                                          271,874
                                                                                          
                                                                                          
                                                                                          
                                                                                          143,125Additional
      Paid in Capital
                                                                                          
                                                                                          
                                                                                          4,001,154
                                                                                          
                                                                                          
                                                                                          
                                                                                          4,120,649Stock
      Subscribed
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          
                                                                                          -Accumulated
      Deficit
                                                                                          
                                                                                          
                                                                                          (7,136,124
                                                                                          )
                                                                                          
                                                                                          
                                                                                          (6,908,570
                                                                                          )Total
      stockholders' equity (deficit)
                                                                                          
                                                                                          
                                                                                          (2,840,796
                                                                                          )
                                                                                          
                                                                                          
                                                                                          (2,644,496
                                                                                          )Total
      liabilities and stockholders' equity
                                                                                          
                                                                                          $
                                                                                          305,394
                                                                                          
                                                                                          
                                                                                          $
                                                                                          452,903The
      accompanying notes are an integral part of these
statements





5





SEW
      CAL LOGO, INC.STATEMENTS OF OPERATIONSSix
      Months Ended
                                                                                        
                                                                                        
                                                                                        Three
      Months EndedFebruary
      28,
                                                                                        
                                                                                        
                                                                                        February
      28,2009
                                                                                        
                                                                                        
                                                                                        2008
                                                                                        
                                                                                        
                                                                                        2009
                                                                                        
                                                                                        
                                                                                        2008Revenue:Sales
      of Caps, Embroidery and Other
                                                                                        
                                                                                        $
                                                                                        661,377
                                                                                        
                                                                                        
                                                                                        $
                                                                                        998,339
                                                                                        
                                                                                        
                                                                                        $
                                                                                        307,184
                                                                                        
                                                                                        
                                                                                        $
                                                                                        449,427Total
      Revenue
                                                                                        
                                                                                        
                                                                                        661,377
                                                                                        
                                                                                        
                                                                                        
                                                                                        998,339
                                                                                        
                                                                                        
                                                                                        
                                                                                        307,184
                                                                                        
                                                                                        
                                                                                        
                                                                                        449,427Cost
      of Goods Sold
                                                                                        
                                                                                        
                                                                                        583,782
                                                                                        
                                                                                        
                                                                                        
                                                                                        933,810
                                                                                        
                                                                                        
                                                                                        
                                                                                        287,582
                                                                                        
                                                                                        
                                                                                        
                                                                                        466,907Gross
      profit/(loss)
                                                                                        
                                                                                        
                                                                                        77,595
                                                                                        
                                                                                        
                                                                                        
                                                                                        64,529
                                                                                        
                                                                                        
                                                                                        
                                                                                        19,602
                                                                                        
                                                                                        
                                                                                        
                                                                                        (17,480
                                                                                        )Expenses:General
      and Administrative
                                                                                        
                                                                                        
                                                                                        91,666
                                                                                        
                                                                                        
                                                                                        
                                                                                        122,681
                                                                                        
                                                                                        
                                                                                        
                                                                                        29,027
                                                                                        
                                                                                        
                                                                                        
                                                                                        58,583Officer
      and Administrative Compensation
                                                                                        
                                                                                        
                                                                                        8,116
                                                                                        
                                                                                        
                                                                                        
                                                                                        91,908
                                                                                        
                                                                                        
                                                                                        
                                                                                        4,654
                                                                                        
                                                                                        
                                                                                        
                                                                                        31,308Consulting,
      Legal and Accounting
                                                                                        
                                                                                        
                                                                                        14,007
                                                                                        
                                                                                        
                                                                                        
                                                                                        127,798
                                                                                        
                                                                                        
                                                                                        
                                                                                        6,000
                                                                                        
                                                                                        
                                                                                        
                                                                                        59,667Depreciation
                                                                                        
                                                                                        
                                                                                        27,065
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,118
                                                                                        
                                                                                        
                                                                                        
                                                                                        9,012
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,559Rent
                                                                                        
                                                                                        
                                                                                        108,000
                                                                                        
                                                                                        
                                                                                        
                                                                                        48,000
                                                                                        
                                                                                        
                                                                                        
                                                                                        60,000
                                                                                        
                                                                                        
                                                                                        
                                                                                        12,000Total
      expenses
                                                                                        
                                                                                        
                                                                                        248,854
                                                                                        
                                                                                        
                                                                                        
                                                                                        393,505
                                                                                        
                                                                                        
                                                                                        
                                                                                        108,693
                                                                                        
                                                                                        
                                                                                        
                                                                                        163,117Loss
      from Operations
                                                                                        
                                                                                        
                                                                                        (171,259
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (328,976
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (89,091
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (180,597
                                                                                        )Other
      Income (Expenses)Interest
      (Expense)
                                                                                        
                                                                                        
                                                                                        56,295
                                                                                        
                                                                                        
                                                                                        
                                                                                        37,846
                                                                                        
                                                                                        
                                                                                        
                                                                                        28,850
                                                                                        
                                                                                        
                                                                                        
                                                                                        17,268Total
      other expenses
                                                                                        
                                                                                        
                                                                                        56,295
                                                                                        
                                                                                        
                                                                                        
                                                                                        37,846
                                                                                        
                                                                                        
                                                                                        
                                                                                        28,850
                                                                                        
                                                                                        
                                                                                        
                                                                                        17,268Loss
      before income taxes
                                                                                        
                                                                                        
                                                                                        (227,554
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (366,822
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (117,941
                                                                                        )
                                                                                        
                                                                                        
                                                                                        (197,865
                                                                                        )Provision
      for income taxes
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -Net
      loss
                                                                                        
                                                                                        $
                                                                                        (227,554
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        (366,822
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        (117,941
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        (197,865
                                                                                        )Basic
      and Diluted Earnings (Loss) per Share
                                                                                        
                                                                                        $
                                                                                        (0.00
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        (0.01
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        (0.00
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        (0.01
                                                                                        )Weighted
      Average Number of Common Shares
                                                                                        
                                                                                        
                                                                                        232,941,574
                                                                                        
                                                                                        
                                                                                        
                                                                                        27,595,484
                                                                                        
                                                                                        
                                                                                        
                                                                                        232,941,574
                                                                                        
                                                                                        
                                                                                        
                                                                                        27,595,484The
      accompanying notes are an integral part of these
statements





6





SEW
      CAL LOGO, INC.STATEMENTS OF STOCKHOLDERS'
      EQUITY(
      From Inception to February 28, 2009)Additional
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              TotalPreferred
      Stock
                                                              
                                                              
                                                              Common
      Stock
                                                              
                                                              
                                                              Paid
      in
                                                              
                                                              
                                                              Stock
                                                              
                                                              
                                                              Accumulated
                                                              
                                                              
                                                              Stockholders'Shares
                                                              
                                                              
                                                              Amount
                                                              
                                                              
                                                              Shares
                                                              
                                                              
                                                              Amount
                                                              
                                                              
                                                              Capital
                                                              
                                                              
                                                              Subscribed
                                                              
                                                              
                                                              (Deficit)
                                                              
                                                              
                                                              EquityBalance,
      August 31, 2005
                                                              
                                                              
                                                              234,800
                                                              
                                                              
                                                              $
                                                              235
                                                              
                                                              
                                                              
                                                              5,176,168
                                                              
                                                              
                                                              $
                                                              5,176
                                                              
                                                              
                                                              $
                                                              187,517
                                                              
                                                              
                                                              $
                                                              36,000
                                                              
                                                              
                                                              $
                                                              (673,814
                                                              )
                                                              
                                                              $
                                                              (444,886
                                                              )Shares
      issued for Servicesat
      $0.15 per share
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              50,000
                                                              
                                                              
                                                              
                                                              50
                                                              
                                                              
                                                              
                                                              7,450
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              7,500Fair
      Value of Warrants attached toConvertible
      Debentures
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              1,081,657
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              1,081,657Beneficial
      Conversion Feature attached toConvertible
      Debentures
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              2,500,000
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              2,500,000Shares
      issued for Servicesat
      $0.10 per share
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              33,334
                                                              
                                                              
                                                              
                                                              33
                                                              
                                                              
                                                              
                                                              3,300
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              3,333Shares
      issued for Conversion of Debt
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              290,000
                                                              
                                                              
                                                              
                                                              290
                                                              
                                                              
                                                              
                                                              32,741
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              33,031Net
      Loss for Year
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              (2,947,833
                                                              )
                                                              
                                                              
                                                              (2,947,833
                                                              )Balance,
      August 31, 2006
                                                              
                                                              
                                                              234,800
                                                              
                                                              
                                                              
                                                              235
                                                              
                                                              
                                                              
                                                              5,549,502
                                                              
                                                              
                                                              
                                                              5,549
                                                              
                                                              
                                                              
                                                              3,812,665
                                                              
                                                              
                                                              
                                                              36,000
                                                              
                                                              
                                                              
                                                              (3,621,647
                                                              )
                                                              
                                                              
                                                              232,802Preferred
      Shares issued for Services
                                                              
                                                              
                                                              65,200
                                                              
                                                              
                                                              
                                                              65
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              1,891
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              1,956Common
      Stock Issued for Cash
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              61,000
                                                              
                                                              
                                                              
                                                              61
                                                              
                                                              
                                                              
                                                              60,939
                                                              
                                                              
                                                              
                                                              (36,000
                                                              )
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              25,000Shares
      issued for Services
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              3,500,200
                                                              
                                                              
                                                              
                                                              3,501
                                                              
                                                              
                                                              
                                                              214,000
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              217,501Shares
      issued for Conversion of Debt
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              24,970,000
                                                              
                                                              
                                                              
                                                              24,970
                                                              
                                                              
                                                              
                                                              65,482
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              90,452Net
      Income (Loss) for period
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              (2,570,683
                                                              )
                                                              
                                                              
                                                              (2,570,683
                                                              )Balance,
      August 31, 2007
                                                              
                                                              
                                                              300,000
                                                              
                                                              
                                                              
                                                              300
                                                              
                                                              
                                                              
                                                              34,080,702
                                                              
                                                              
                                                              
                                                              34,081
                                                              
                                                              
                                                              
                                                              4,154,977
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (6,192,330
                                                              )
                                                              
                                                              
                                                              (2,002,972
                                                              )Shares
      issued for Services
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              9,150,000
                                                              
                                                              
                                                              
                                                              9,150
                                                              
                                                              
                                                              
                                                              36,600
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              45,750Shares
      issued for Conversion of Debt
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              744,833
                                                              
                                                              
                                                              
                                                              745
                                                              
                                                              
                                                              
                                                              292
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              1,037Shares
      issued for Conversion of Debt
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              200,000
                                                              
                                                              
                                                              
                                                              200
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              200Shares
      issued for Services
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              17,200,000
                                                              
                                                              
                                                              
                                                              17,200
                                                              
                                                              
                                                              
                                                              (8,450
                                                              )
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              8,750Shares
      issued for Conversion of Debt
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              27,916,000
                                                              
                                                              
                                                              
                                                              27,916
                                                              
                                                              
                                                              
                                                              (18,411
                                                              )
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              9,505Shares
      issued for Conversion of Debt
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              53,833,000
                                                              
                                                              
                                                              
                                                              53,833
                                                              
                                                              
                                                              
                                                              (44,359
                                                              )
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              9,474Net
      Income (Loss) for period
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              (716,240
                                                              )
                                                              
                                                              
                                                              (716,240
                                                              )Balance,
      August 31, 2008
                                                              
                                                              
                                                              300,000
                                                              
                                                              
                                                              
                                                              300
                                                              
                                                              
                                                              
                                                              143,124,535
                                                              
                                                              
                                                              
                                                              143,125
                                                              
                                                              
                                                              
                                                              4,120,649
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (6,908,570
                                                              )
                                                              
                                                              
                                                              (2,644,796
                                                              )Shares
      issued for Conversion of Debt
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              128,749,103
                                                              
                                                              
                                                              
                                                              128,749
                                                              
                                                              
                                                              
                                                              (119,495
                                                              )
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              9,254Shares
      issued for Services
                                                              
                                                              
                                                              2,200,000
                                                              
                                                              
                                                              
                                                              22,000
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              22,000Net
      Income (Loss) for period
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              (227,554
                                                              )
                                                              
                                                              
                                                              (227,554
                                                              )Balance,
      February 28, 2009
                                                              
                                                              
                                                              2,500,000
                                                              
                                                              
                                                              $
                                                              22,300
                                                              
                                                              
                                                              
                                                              271,873,638
                                                              
                                                              
                                                              $
                                                              271,874
                                                              
                                                              
                                                              $
                                                              4,001,154
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              (7,136,124
                                                              )
                                                              
                                                              $
                                                              (2,840,796
                                                              )The
      accompanying notes are an integral part of these
  statements





7





SEW
      CAL LOGO, INC.STATEMENTS OF CASH FLOWSSix
      Months Ended
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          Three
      Months EndedFebruary
      28,
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          February
      28,Operating
      Activities:
                                                                                                                                          
                                                                                                                                          2009
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          2008
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          2009
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          2008Net
      income (loss)
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          (227,554
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          (366,822
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          (117,941
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          (197,865
                                                                                                                                          )Adjustments
      to reconcile net income (loss)Depreciation
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          27,066
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          3,118
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          9,012
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          3,118Stock
      issued for services
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          22,000
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          45,950
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          200Amortization
      of Discount on Debentures
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -Changes
      in Assets and Liabilities(Increase)
      decrease in prepaid expenses
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (2,200
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (2,200
                                                                                                                                          )(Increase)
      decrease in inventory
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          24,514
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          17,980
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          24,514
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          3,230(Increase)
      decrease in security deposits
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          3,800
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          3,800(Increase)
      decrease in accounts receivable
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          82,480
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (598
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          8,167
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          48,964Increase
      (decrease) in accounts payable
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          109,062
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          28,687
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          85,295
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          51,598Increase
      (decrease) in other current liabilities
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          7,322
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          113,408
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          7,463
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          73,467Net
      cash provided by (used in) operating activities
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          44,890
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (156,617
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          16,510
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (156,677
                                                                                                                                          )Investing
      Activities:(Purchases)
      disposal of equipment
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          34,591
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          15,737Cash
      (used) in investing activities
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          34,591
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          15,737Financing
      Activities:Notes
      Payable
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -Debentures
      Payable
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (9,474
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          6,000
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          6,000Increase/(Decrease)
      in shareholder loan
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (28,583
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (25,000
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -Repayment
      of loans
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (18,510
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (10,312
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (5,188
                                                                                                                                          )Proceeds
      from equipment loan
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (1,772
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (882
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (766
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (882
                                                                                                                                          )Net
      cash provided by (used in) financing activities
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (58,339
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (5,194
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (25,766
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (70
                                                                                                                                          )Net
      increase (decrease) in cash and cash equivalents
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (13,449
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (127,280
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (9,256
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          80Cash
      and cash equivalents at beginning of the period
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          15,716
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          155,704
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          11,523
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          28,296Cash
      and cash equivalents at end of the period
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          2,267
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          28,424
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          2,267
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          28,424Cash
      Paid For:Interest
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          56,295
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          74,566
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          27,445
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          37,846Taxes
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          -Non
      Cash Activities:Stock
      issued for services
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          22,000
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          45,950
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          200Stock
      issued for convertible debt
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          9,254
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          1,237
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          2,114
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          1,037The
      accompanying notes are an integral part of these
statements





8
 SEW
CAL LOGO, INC.
 NOTES
TO FINANCIAL STATEMENTS
 (February
28, 2009 and August 31, 2008)


NOTE
1. Summary of Significant Accounting Policies
 
 The
Company
 
 Sew Cal
Logo, Inc. (The Company) was incorporated in the State of California on August
30, 1985 as C J Industries and on February 24, 2004 merged with Calvert
Corporation, a Nevada Corporation which changed its name to Sew Cal Logo,
Inc.  This was a recapitalization accounted for as a stock exchange
reverse merger.
 
 The
Company is a Nevada corporation doing business in Los Angeles,
California.  The Company produces and manufactures custom embroidered
caps, sportswear and related corporate identification apparel.  The
Company provides an in-house, full-service custom design center where original
artwork and logo reproduction for embroidery are available.  The
Company also offers contract embroidery and silk-screening to the manufacturing
and promotional industry.  The Company’s products are sold, primarily
in the United States, to Fortune 500 companies, major motion picture and
television studios, retailers, and local schools and small
businesses.
 
 Use
of Estimates
 
 The
financial statements have been prepared in conformity with accounting principles
generally accepted in the United States, which require management to make
estimates, and assumptions that affect the reported amounts of assets and
liabilities (including disclosure of contingent assets and liabilities) at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.  Actual results could differ
from those estimates.
 
 Accounts
Receivable
 
 The
Company’s trade accounts receivable and allowance for doubtful accounts are
shown below.
  2/28/2009
                        
                        
                        8/31/2008Gross
      Trade Accounts Receivable
                        
                        $
                        134,978
                        
                        
                        $
                        218,343Allowance
      for Doubtful Accounts
                        
                        
                        (1,350
                        )
                        
                        
                        (2,235
                        )Accounts
      Receivable, net
                        
                        $
                        133,628
                        
                        
                        $
                        216,108
 
 Revenue
Recognition
 
 The
Company recognizes revenue from product sales upon shipment, which is the point
in time when risk of loss is transferred to the customer, net of estimated
returns and allowances.
 
 Cash
and Cash equivalents
 
 The
Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC).  This government corporation insured
balances up to $100,000 through October 13, 2008.  As of October 14,
2008 all non-interest bearing transaction deposit accounts at an FDIC-insured
institution, including all personal and business checking deposit accounts that
do not earn interest, are fully insured for the entire amount in the deposit
account.  This unlimited insurance coverage is temporary and will
remain in effect for participating institutions until December 31,
2009.
  All other
deposit accounts at FDIC-insured institutions are insured up to at least
$250,000 per depositor until December 31, 2009.  On January 1, 2010,
FDIC deposit insurance for all deposit accounts, except for certain retirement
accounts, will return to at least $100,000 per depositor.  Insurance
coverage for certain retirement accounts, which include all IRA deposit
accounts, will remain at $250,000 per depositor.





9
 SEW
CAL LOGO, INC.
 NOTES
TO FINANCIAL STATEMENTS
 (February
28, 2009 and August 31, 2008)
 NOTE 1. Summary of Significant
Accounting Policies-
continued
  Inventory
 
 Inventory
is stated at the lower of cost (first-in, first-out method) or market and
consists of raw material, work-in-process and finished
goods.  Normally the Company ships out to the customer the finished
goods as soon as they are produced and therefore usually does not maintain a
finished goods inventory.  Overhead items are applied on a standard
cost basis to work in process and finished goods.
  2/28/2009
                              
                              
                              8/31/2008Raw
      Materials and WIP
                              
                              $
                              46,388
                              
                              
                              $
                              709,025Finished
      Goods
                              
                              
                              -
                              
                              
                              
                              -Total
      Inventory
                              
                              $
                              43,688
                              
                              
                              $
                              70,902
 
 Equipment
and Machinery
 
 Equipment
and machinery are stated at cost.  Depreciation is computed using the
straight-line method over their estimated useful lives ranging from five to
seven years.  Depreciation and amortization expense for the six months
ended February 28, 2009 and the fiscal year ended August 31, 2008 amounted to
$27,065 and $79,493 respectively and includes $25,016 and $69,180 respectively
for depreciation related to Cost of Goods Sold.  Gains from losses on
sales and disposals are included in the statements of
operations.  Maintenance and repairs are charged to expense as
incurred.  As of February 28, 2008 and August 31, 2008 equipment and
machinery consisted of the following:
  2/28/2009
                            
                            
                            8/31/2008Equipment
      and Machinery
                            
                            $
                            980,717
                            
                            
                            $
                            942,890Less:Accumulated
      depreciation
                            
                            
                            (865,806
                            )
                            
                            
                            (800,913
                            )$
                            114,911
                            
                            
                            $
                            141,977
  Fiscal
Year
 
 The
Company operates on a fiscal year basis with a year ending August
31.
  Advertising
 
 The
Company expenses advertising as incurred.  There were no advertising
expense incurred for the six months period ended February 28, 2009 and the year
ended August 31, 2008.
 
 Earnings
and Loss Per Share Information
 
 Basic net
earnings (loss) per common share is computed by dividing net earnings (loss)
applicable to common shareholders by the weighted-average number of common
shares outstanding during the period.
  Segment
Reporting
 
 Pursuant
to Statement of Financial Accounting Standards No. 131 (“SFAS No. 131”),
“Disclosure about Segments of an Enterprise and Related Information,” the
Company has determined it operated in only one
segment.






10
 SEW
CAL LOGO, INC.
 NOTES
TO FINANCIAL STATEMENTS
 (February
28, 2009 and August 31, 2008)
 NOTE
2.  Going Concern
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of assets
and the liquidation of liabilities in the normal course of
business.  However, the Company has accumulated a loss $7,136,124
during its years of operation.  This raises substantial doubt about
the Company’s ability to continue as a going concern.  The financial
statements do not include any adjustments that might result from this
uncertainty.
 
 Managements
Plan
 
 Management
continues to seek funding from its shareholders and other qualified investors to
pursue its business plan.  It is in the process of expanding its sales
and distribution capability.
 
 
 NOTE
3.  Note Payable- Related Party
 
 On March
1, 2003, for purposes of working capital, the sole shareholder and spouse made a
$355,384 subordinated loan to the Company.  The Company is obligated
to pay monthly interest only on the subordinated loan during its term at the
rate of 10% per annum (fixed-rate calculated as simple interest).  The
entire principal amount of the loan was originally due on March 1, 2004, and has
continued from that time on a month-to-month basis.  The subordinated
loan, which was consented to by United Commercial Bank and subsequent banks, is
collateralized by the assets of the Company, including but not limited to any
and all equipment owned by the Company, inventory, and outstanding
receivables.  The balance due at February 28, 2009 is
$328,884.
 
 On April
4, 2005 a shareholder loaned the company $100,000 on a five year monthly
installment loan at 5% per annum for the purchase equipment.  Balance
of loan as of February 28, 2009 is $21,552.
   NOTE
4. Commitments and Contingencies
 
 Long-Term
Debt
 
 On March
25, 2002 the Company entered into an agreement with United Commercial Bank for a
$515,000 SBA loan.  For the years ending August 31, 2003 and 2002, the
unpaid principal balance of the loan was $462,100 and $500,313
respectively.  The monthly required payment varied with an annual
interest rate of 6.75% and a maturity date of March 1, 2012.  This
loan related to the purchase of equipment.
 
 On August
11, 2004 the Company refinanced this SBA loan with Pacific Liberty
Bank.  As of February 28, 2009 the balance was
$139,780.  Monthly payments are made the 15th of each
month with interest at prime plus 2.5.  Currently the interest rate is
9.5%.  This loan is collateralized by the assets of the corporation
and is in first place before the shareholder loan.
 
 The
Company has a second installment loan with GMAC on a vehicle with a balance as
of February 28, 2009 of $7,329.
 
 Lease
Commitments
 
 The
Company leases warehouse and office facilities under an operating lease
requiring the Company to pay property taxes and utilities.  In July
2004 this building was purchased by a related party (a corporation controlled by
the officers) and the lease was re-written for 5 years.  Lease expense
is currently $12,500 per month.
 
 The lease
obligation is shown below for the next five years.
  Year
      1
                          
                          
                          Year
      2
                          
                          
                          Year
      3
                          
                          
                          Year
      4
                          
                          
                          Year
      5Office
      /warehouse lease
                          
                          $
                          150,000
                          
                          
                          $
                          150,000
                          
                          
                          $
                          150,000
                          
                          
                          $
                          150,000
                          
                          
                          $
                          150,000


11
 SEW
CAL LOGO, INC.
 NOTES
TO FINANCIAL STATEMENTS
 (February
28, 2009 and August 31, 2008)




NOTE 4. Commitments and
Contingencies-
continued
  Callable
Convertible Debentures
 
 On
February 16, 2006 the Company executed an equity financing agreement wherein it
will issue an aggregate of $2,000,000 callable convertible debentures in three
segments.  The Company has received a net of
$1,955,000.  The debentures are convertible to common stock at 45%
below the lowest three intra-day trading price during the 20 trading days
immediately preceding conversion.
 
 The
Debentures also carry five-year warrants exercisable at $0.50 per
share.  The aggregate number of warrants to be issued is 2,142,855.
The Company has recorded an expense of $585,343 for the fair value of the
warrants. The value was determined using the Black-Scholes pricing model and
assumes a 5 year maturity, a risk free interest rate of 4.85% and a volatility
of 207%.
 
 The
Company has recorded a discount on the convertible debentures of $2,000,000
which represents the beneficial conversion feature.  During the years
ended August 31, 2007 and 2006 the Company converted $90,452 and $33,031 debt
into stock, respectively.  During the years ended August 31, 2007 and
2006 the Company expensed $983,485 and $565,752 of the recorded discount as
interest expense, respectively.  The Company will amortize the
remaining discount over the remaining life of the debentures. The discount was
determined using the Black-Scholes pricing model and assumes a 2 year maturity,
a risk free interest rate of 4.85% and a volatility of 207%.
  On July
31, 2006 the Company executed an equity financing agreement wherein it has
issued $500,000 in callable convertible debentures and 20,000,000 seven year
warrants exercisable at $0.05 per share.  The debentures are
convertible to common stock at 40% below the lowest three intra-day trading
price during the 20 trading days immediately preceding
conversion.  The aggregate number of shares to possibly be issued at
100% conversion is 69,444,444 shares.  Calculated using a current 3
day trading average price per share of $0.012 per share less 40% is $0.0072 per
share divided into $500,000 equals 69,444,444 shares.
 
 During
the year ended August 31, 2006, the Company recorded an expense of $496,314 for
the fair value of the warrants. The value was determined using the Black-Scholes
pricing model and assumes a 5 year maturity, a risk free interest rate of 4.85%
and a volatility of 207%.
 
 The
Company recorded a discount on the convertible debentures of $500,000 which
represents the beneficial conversion feature and is amortized to interest
expense over the 2 year life of the debentures. The Company recorded an expense
of $ 250,000 and $20,833 respectively for the years ended August 31, 2007 and
2006. The discount was determined using the Black-Scholes pricing model and
assumes a 2 year maturity, a risk free interest rate of 4.85% and a volatility
of 207%.
 
  NOTE
5.  Stockholders’ Equity
 
 Preferred
Stock
 
 The
Company (post merger) is authorized to issue twelve million (12,000,000) shares
of series A preferred stock at a par value of $0.001.  The preferred
stock is convertible to common stock at one share of preferred for every 100
shares of common.  The preferred shares can only be converted when the
Company reaches $10,000,000 in sales for any fiscal year.  As of
August 31, 2008 there were 2,500,000 shares of preferred stock.  The
value was placed at par.  The conversion to common stock would be
250,000,000 shares.  Based upon the actual growth for the last two
years, the $10,000,000 in sales will not be reached within five
years.  Therefore, these shares are not considered in calculating the
loss per share.
 
 During
the quarter ended November 30, 2008 the Company issued 2,200,000 preferred
shares to key employees for services.


12
 SEW
CAL LOGO, INC.
 NOTES
TO FINANCIAL STATEMENTS
 (February
28, 2009 and August 31, 2008)




NOTE 5.  Stockholders’
Equity-
continued
  Common
Stock
 
 On
September 12, 2008 the Company’s authorization to issue common stock was
increased from 500.000,000 ti 2,000,000,000.
 
 On August
25, 2006 the Company’s authorization to issued common stock was increased from
50,000,000 shares to 500,000,000 shares at par value of $0.001
 
 As of
August 31, 2004 (post merger) the Company had 5,020,000 common shares issued and
outstanding. The Company’s financial statements have been restated to reflect
the recapitalization on a retroactive basis.
 
 In May
2005 the Company purchased equipment valued at $114,100 for 33,334 common share
and issued 122,834 common shares for services valued at $12,283.
  As of 31
May 2005 the Company had received from investors $36,000 in investment funds for
which restricted common shares will be issued.  The exact number of
shares has not yet been determined.
 
 On
January 6, 2006 the Company issued 50,000 common shares for services valued at
$7,500.
 
 On
February 16, 2006 the Company entered into a securities purchase agreement for a
total subscription amount of $2,000,000 that includes stock purchase warrants
and callable convertible debentures.  A discount on convertible
debentures was recorded as additional paid in capital of $2,000,000 for the
beneficial conversion feature which is being amortized over the life of the
debentures.  The total subscription includes an aggregate of 2,142,858
five-year warrants exercisable for the same number of common shares at $0.50 per
share.  An aggregate of 25,974,026 common shares have been registered
and are available for issue to potentially convert the full
$2,000,000.
 
 On July
31, 2006 the Company issued $500,000 in convertible debentures which are
convertible to shares of the Company’s common stock at a 40% discount to the
market price at the time of conversion.  A discount on convertible
debentures was recorded as additional paid in capital of $500,000 for the
beneficial conversion feature which is being amortized over the life of the
debentures.  Common stock registered to convert the full $500,000 was
calculated at 69,444,444 shares using the current three day average price per
share of $0.012 less a 40% discount.
 
 On May
31, 2006 the Company issued 290,000 common shares by converting $33,031 of
debenture debt and issued 33,334 common shares for consulting services valued at
$3,333.
 
 The
Company issued 61,000 common shares for cash of $25,000 and the subscription
deposit of $36,000 received in May 2005 in a private placement.
 
 During
the Year ended August 31, 2007 the Company issued 3,500,200 common shares for
various services valued at $217,501 including 2,750,000 common shares in
settlement of a finders fee dispute valued at $200,000.  The Company
converted $90,452 debenture debt by issuing 24,970,000 common
shares.
 
 During
the three months ended November 30, 2007 the Company issued 9,150,000 common
shares for various services valued at $45,750.  The Company converted
$1,037 debenture debt by issuing 744,833 common shares.
 
 During
the three months ended February 29, 2008 the Company converted $200 debenture
debt using 200,000 common shares.
 
 During
the three months ended March 31, 2008 the Company converted $9,505 debenture
debt by issuing 27,916,000 commons shares and issued 17,200,000 common shares
for $8,750 services.
 
 During
the three months ended August 31, 2008 the Company converted $9,474 debenture
debt issued by issuing 53,833,000 common shares.
 
 During
the six months ended February 28, 2008 the Company converted $9,254 debenture
debt issued by issuing 128,749,103 common shares.
 
 Warrants
 
 With the
$1,955,000 worth of convertible debentures described above 2,000,000 five-year
warrants for commons stock exercisable at $0.50 per share were issued and with
the $500,000 convertible debentures 20,000,000 seven-year warrants for common
shares exercisable at $0.05 per share were issued.  Both exercisable
prices are “out of the money” therefore no discount has been
recorded.


13
 SEW
CAL LOGO, INC.
 NOTES
TO FINANCIAL STATEMENTS
 (February
28, 2009 and August 31, 2008)


NOTE
6.  Interest Expense
 
 Interest
expense for the period ended February 28, 2009 and the year ended August 31,
2008 is $56,295 and $74,566 respectively.
 
  NOTE
7.  Income Taxes
 
 The
Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.
 
 SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.  The total
deferred tax asset is $1,553,978 as of February 28, 2009 which is calculated by
multiplying a 22% estimated tax rate by the cumulative NOL of $7,063,535 the
total valuation allowance is a comparable $1,553,978.
 
 The
provision for income taxes for the period ended August 31, 2008 and 2007 is
calculated by applying the statutory rate of 22% to the income/(loss) from
continuing operations and deducting appropriate taxes and allowances as
follows:
 
 August
      31,2008
                          
                          
                          2007Deferred
      Tax Asset
                          
                          $
                          157,573
                          
                          
                          $
                          565,550Valuation
      Allowance
                          
                          
                          (157,573
                          )
                          
                          
                          (565,550
                          )Current
      Taxes Payable
                          
                          
                          -
                          
                          
                          
                          -Income
      Tax Expense
                          
                          $
                          -
                          
                          
                          $
                          -
 
 At August
31, 2008, federal income tax net operating loss carry forwards (“NOL’s”) which
were available to the Company were the following with the year in which they
expire.
  Year
                                
                                Amount
                                
                                Expiration1996
                                
                                
                                2,104
                                
                                20111997
                                
                                
                                9,265
                                
                                20121998
                                
                                
                                26,317
                                
                                20131999
                                
                                
                                21,074
                                
                                20192000
                                
                                
                                50,619
                                
                                20202001
                                
                                
                                21,675
                                
                                20212002
                                
                                
                                319,424
                                
                                20222003
                                
                                
                                45,381
                                
                                20232005
                                
                                
                                105,366
                                
                                20252006
                                
                                
                                2,947,833
                                
                                20262007
                                
                                
                                2,570,683
                                
                                20272008
                                
                                
                                716,240
                                
                                2028YTD
      2009
                                
                                
                                227,554
                                
                                2029Total
                                
                                $
                                7,063,535
  Were the
NOL tax asset to be recorded at August 31, 2008 it would be a long-term asset of
$1,553,978.  Continued profitability by the Company will be a major
factor in the valuation account being removed and the recording of this
asset.


14
 SEW
CAL LOGO, INC.
 NOTES
TO FINANCIAL STATEMENTS
 (February
28, 2009 and August 31, 2008)





NOTE  8. 
The Effect of Recently Issued Accounting Standards
 
 Below is
a listing of the most recent Statement of Financial Accounting Standards (SFAS)
issued by the Financial Accounting Standards Board (FASB) and their effect on
the Company.
 
 FASB Staff Position EITF 03-6-1
–Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities
  In June
2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities,
(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the computation of earnings per share under
the two-class method as described in FASB Statement of Financial Accounting
Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for
financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited.
 
 We are
not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF
03-6-1 would have material effect on our consolidated financial positionand results of
operations if adopted.
 
 Statement No. 163 –Accounting for Financial Guarantee
Insurance Contracts – and interpretation of FASB Statement No.
60
  In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
Accounting for Financial
Guarantee Insurance Contracts-and interpretation of FASB Statement No.
60.  SFAS No. 163 clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance
contracts.  SFAS No. 163 is effective for fiscal years beginning on or
after December 15, 2008, and interim periods within those years.
  SFAS No.
163 has no effect on the Company’s financial position, statements of operations,
or cash flows at this time.
  Statement No. 162 –The Hierarchy of Generally Accepted
Accounting Principles
  In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
The Hierarchy of Generally
Accepted Accounting Principles.  SFAS No. 162 sets forth the
level of authority to a given accounting pronouncement or document by category.
Where there might be conflicting guidance between two categories, the more
authoritative category will prevail. SFAS No. 162 will become effective 60 days
after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA
Professional Standards.
 
 SFAS No.
162 has no effect on the Company’s financial position, statements of operations,
or cash flows at this time.
 
 Statement No. 161 –Disclosures about Derivative
Instruments and Hedging Activities—an amendment to FASB No.
133
  In March
2008, the FASB, issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No.
133.  This standard requires companies to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged.
  Statement No. 160 –Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51
  In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No.
51.A noncontrolling interest, sometimes called a minority
interest, is the portion of equity in a subsidiary not attributable, directly or
indirectly, to a parent. The objective of this Statement is to improve the
relevance, comparability, and transparency of the financial information that a
reporting entity provides in its consolidated financial statements related to
the noncontrolling or minority interest.
  The
Company will adopt this statement beginning March 1, 2009. It is not believed
that this will have an impact on the Company’s consolidated financial position,
results of operations or cash flows.






15
 SEW
CAL LOGO, INC.
 NOTES
TO FINANCIAL STATEMENTS
 (February
28, 2009 and August 31, 2008)
 NOTE  8.  The Effect
of Recently Issued Accounting Standards-
continued
  Statement No. 141 (revised 2007) –Business
Combinations
  In
December 2007, the FASB revised SFAS No. 141 (revised 2007), Business
Combinations.This revision changes the way the minority
interest in a company is measured, recorded and reported in the parent companies
financial statements to the end that a statement user can better evaluate the
nature and financial effects of the business combination.  The Company
will adopt this statement beginning March 1, 2009.
  The
Company will adopt this statement beginning March 1, 2009. It is not believed
that this will have an impact on the Company’s consolidated financial position,
results of operations or cash flows.
  The
Company has not yet adopted the provisions of SFAS No. 161, but does not expect
it to have a material impact on its consolidated financial position, results of
operations or cash flows.
 
 Statement No. 159 –The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115
  In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115.This standard permits an entity to choose to measure many
financial instruments and certain other items at fair value. This option is
available to all entities. Most of the provisions in FAS 159 are elective;
however, an amendment to FAS 115 Accounting for Certain Investments in Debt and
Equity Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. SFAS No. 159 is effective as of the beginning of an entities first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of SFAS No. 157 Fair Value Measurements.
 
 Adoption
of this pronouncement has not had a material effect on the Company’s
consolidated financial statements.
 
 Statement No. 158 –Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements
No. 87, 88, 106, and 132(R)
  In
September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements
No. 87, 88, 106, and 132(R).To improve financial reporting by
requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions.
  The
adoption of this new Statement has no material effect on the Company’s current
financial position, results or operations, or cash flows.
  Statement No. 157 – Fair Value
Measurements
  In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, to
clarify how to measure fair value and to expand disclosures about fair value
measurements.  The expanded disclosures include the extent to which
companies measure assets and liabilities at fair value, the information used to
measure fair value, and the effect of fair value on earnings and is applicable
whenever other standards require (or permit) assets and liabilities to be
measured at fair value.  SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years.
  The
adoption of this new Statement has not had a material effect on the Company’s
current financial position, results or operations, or cash
flows.







16





ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONTINUING AND FUTURE PLAN OF
OPERATIONS.
 
 FORWARD
LOOKING STATEMENTS
 
 This
analysis should be read in conjunction with the condensed consolidated financial
statements, the notes thereto, and the financial statements and notes thereto
included in the Company's Registration Statement on Form SB-2, as amended,
initially filed on March 20, 2004. All non-historical information contained in
this annual report is a forward-looking statement. The forward-looking
statements contained herein are subject to certain risks and uncertainties that
could cause the actual results to differ materially from those reflected in the
forward-looking statements.
  Results
of Operations
 
 Total
revenue was $ 307,184 for the quarter ended February 28, 2009 as compared
to $449,427 for the quarter ended February 29, 2008, a net decrease of
$142,243 The net decrease is a result of our continued effort to replace
non-profitable with profitable business. Also, overall losses as a percentage of
sales continue to decline. This can be attributed directly to both internal
restructuring and to our significant investment in the research and development
of our new surf based brand. Our line of merchandise is continuing to
be  developed and advertising and promotional campaigns are initiated
and underway.   Officer and Administrative Compensation was
$4,654 for the quarter ended February 28, 2009 as compared to  $31,308
for the quarter ended February 28,2008, a net decrease of
$26,654.  The net decrease is due to the continued restructuring and
streamlining of management responsibilities, helping facilitate more focused
company direction and the anticipated resulting profitability.  Total
Assets were $305,394 at February 29, 2009 as compared to $452,903 at August 31,
2008, a net decrease of $147,509.  The net decrease was primarily due
to cash used for development expenses, ongoing operations, and reduction of
inventory.
 
 Plan
of Operation
 
 We
continue promoting and marketing the Pipeline Posse product line, a recognized
name in the world of surf and action sports. Our intent  remains the
manufacturing, selling and distributing of our own lines of surf wear and to
promote this and other lines of goods in appropriate trade journals and other
media as they are developed, expanded and distributed. Our first full length
movie (surf video) – “Pipeline Posse – Project One” is now for sale in surf
shops nationwide as well as available on the website:
pipelineposse.com.  Ads have been placed in major surf publications as
well as on selected internet websites and the video trailers are available for
viewing in our website video section.  Private label business is
beginning to return in spite of the continuing competition with aggressively
marketed inexpensive overseas manufacturing. We continue to advocate the value
of “Made in the USA” products and this is having some effect on new business as
well as the return of previous customers. Our unique ability to respond to
client needs for fast delivery also adds to our value as a domestic producer of
quality goods. Should we be able to perpetuate and expand this trend we will add
to our existing staff to support expansion and growth of both our private label
business and entertainment business now that the writer’s strike has ended and
remain cautiously optimistic on both issues.
 
 Private
Labeling
 
 Domestic
headwear suppliers have been drastically reduced as a result of increased lower
pieced imports. Suppliers remaining in this business each have their own niche
in the market place. Few remain in California and our customer base is
increasing somewhat with this reduced competition. There are U.S. suppliers
located in the Midwest and on the East Coast. They seldom manufacture for our
market and deal mainly in the golf, major league baseball and ad specialty-type
businesses.
 
 Overseas
suppliers are a different situation. They can produce a cap at a fraction of the
price we can and we are constantly in competition with them. They can copy all
that we create, but if they are asked to create on their own, they may fall
short, as our industry is constantly changing by way of fabrics, styles, and
method of decorating. Overseas suppliers are in the business of mass production
for export. Our current customers use overseas suppliers for some of their
"bread and butter" styles but tend to use U.S. suppliers for the more cutting
edge products. However, overseas manufacturers require considerably more time in
creating new products because of their inability to provide face-to-face contact
with designers and domestic customers. They also require greater lead times for
shipping and cannot make changes overnight (literally) when required. The
logistics also may not allow them to be immediately aware of developing trends,
forecasting them, and then developing an appropriate finished product
instantly.
 
 At
present, the youth oriented "action sports" lifestyle-clothing market
(surf/skate/snow) is led by labels such as "Quiksilver" of Huntington Beach,
California, representing in excess of $1 billion in annual sales. Also, "O'Neill
Sportswear", "Rip Curl", "Lost", "Billabong", "Volcom", and numerous other
Orange County, California-based clothing companies service this market and can
be considered competition for our new brands. We believe that teens and young
adults are looking for something new and trendy to identify with, purchase, and
wear.




17




ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF CONTINUING AND FUTURE PLAN OF OPERATIONS. - continued
  Private Labeling-
continued
  Although
we believe we now have the experience and resources to take advantage of and
fulfill the needs of this market and we have already made significant steps
towards doing so, the youth, active and sports apparel industry is highly
competitive, with many of our competitors having greater name recognition and
resources than we do. Many of our competitors are well established, have
longer-standing relationships with customers and suppliers, greater name
recognition and greater financial, technical and marketing resources. As a
result, these competitors may be able to respond more quickly and effectively
than we can to new or changing opportunities or customer requirements. Existing
or future competitors may develop or offer products that provide price, service,
number or other advantages over those we intend to offer. If we fail to compete
successfully against current or future competitors with respect to these or
other factors, our business, financial condition, and results of operations may
be materially and adversely affected.
 
 We
currently have no market share data available for competition in these areas. We
work on each job through personal contacts and are frequently the only company
contacted for the particular project.
 
 We do not
depend on any one or a few major customers.
  Patents,
Trademarks, Franchises, Concessions, Royalty Agreements, or Labor
Contracts
 
 We
recently applied to the USTPO for the trademark “Pipeline Posse” in several
categories. Each of our applications is active and currently either approved or
under review for approval by the USPTO examiners We will continue to assess the
need for any copyright, trademark or patent applications on an ongoing
basis.
 
 Film
Wardrobe & Entertainment Related Business
 
 Film
wardrobe and related business remains slow as productions continue to be
produced outside the United States.  This holds true for nearly all of
the major studios as well as independent filmmakers, causing the majority of the
local costume houses to downsize.
 
 To
counter this trend and help regain our lost dollar volume in this area we will
continue our existing strategy of marketing directly to movie and television
productions before they begin filming locally and send units out of town on
location.  Our strategy of dealing directly with producers, wardrobe
personnel, and talent is beginning to pay off with recent orders from major
films such as “Superman Returns” and the recently released “American Gangster”
starring Denzel Washington and Russell Crowe. Any new movies or TV programs to
add?
 
 Corporate
Sales
 
 While
corporate clients currently account for less than fifteen percent (15%) of our
business, we continue to focus on growing this area of our business over the
next year with the addition of in-house salespeople. Also, the addition of new
silk screening equipment has given us the capability to accept and produce large
orders of promotional t-shirts and related items for corporate programs through
outside sales and advertising organizations. Our salespeople are now attempting
to solicit business to our existing client base via telephone and Internet as
well as to potential new customers through the same means as well as through
print advertising via mailing and placement in trade publications. We are
committed to making this new division profitable and more qualified labor has
been retained to operate the new equipment as needed.   Second
and third manufacturing shifts can be added as growth requires. We have assigned
two in-house clerical persons to service new inquiries and added accounts, as
well as order finished goods for embellishment and shipping. Current production
capacity is adequate to handle the anticipated increased volume.  No
other major capital expenditures are anticipated at this time.
 
 Development
of new Product Lines
 
 We have
identified and developed an opportunity to export the California life style to
the rest of America and to the worldwide markets in general. Started as an idea
born in San Clemente, California, home of the premier surfing beaches in the
world, we have created a number of California Driven brands of
products.
  Under the
California Driven umbrella, several lines are being developed with specific
target markets in mind. Currently, several California Driven products are being
developed by us but they do not represent any significant amount of our current
overall revenue. The California Driven brand lines are being developed as an
expansion into our own line of products to market and sell.






18
 ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF CONTINUING AND FUTURE PLAN OF OPERATIONS. - continued
  Development of new Product
Lines-
continued
  The first
identified brand line is Pipeline PosseTM.Three trademarks have been
applied for and are under active review for approval by the USPTO. We have completed
initial design of a line of surf wear under the Pipeline PosseTM logo and have
manufactured  lifestyle oriented goods to begin a sales and marketing
campaign. The exclusive rights for  Pipeline PosseTM were acquired on
August 15, 2005  from Braden Dias of Hawaii.  Mr. Dias is a
world renowned surfer and is under agreement with us to represent Pipeline Posse
as a professional athlete in the development of Surf and Sportswear
lines.  In addition to Mr. Dias, several additional professional
Hawaiian surfers are currently under agreement to represent the project and 3
support people have been hired, both in Hawaii and
California.  Clothing design is being aggressively developed by both
in-house personnel and professional independent contractors experienced in
product development for the Action Sports Industry.
  Contact
with our target market has been initially established in several major surf
publications  through personal interviews with our athletes as well as
editorials on The Pipeline Posse itself.  Print and on-line
advertising campaigns have commenced in both industry related magazines and
websites.  We have also published and activated PIPELINEPOSSE.COM, our
website which features up to date information on the athletes, activities, photo
and video galleries, an active news blog, related action sports links, and a
fully developed online store.  The secure site and shopping capability
has been recently activated to accept credit cards and offer shipment of
merchandise worldwide.  A multi- faceted major advertising and
marketing campaign is being budgeted and developed for the end of 2008 and
professional sales organizations are being interviewed and considered for
representation and distribution of the brand both domestically and
worldwide.
  Additional
Action Sport related brands are being considered and are in various stages of
development in regard to trademarks, competition, market potential, and strategy
and cost.  Target dates for launch have not been yet
established.
  This Form
10-Q includes forward looking statements concerning the future operations of the
Company. This statement is for the express purpose of availing the Company of
the protections of such safe harbor with respect to all forward looking
statements contained in this Form 10-Q. We have used forward looking statements
to discuss future plans and strategies of the Company. Management's ability to
predict results or the effect of future plans is inherently uncertain. Factors
that could affect results include, without limitation, competitive factors,
general economic conditions, customer relations, relationships with vendors, the
interest rate environment, governmental regulation and supervision, seasonality,
distribution networks, product introductions, acceptance, technological change,
changes in industry practices and one-time events. These factors should be
considered when evaluating the forward looking statements and undue reliance
should not be placed on such statements. Should any one or more of these risks
or uncertainties materialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those described
herein.
  Critical
Accounting Policies
  Sew Cal’s
financial statements and related public financial information are based on the
application of accounting principles generally accepted in the United States
("GAAP"). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenue and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use if estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
  Our
significant accounting policies are summarized in Note 1 of our financial
statements. While all these significant accounting policies impact its financial
condition and results of operations, Sew Cal's views certain of these policies
as critical. Policies determined to be critical are those policies that have the
most significant impact on Sew Cal's consolidated financial statements and
require management to use a greater degree of judgment and estimates. Actual
results may differ from those estimates. Our management believes that given
current facts and circumstances, it is unlikely that applying any other
reasonable judgments or estimate methodologies would cause effect on our
consolidated results of operations, financial position or liquidity for the
periods presented in this report. During the next twelve months, we expect to
take the following steps in connection with the further development of our
business and the implementation of our plan of operations.
   ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Not
applicable.




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ITEM
4T. CONTROLS AND PROCEDURES
 
 Our
management, under the supervision and with the participation of our Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the
effectiveness of our disclosure controls and procedures as defined in Securities
and Exchange Commission (“SEC”) Rule 13a-15(e) and 15d-15(e) as of the end of
the period covered by this report.  Based upon that evaluation,
management  has concluded that our  disclosure  controls 
and  procedures  are  effective  to ensure  that
information  we are required to disclose in reports that we file or submit
under the Securities Exchange Act is communicated to management, including the
CEO and CFO, as appropriate to allow timely decisions  regarding required
disclosure and is  recorded,  processed,  summarized 
and  reported  within the time periods specified in the SEC’s rules
and forms.
  There
were no changes (including corrective actions with regard to significant
deficiencies or material weaknesses) in our internal controls over financial
reporting that occurred during the Third quarter 2008 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
   PART
II - OTHER INFORMATION
  ITEM
1. LEGAL PROCEEDINGS
  On or
about February 14, 2008 Rick and Judy Songer, RL Songer & Associates LLC and
the Company filed suit against Conoco Phillips, Inc. in the Superior Court of
the State of California for the County of Los Angeles for damages for
negligence, private nuisance, public nuisance, nuisance per se, trespass,
declaratory relief, equitable indemnity and preliminary and permanent
injunction.  Discovery is progressing and a trial date of September
14, 2009 has been set.  The Complaint alleges that the defendants
operated and continued to operate a “TANK FARM” which leaked gasoline and
related products, creating a large underground contaminate
plume.  This plume has spread in a generally South/Southwesterly
direction, traveling onto Plaintiffs’ properties along the
Southern  border of the ConocoPhillips Facility.
 
 On or
about February 19, 2009, Sew Cal Logo, Inc. filed suit in Superior Court of the
State of California for the County of Los Angeles against Joseph J Pearson
alleging fraud against the Company.
   ITEM
1A. RISK FACTORS
  Not
required.
   ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  None.
   ITEM
3. DEFAULTS UPON SENIOR SECURITIES
  None.
   ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  None.
   ITEM
5. OTHER INFORMATION
  None.




20




ITEM
6. EXHIBITS




(a)
EXHIBITS




31.1
            Certification of the Chief Executive Officer
      Pursuant to Section 302 of the Sarbanes-Oxley
    Act31.2
            Certification of the Chief Financial Officer
      Pursuant to Section 302 of the Sarbanes-Oxley
      Act32.1
            Certification of the Chief Executive Officer
      Pursuant to Section 906 of the Sarbanes-Oxley
      Act32.2
            Certification of the Chief Financial Officer
      Pursuant to Section 906 of the Sarbanes-Oxley
      Act




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.




Date:
      April 20, 2009
                By:
                /s/  Richard
      SongerRichard
      SongerPresident,
      Director and ChiefExecutive
      Officer






Date:
      April 20, 2009
                By:
                /s/
       Judy SongerJudy
      SongerDirector
      and ChiefFinancial
      Officer









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